City says sewer bonds won't mean a rate increase

* Rate increases could come later, for other reasons, city adds; but 'no' votes will not decrease rate.

If Nevada voters approve the $9.8 million in sewer revenue bonds on Aug. 7, there will be no increase in sewer rates to cover the cost of repaying the bonds.

Nevada City Manager Bill McGuire has stated publicly that when the city council raised the sewer rates in December 2006, the new rate was designed to cover the cost of building a new sewer treatment plant and upgrading the sewer lines.

Although there will be no need to raise rates to pay off the bonds, McGuire has told the council that it may be necessary to have small increases in sewer rates from time to time to cover increases in the operating cost of the treatment plant.

The Missouri Department of Natural Resources has told the city it estimates that it will cost $15 million to do the necessary renovations to the city's sewer system. To cover the total cost, the city will add the $9.8 million in bonds to the $5.2 million in bonds approved in 2003 but never issued.

If Nevada voters approve the revenue bonds on Aug. 7, the city plans to sell the bonds to the state of Missouri, which will use money from the State Revolving Loan Fund to purchase the bonds. Money from the SRF has an interest rate of about 2 percent, which is much lower than can be found elsewhere.

According to McGuire, the $15 million cost for the improvements breaks down this way: $8.6 million to build a new, larger treatment plant; $2.5 million to replace the north interceptor line, the line wastewater from the northern part of Nevada feeds into; $3 million to reduce inflow and infiltration of the current sewer mains, which is to be done on a pay-as-you-go basis and $900,000 for design and contingencies.

This project has been under discussion for about 10 years and after the 2003 bond election, the work was anticipated to begin in 2005 or 2006 with completion in 2007.

The city estimates that every year this project is delayed adds another $1 million to the cost of the project.

If voters do not approve the revenue bonds in August, they will not see their sewer rates come down.

The rates may actually have to be increased substantially, because the city will still have to make many of the proposed improvements to meet state regulations.

The city will still be able to issue the $5.2 million in bonds that voters approved in 2003, but that will not cover the cost of the proposed improvements. To make all of the proposed improvements the additional cost will have to be paid for with increased in sewer rates, McGuire said.