Aging water, sewer systems create problems across state

Talk about it

The price tag was a stunner.

Menno Mayor Darrell Mehlhaf told community members at special meeting at the high school Thursday their small city is looking at an estimated $2.5 million cost to replace aging, cracked and collapsing sewer lines.

While the matter will be put to a public vote, the city is left with few choices, Mehlhaf said after the meeting.

“It not a matter of want — like one of our residents said — it’s a matter of we have to do it,” he said. “The time has come to quit thinking about it. It’s got to be done.”

Sioux Falls bond attorney Todd Meierhenry, who explained financing options at the meeting, has assembled funding packages for counties and municipalities across the state.

He said many towns in South Dakota are facing Menno’s plight, and he knows of roughly 68 sewer and water projects in search of financing. Planning and Development District III, which only covers the southeast part of the state, is assisting with about 30 water, sewer or drainage projects.

The major projects include a $4.5 million water and sewer project in Plankinton, a $2.3 million sewer project in Mount Vernon, and a $2 million drainage project in Corsica.

The demand is understandable, Meierhenry said, given the history behind the systems.

When the railroads came through 100 to 125 years ago, they established towns at intervals such as six to 10 miles. Water and sewer systems were part of that development.

“You can go down a highway or a rail line and you will see the systems in city after city starting to fail at the same time,” Meierhenry said.

Some of Menno’s 100-yearold clay sewer pipes, which were installed when the town was young, are failing. Cracked lines are allowing ground water to infiltrate the pipes, adding wear and tear to pumps and straining wastewater systems.

If the plan is approved by voters, the job will be put to bid next January and will be completed in three phases over several years’ time, Mehlhaf said.

While Menno has received a $207,000 grant for the first $898,000 phase of the threephase plan, the bill that remains for a small town with only 344 metered users is staggering. The cost of the project will likely be borne through a special real estate assessment and not simply as an increase in sewer rates, Mehlhaf said.

Meierhenry, offering some good news, told the small crowd in the gym that current financing rates are running between 3 and 3.5 percent.

“This is the best time ever in the past 25 years to borrow money,” he said.

Big projects, big bucks

David Templeton, director of the Division of Financial and Technical Assistance of the state’s Department of Environment and Natural Resources, said his office helped administer $100.8 million in grants and loans for water and wastewater projects in 2011. The majority were loans through the State Revolving Fund, a low-interest loan program.

“The biggest needs in the state we’ve identified are from those aging wastewater collection systems such as the one in Menno,” Templeton said. “They typically can run several million dollars for a small town, so those types of projects will normally end up before us asking for assistance.”

The DENR has a dedicated water funding mechanism that generates about $9 million a year for water and waste water projects, Templeton said.

The Legislature appropriates that out each year through the governor’s omnibus water bill, and the Board of Water and Natural Resources ends up making those funding awards on a quarterly basis.

The end of March always marks the first, and largest, funding round.

This month, the board will consider 50 funding requests totaling around $40 million for water, wastewater (sewer) and solid waste (landfill) projects, Templeton said.

Requests for financial help have been steady in the past five years, “but it’s probably on the high side this year,” he said.

Poor maintenance and higher rates

Problems are magnified when towns neglect water and sewer systems over the years.

“Some towns are more progressive than others and, using their own or hired crews, have replaced several blocks of line a year,” Templeton said, “but we do have a fair number that didn’t do much, and we’re seeing the result of not keeping up.”

Complicating the issue is that many towns are undercharging for services and failed to periodically adjust water and sewer fees.

Templeton said towns must establish minimum water and sewer rates before they can even apply for loans or grants. Those are $22 per 5,000 gallons on the wastewater side, and $25 for water.

“In reality, though, we’re not even recommending grants until a community is looking at charging rates in the mid- to high 30s and, a lot of time, the low 40s, for water and wastewater rates,” he said.

“Historically, they haven’t been charging what the true cost has been, so we’re trying to get the rate up to where we think it needs to be. A lot of times that’s not even the price of a cell phone or TV package, but having good quality safe water to drink and adequate wastewater treatment is, in our minds, a high priority.”

Where the money is

Planning and Development District III Director Greg Henderson said many towns like Menno are using systems well beyond the typical 25-year life of newer infrastructure systems.

Henderson said one of the first steps for communities seeking aid is to get a project listed on the State Water Facilities Plan, which is the list the DENR uses to identify project needs and anticipate funding needs.

That list is forwarded to the Legislature each year for funding consideration.

Henderson said the state can use several funding mechanisms, including Environmental Protection Agency low-interest loan money, under the previously noted State Revolving Fund.

District III planner John Clem, who is assisting Menno with its project planning and grant and loan applications, said SRF money is under consideration as a funding option.

“They also have state dollars though the Consolidated Water Facilities Construction Fund, which is typically grant money the state raises to support water and sewer projects,” Henderson said.

Many communities took advantage of American Recovery Act stimulus funds to get projects done, but many weren’t able to get in under that plan.

There was a lull after that as communities caught their breath and dealt with the recession. Projects are now picking up as the economy improves, Henderson said.

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