The Bourbon Town Council took the first steps in seeking a bond issue for a proposed water project during its meeting Tuesday evening.
Representatives Eric Walsh and Tyler Coffel from BakerTilly explained the three components of the projects: a well rehab, the largest component is a new water treatment plant, and there is an alternative new production well which would be well number three for the town. This alternate is estimated to be $410,000.
Wessler Engineering has been retained as the consulting engineer for the project. Their preliminary design estimate is $4 million to $4.5 million.
The project is set for bid and the Bourbon Town Council will receive bids on February 7th.
Funding for the project will require a bond issue. As municipal advisors for the town, BakerTilly said they will be borrowing somewhere between $5 million to $5.5 million covering all the additional costs and fees.
BakerTilly has been negotiating with the State’s Revolving Fund on behalf of Bourbon. Due to their SRF priority rating the town would use the State of Indiana’s triple-A credit rating and borrows the funds needed and will loan the funds to Bourbon for the project as a secondary borrower. It was estimated that the interest rate on the loan would be mid-4 %.
This project would also qualify for a 35-year loan. While you are paying the loan off longer, it lowers your annual payments and thus water rates can be set at a lower monthly rate. The proposed rate adjustments will have to double for the water utility. To the average residential customer, 2 to 3 people using 4,000 to 5,000 gallons monthly are currently paying $31 a month. That water rate is estimated to increase to somewhere between $65 to $70 monthly.
Walsh said these rates and costs are based on estimates. When the bids come in and the true costs are determined the rates could be reduced if the bids come in lower.
Moving forward the Bourbon Town Council suspended the rules and passed the Bond Ordinance on all three readings authorizing the town to borrow money for the project.
The Town Council also approved the first reading of the Rate Ordinance. A public hearing will be held on the Rate Ordinance on February 14th to hear comments and questions from the public. A representative from Wessler and BakerTilly will attend to explain the need for the project.
Following the public hearing on February 14th, the Bourbon Town Council will consider the Rate Ordinance on the second and the third readings.
BakerTilly suggested phasing in the rate increase. The first phase would go into effect following the adoption of the Rate Ordinance at the February meeting with the increase projected for March 2023 bills that would be due in April. The second increase would come in January 2024.