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Councilor DuQuenne Proposes Food & Beverage Tax Funding of New Water Treatment Plant at Ashland Council Study Session
DuQuenne Proposes Food and Beverage Tax
Funding of New Water Treatment Plant
5/7/24
By David Runkel
With nearly all city councilors voicing support for construction of a new water treatment plant at last night’s Council Study Session, Councillor Gina DuQuenne put forth a new plan for helping pay for it – using income from the five percent food and beverage tax income.
“The food and beverage tax income went to pay off bonds for the wastewater treatment plant, it should be used for this water project,” she told her colleagues. This would lessen the huge increase in water rates, 77 percent this decade, recommended by a Public Works consultant, she added. She also urged allocating the $18.6 million currently sitting in the city’s water fund to cut the amount of money the city would need to borrow.
Most of the prepared food and beverage tax income, between $2 million and $3 million annually, currently is allocated to pay for street repairs, with a smaller percentage going to the parks department. DuQuenne’s proposal to extend the tax beyond its current expiration 2029 date would need to be approved by city voters.
“We all want clean water and infrastructure,” she said, explaining that using the meals tax money would offset placing the full burden on water rate payers.
Her proposals seemed to stun other members of the Council, with only Dylan Bloom later saying it was a possibility.
Paying for a new plant, now estimated to cost between $55 million and $70.4 million with another $8.7 million for installing solar panels and battery storage capacity, came up during a 90 minute presentation on the water plant project by Public Works Director Scott Fleury. The plan approved previously by Council authorizes the city to borrow up to $75 million from a US Environmental Protection Agency fund at 4.77 percent to be repaid over 35 years. If interest rates remain high, this could add up to $79.4 million to the plant’s cost.
This funding proposal is likely to be the subject of a referendum before city voters in November. Petitioners have claimed they have far more than enough signatures from city residents to put the issue on the ballot. Those petitions are due to be presented to the city recorder on Thursday. A check will be made that a sufficient number of qualified city residents signed.
To reduce borrowing, Fleury said he is looking into potential grants from the state and federal government, including the Bipartisan Infrastructure bill passed by Congress last year, that could reduce the size of the EPA loan. Other potential funding mechanisms, such as a revenue bond or borrowing on the full faith and credit of the city have been ruled out as more expensive.
He also unveiled another money raising proposal for the city’s water program. During the fall and winter months, he said, it’s possible to sell water to neighboring Talent and Phoenix, using the TAP (Talent, Ashland, Phoenix) water line installed to connect to the Medford Water Authority. Ashland taps into the line during high-demand summer months, where it’s used year-round to supply water to Talent and Phoenix.
Ashland water could be piped downhill in the same line at half of the cost to Talent and Phoenix, Fleury said.
In his presentation, Fleury reviewed the 12 year history of Ashland’s consideration of building a new water plant that started with agreement in 2012 to build a small auxiliary plant at a cost of $12 million to be operated in the summer months when water demand is high. In 2016, this plan was ditched in favor of an entirely new plant at a lower location in the watershed south of Lithia Park at a then estimated cost of $20 million.
As engineering plans were developed, the cost estimate rose to $35 million in 2020. The latest estimated increase is largely due to inflation in construction costs, up between 30 and 40 percent in our region since 2020, Fleury said.
Although no official or unofficial vote was taken on the project, all questions asked by councilors served to reinforce their support for building a new treatment plant.
Councilor Jeff Dahle pointed to “limitations” with the current plant’s treatment for algae blooms which he predicted will “happen more often with climate change.”
The new plant will be equipped to treat ozone and turbid water, Council Eric Hansen pointed out.
The risk from the steep embankment beside the current plant will be avoided, Councilor Paula Hyatt noted.
The new plant will have “gold star” status from a Washington, DC, environmental organization Envision, Mayor Tonya Graham said, adding that it will be built to withstand an earthquake, which the current plant is not.
Councillor Bob Kaplan reviewed all the funding proposals and put his stamp of approval on the EPA borrowing as the best option, since it allows the city to borrow on as needed basis with interest charges only the funds borrowed and to pay off the loan sooner without penalty.
Fleury said he plans to bring a new water rate increase proposal to the Council by the end of the year. With the pending fall referendum, he said, construction will not start this summer as planned, but next spring at the earliest. It will take 30 months to build the plant, which will lead to substantial truck traffic on Granite Street during the land clearing phase, and another six months for a trial run before it would go online.
“We are not building a Cadillac,” Fleury said of the design. “We’re in the middle range, a durable Toyoda that will run forever.” His predecessor as Public Works director also used an automobile analogy when she switched her position from spending much less money on upgrading the existing plant to building a new one.
“Sometimes instead of again fixing up an old car, you just have to go out and buy a new one,” was Paula Brown’s way of putting it.
