Village denied ‘hardship’ low rates cited by EFC
Granville residents face the prospect of higher water rates after village officials learned that one of the financing routes for the new state-mandated water treatment plant will not be available to them.
Mayor Jay Niles said he received a letter from EFC, or New York State Environmental Facilities Corp., explaining the village was not eligible for hardship financing for the $4.5 million water treatment plant project.
“Basically, they said our user fee of $135 per year does not qualify,” Niles said.
A letter to the mayor dated July 12 from EFC President and CEO Matthew J. Driscoll spells out the determination quite clearly when in the first paragraph it said, “… based on a comparison of the projected annual user fee per Equivalent Dwelling Unit with the targeted service charge, this project does not qualify for DWSRF (Drinking Water State Revolving Fund) financial hardship assistance.”
Residents now pay a water rate of $135 per year, and to be considered for the special EFC financing, the rate would have to more than double to nearly $300, officials said.
“We did what they asked of us, the hydrologic study, planning for the project and we had the scores, but the water rate was lower than they wanted; that does not seem reasonable,” Niles said.
Health department spokesman Jeffery Hammond said the determination on hardship funding is made based on a number of criteria, only one of which was the “target service charge,” or expected water rate, including management and operation of the facility and the average household income of the users. Hammond said the decision is based on competitive scoring between projects.
The village had hoped to receive hardship assistance of either a combination of a grant and a 0 percent interest loan or, at least, the no interest loan.
Either option would have helped to keep the water rates from substantial increases, village clerk treasurer Rick Roberts said.
Roberts said the challenge now is to keep water rate increases to a reasonable level because they are the only way the village can pay for a project the health department said must be completed.
“The number should still have a one in front of it, but the rates will have to go up,” Roberts said.
The village faces fines and penalties if it should fail to comply with the mandate to upgrade its water treatment facility after the water supply was deemed GWUDI, or ground water under direct influence.
“We worked hard to maintain a reasonable water rate and keep the system in good repair and improve it when we needed to. Now with a mandated major upgrade I didn’t feel that it was reasonable that we would be denied at least a 0 percent loan,” Niles said.
Niles said he found it “disturbing” current and prior administrations in the village could work for years to maintain the water system and essentially be punished for doing a good job keeping the local water rates down.
The mayor said he reviewed the process with EFC officials after receiving the letter, but they held firm to their conclusion. Niles said he inquired about whether the EFC has any sort of appeal process to this determination and was told they “did not think so.”
“I plan to invite them to the September board meeting so that they can explain this to the board,” Niles said.
What is not in doubt is the anticipated expense of $1.5 million to $4.5 million.
“We know we have to build the plant, but now we’re only going to do what we have to do in order to keep the water rates at a reasonable number,” Niles said.
The most expensive plan was one that included work on the water infrastructure throughout the village, which was part of the reason the village had the hydrological study conducted by Lamont engineers.
“We know it has to increase because we have to build the plant – we have no choice – but to build the plant,” Niles said.
What the engineering team is doing now is determining exactly what must go into the plan and what can come out to be done at another time, likely with another financing source.
One of the two options left to the village now that grants and 0 percent financing are out of the picture is financing through EFC, which is offering a 30-year loan at a 4.1 percent rate with a break on the interest rate for the first 20 years.
That option would mean a roughly 2.75 percent rate for two thirds of the period of indebtedness, Roberts said.
The village, however, plans to go with the U.S. Department of Agriculture Rural Utilities Service, which offers a 2.375 percent fixed rate loan over 38 years.
Roberts said the duration and low fixed rate make the USDA option much more attractive and easier on the water customers.
“It’s going to have to come up some. I’m just hoping to make it reasonable. What the board is asking is what can the community afford in these difficult times?” Roberts said.