Purdy Council signs sewer project paperwork

Wednesday, June 20, 2018

Most set guidelines for repaying $742,000 USDA loan

Agreements have been signed and pipe has been hauled to the work zone for construction of the sewer pipeline from Purdy to Monett.

Prior to the pre-construction conference with Rosetta Construction last week, Purdy City Council members approved and signed required documents.

Among those was an advance agreement between the city and the Missouri Public Utilities Commission, focusing on a $742,000 loan. Interest on the loan was capped at 4 percent, but Purdy qualified for a reduced rate of 2.375 percent.

The U.S. Department of Agriculture's Rural Development program will handle the bonds. The loan will be paid back through the issuance of $742,000 in revenue bonds, underwritten by sewer charges. The remainder of funding will come from grants through USDA and the Community Development Block Grant program.

Voters approved $4.6 million in revenue bonds on Nov. 3, 2015, but due to grants and a lower than expected bid at $1.8 million, the city's debt from the project will be much lower. Most of the authorized bonds will not have to be sold.

A 29-page ordinance was adopted detailing the loan repayment procedure. Principal and interest will be repaid in annual installments of $32,693 over 35 years. The agreement directed the city to create seven new accounts for tracking and repaying the debt. Restrictions were placed on issuing future bonds to guarantee repayment of these bonds, or that the bond owner gives specific permission before the city can proceed.

A tax compliance procedure was adopted under guidelines through the Federal Internal Revenue Service, detailing the requirement for issuing tax-advantaged bonds. A loan resolution was the USDA was also signed for $742,000.

Both covered accountability issues.

Bruce Hively, with USDA's Rural Development, said Purdy is the first city in southwest Missouri to qualify for interim financing through the Missouri Public Utilities Commission. The commission will provide construction funding, which money from USDA will be used to repay. The city will also have a reduced payment loan for the first two years, paying interest only. After that, the city will pay interest and principle.

The USDA will hold Purdy's bonds for security, but will not sell them. At a later date, Hively said, the city will be able to afford to go to a commercial lender and refund the bonds, at which point USDA will leave the picture.

In the meantime, Purdy will follow reporting requirements like Freistatt, which has a water system loan through USDA. The city will make both monthly and annual reports to USDA, Hively said, to see that rate projections have proven adequate to repay the debt.

"This is a big undertaking for a city of Purdy's size," Hively said. "It's really nice to see communities like Purdy and Monett working together. I hope it all works out well."

City Clerk Debbie Redshaw said Sue Bacorn, grant consultant, walked city staff through the preparation of all the documents. Bacorn would manage requirements for the financial obligations, making sure all necessary steps had been taken.

An official loan signing was held on Wednesday to complete financial arrangements.

"I feel we're done," Redshaw said. "We've been at this for six months."

Stacks of pipe for the sewer construction have been placed at South Park and on Waldensian Road. Construction was expected to start at the Monett wastewater treatment plant and work its way south.

The pipeline will run along the north side of Clear Creek, east from Monett's plant, under Highway 37 north of the Highway 60 interchange, along Dairy Street, then under the Highway 60 overpass at Waldensian Road, then south to Purdy, crossing from the west side of the Arkansas and Missouri Railroad tracks to the east side around Farm Road 2035.

According to Bob Sell, engineering intern with Allgeier, Martin and Associates, who attended the preconstruction conference with the Rosetta staff and city officials, the project received a notice to precede on June 14. Crews were expected on site staking the route on Monday and will start digging shortly.

Purdy, Sell noted, has a higher elevation than Monett, enabling the gravity-flow system to run without a great deal of additional thrust. The lift station existing at the west lagoon will stay in use to push effluent toward the pipeline near the center of town. The lift station at the east lagoon will undergo a major renovation to upgrade its capacity.

The pipeline itself will run parallel with the Arkansas and Missouri Railroad line, not on railroad right of way. The pipeline will run at least 3.5 feet below the ground. Sell said topographic changes will require digging possibly as deep as 10 feet in some places. There is concern about encountering unmarked utilities and creek beds, or a bed of dense rock along the route, that could require a route change.

"This is just a pressure sewer line," Sell said. "It's not as complicated as a sewer treatment plant. There shouldn't be much call for change orders. They could hit the aquifer at some point or something else that requires a reroute. For a route as long as this, it's hard to know what you could encounter over the whole length."

The contract calls for construction to be completed in one year. Sell said the contractor would have days built into the schedule to accommodate for weather delays. Each month Rosetta will send the city a pay estimate, which will then go through review by Allgeier, Martin and the funding agencies before a check for the project was cut.

The project will eliminate Purdy's sewer operations except for two lift stations pumping effluent. The city will still maintain its east lagoon as a stormwater retention pond, which can still potentially fill in high water periods. The west lagoon will be closed and filled.

State and federal officials pushed the city to upgrade its sewer treatment system, first over concerns about a potential collapse due to a sinkhole, and later over the failure of the land irrigation method to reduce chemical contents, such as excessive nitrates.

After dealing with the sewer project, aldermen passed monthly bills totaling $35,342.30. Redshaw presented them with a budget draft for revision prior to the next fiscal year beginning on July 1. She indicated the budget called for no raises and no capital improvement projects.

"If you can figure out where more money is, I'm all for it," Mayor Bo Prock told aldermen.

A special meeting to act on the budget was scheduled for June 20 at 6 p.m.

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