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August 23, 2008

Seneca asks Milnot to share cost of sewer plant

By Derek Spellman

dspellman@joplinglobe.com

SENECA, Mo. — Seneca officials want Milnot to cover part of the cost of a new sewer plant.

Residents will be asked to approve a proposal in November allowing the city to assume up to $4.2 million in debt to build a new mechanical sewer plant.

The Seneca City Council earlier this month voted to place the issue on the ballot. Proceeds from the bonds the city would issue for the work would be coupled with a $2 million state grant for which the city has already been approved.

Seneca Mayor Gary Roark said the city’s existing lagoon treatment system will not comply with Oklahoma’s environmental standards by late 2011 — when the city’s wastewater permit with the Oklahoma Department of Environmental Quality expires. The lagoon is on the Oklahoma side of the border.

“We don’t have a choice,” Roark said. “We have got to put this system in.”

Seneca officials say voter approval would enable the city to participate in the state’s revolving loan fund, which offers lower interest rates.

Milnot’s role

The city also has asked Milnot, which operates a plant in Seneca, if it would share some of the capital costs since the company’s plant produces about 70 percent of the sewage the city treats. Roark said the city asked the company if it would be willing to contribute up to $2.8 million toward the new plant.

Roark said the incentive to Milnot, which he called a “big part of Seneca,” is that contributions toward construction would mean lower rate increases. Also, the plant now must pre-treat its sewage before discharging it into the city system. With the new operation, the city would assume that responsibility.

Roark said the city is awaiting a response from Milnot.

If the company declines, Roark said Milnot would face larger rate increases to pay for its share of city treatment.

“We can’t expect the residents to pay the cost of the commercial use,” he said.

A phone message left for the Milnot plant manager in Seneca was not returned.

If Milnot contributes $2.8 million, it would reduce the amount the city would have to borrow so that the average Seneca resident would see his monthly bill increase from $15.45 to $26.53, according to city documents. Milnot’s average monthly bill would rise from about $7,370 to more than $16,015.

If the city borrows the full amount, the average resident’s monthly bill will rise to $36.22; Milnot’s would increase to $23,890.

Roark said the rate increases would still be lower than what both residents and businesses would have to pay if the proposal fails and the city finances the work through a lease-purchase agreement. That scenario would mean the city is paying interest rates of about 6 percent, compared to the 2.5 percent rate from the state’s revolving loan fund.

Regardless of whether the November issue passes, the new plant still will have to be built, Roark said, or the city risks losing its wastewater license.

“If we lose our license with them (DEQ), we are in a world of hurt,” he said.

The city’s sewer issue will only require a simple majority for passage, but Seneca residents also will be asked to approve a nearly $10 million bond issue in November for construction of a new elementary school and additions to the high school.

Roark said he did not know whether the addition of the city proposal would help, hurt, or have no impact on the school district’s ballot.

Seneca Superintendent Rick Cook said he could not comment on whether the city’s issue would impact district plans.







Timeline

The site identified for the proposed sewer treatment plant for Seneca would be near the current lagoon system. If the bond issue is approved, construction would be finished in the fall of 2011, said Mayor Gary Roark.

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