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Shall the City of Kahoka, Missouri, issue its combined waterworks and sewerage system revenue bonds in the amount of $8,000,000 for the purpose of acquiring, constructing, furnishing, equipping, extending and improving the City’s combined waterworks and sewerage system, the cost of operation and maintenance of said system and the principal of and interest on said revenue bonds to be payable solely from the revenues derived by the City from the operation of its combined waterworks and sewerage system, including all future extensions and improvements thereto?
By Mike Scott
After the City of Kahoka’s application for $5 million dollars was not selected for grant funding from the state’s Community Water Infrastructure Grant program, city leaders voted Monday, November 28, at a special meeting, to place an $8 million dollar bond issue on the ballot in February.
If approved, it would give the city authority to borrow up to $8 million dollars to upgrade the city’s water generation plant and water system.
For the past couple years, the city has been working on ways to improve its water quality. While the water is safe, high levels of iron and molybdenum make the water cloudy. Chemicals are added to bind these minerals.
In April of 2021, the city reviewed three proposals from Kyle Posiask of Four Points Land Surveying and Engineering to make improvements at the water generation plant at Wayland, including a new detention tank to allow the chemicals time to bind the unwanted minerals and settle. That cost of the proposal favored by Kahoka’s aldermen was estimated to be $2.7 million dollars.
At that time, the council also discussed the need to replace the asbestos-cement water transmission line running from Wayland to Kahoka. Over time, asbestos-cement tends to become brittle, and the existing line was installed in the early 1970’s, making it almost 50 years old.
Posiask gave a “ballpark” figure of $2 million for it’s replacement.
In March of 2022, the city applied for Missouri’s Community Water Infrastructure Grant, asking for $5 million as part of a $5,563,000 project cost. The city’s application ranked 186th out of 371 applicants.
“The City of Kahoka doesn’t have any debt,” said Mayor Tony Anderson. “That’s why we didn’t get the grant.”
Lead Service Lines
Another issue facing Kahoka, as well as all water systems in Missouri and across the nation, is a recent EPA requirement to “inventory” all water service lines to determine if they contain lead. This inventory needs to be completed by October 16, 2024. Kahoka has around 1200 connections that will need to be inventoried by that date. (The Media will have a story on this requirement next week)
The cost for that project is estimated to be $200,000, and Kahoka had applied for $159,000 in grant funding, but it was not awarded.
Adding It Up
The two grant applications, which were made in March 2022, totaled $5,763,000. The cost of building materials has risen by over 14 percent in 2022, so that could add around $800,000 to the previous cost, likely increasing the projects costs over $6.5 million dollars.
Why A Special Election?
The February 7, 2023 election date for the bond issue is a special election. No other issues are on the ballot for that election.
Because of that, the City of Kahoka will have to pay for the entire cost of the election, which County Clerk Kelly Waples estimated could cost up to $4000.
“We had to do it in February, because if voters approve it, the deadline for applying for a low-interest loan Missouri State Revolving Fund Drinking Water program is March 31,” said Kahoka City Clerk Sandie Hopp.
“Otherwise, we’d have to wait another year to apply,” she added.
Those SRF low interest loans often have interest rates below one percent.
What will it cost customers?
If approved, the bond will be repaid by revenue from the water customers in Kahoka, over a 35 year period. Property taxes will not be effected by this project.
Assuming that the city borrowed the entire $8 million dollars, the cost to customers would be divided over the 1200 customers over the life of the loan.
Eight million dollars divided by 35 years is $228,571.43 per year for principal. That figure divided by the 1200 customers is $190.47, and divided by 12 months equals an additional $15.87 per month need to repay the loan (before interest)
Currently, the city’s rate for 2000 gallons (minimum charge) is $21.00.