Printed on: April 02, 2013

Ammon closes its bond on sewer

By Zach Kyle
zkyle@postregister.com

On paper, the Ammon City Council's approval to close the city's bond for its share of a regional sewer project at last week's meeting was a formality.

The action means the city will begin paying the principal as well as the interest on the $24 million borrowed for the project. Previously, Ammon was paying only the interest.

But the action was symbolic for City Council President Dana Kirkham and other officials, ending a long, tenuous decade of growing pains for the city.

"It feels wonderful," Kirkham said. "I can't even describe it. It's like a day you never thought would actually come."

The wastewater treatment facility has been an ongoing and expensive endeavor for Ammon, which is a member of the Eastern Idaho Regional Wastewater Authority along with the city of Shelley and Bonneville and Bingham counties.

Ammon voters approved a $15 million bond for the project in 2005. However, Kirkham said officials at the time were working off outdated quotes for the project that didn't account for escalating construction costs. Crews digging the 13-mile line connecting Ammon's sewer system to the plant in Shelley needed to blast through lava rock, adding another unpredicted cost, she said.

"It wound up being significantly more than anyone had anticipated," Kirkham said. "But at that point, we were committed."

Needing more money, the city secured an additional $5 million in 2008 by successfully petitioning to the Seventh Judicial District Court for judicial confirmation. Cities can request money through judicial confirmation when projects already under way run out of funding. Judicial confirmation is an emergency measure that allows cities to take additional loans without going back to the voters.

Ammon successfully petitioned for another $5 million in 2010.

Ammon spent a total of about $24 million for its portion of the nearly $50 million project, she said.

The city renegotiated the terms of the original bond from a 20-year loan to a 30-year loan in order to cut the residential sewer rate by about $2, Kirkham said.

The rate is now $45 after the council approved a 3 percent increase in November.

While closing the bond only marginally affects taxpayers, the action is a big step in what Kirkham called the biggest challenge of her tenure on the council.

Kirkham took office in 2006. The city's wastewater started flowing to the plant in December 2011.

"When I first got into office, (the plant) seemed conceptual because the project was so huge," Kirkham said. "Finally, we're seeing the fruition of this concept."

The Eastern Idaho Regional Wastewater Authority's plant is now fully operational and serves about 6,000 customers in southern Bonneville and northern Bingham counties as well as the city of Shelley.

Bonneville County Commission Chairman Roger Christensen said he envisions the members of the authority eventually re-establishing it as a sewer district.

A potential district would have the legal ability to levy a bond as a single entity instead of its four members raising money piecemeal, he said.

A district wouldn't necessarily need a bond in the future, Christensen said, but the option would lend the district flexibility if an expensive problem arose.

"I'm feeling good (about the facility)," Christensen said. "I think we've prepared the (area) for responsible growth in a safe way so we don't go out and contaminate the groundwater. This project will be a benefit to the area for many decades."

Zach Kyle can be reached at 542-6746.