Challis residents asked a lot of questions related to water system improvement projects at an open house last week, with most questions focused on how city officials plan to pay for it.

According to engineers Colter Hollingshead and Jared Richens with Keller Associates, the company hired to administer and oversee the $3.5 million project to drill a new well, construct a new water booster station, install 1,000 feet of transmission lines and buy a leak detection system, there will likely be a mix of funding sources.

But, first city officials say they want to be sure city residents want to proceed with rounding up funds and doing the work. Hence, open houses to solicit public input. Two more open houses are planned, but dates haven’t been announced. City Council members were expected to schedule public hearings during a meeting this week.

Depending on the outcomes of those open houses, the first funding option that city officials would pursue would be to ask voters on Nov. 2 if they are willing to let the city sell bonds to pay for part of the project.

A draft of the ballot question says the city would ask voters to allow the city to incur debt of up to $3.5 million and pay that back with revenue from increased costs assessed to city water users for no longer than 40 years.

If the question is placed on the Nov. 2 ballot and approved by a simple majority of voters, the city would proceed with a bond sale. Hollingshead said preliminary assumptions are that the city could obtain a 40-year loan at 1.25 percent interest. The bond would likely be repaid via higher base rates charged for water, not increased property taxes as some bond issues are paid with in Idaho.

Hollingshead said preliminary estimates are that each person or entity that pays for the 544 water connections to the city’s water system would pay more money each month on their water bills with that extra amount earmarked to repay the bond. Early estimates are the increase would be between $6 and $10 a month, per connection, he said.

If the ballot question is asked and approved, the city would also possibly apply for grants from the U.S. Department of Agriculture, the Idaho Department of Commerce, the Army Corp of Engineers, U.S. Rural Development and the Department of Environmental Quality, Hollingshead said.

Voters would have to agree to pay higher water rates because state laws prevent a city from increasing rates by amounts that aren’t deemed reasonable, related to the services provided, Hollingshead said. Because water system users wouldn’t see a return on the potential increase for several years, voter approval would be sought in this case. All of the engineering, design and planning for the work has yet to be done before any bids could be solicited, awarded and work begins, Hollingshead said.

The future of Challis water drew many questions from JaNean Bradshaw. Wanting to know the entirety of what is planned for the city’s water system, Bradshaw asked what comes after this proposed $3.5 million project.

Hollingshead and Barrett told her the focus will shift to expanding water storage capacity in Challis. According to Hollingshead, the city’s two, 200,000-gallon storage tanks aren’t enough to meet the city’s needs, and a new million-gallon tank is needed.

After the new storage tank comes rehabilitation of the slow sand filter for the Challis clear well and then water line improvements, according to infographics Hollingshead and Richens displayed at the open house. Last December, in a presentation about what water system improvements are needed, Hollingshead said all the projects combined will cost about $22 million.

Before she left Bradshaw asked Barrett how people in Challis have responded to the first set of projects the city wants completed. For the most part, Barrett said the people he’s spoken with are against the bond measure in particular because of the increase they would pay. The mayor reiterated that if city leaders discover that Challis residents don’t want an increase in their water rates, the question will not be on the November ballot.

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