Dowagiac City Council authorizes loans for sanitary sewer improvements

DOWAGIAC — Dowagiac’s aging sewer system will soon be receiving a much-needed facelift.

The Dowagiac City Council recently approved resolutions authorizing $5 million and $5.17 million in loans from the U.S. Department of Agriculture for sanitary sewer improvements.

The city of Dowagiac has received final approval for low interest loans from the USDA for the purpose of making substantial improvements to the city’s sanitary sewer system based on needs identified a sewer system analysis provided through a Stormwater, Asset Management, and Wastewater Grant, which was completed by the city two years ago. According to the Michigan Department of Environment, Great Lakes, and Energy, the SAW program was established in 2013 to help municipalities develop, update, and improve asset management plans for their wastewater and stormwater systems.

If the grant application is approved, most communities use the funding to create asset management plans to help save money, better provide services, and to inform their ratepayers on the current and future needs of the systems.

The resolution is the latest in a series of moves aiming to address improvements for the city’s aging sewer system. In 2019, the council authorized a rate increase that will be used in tandem with the loans to fund improvements identified by the SAW Grant.

City Manager Kevin Anderson said the reason for two loan resolutions is that the USDA computer system only allows for loans under $10 million, so they need to break it into two loans.

According to Anderson, the two loans will cover manhole improvements, sewer line improvements and significant improvements at the wastewater treatment plant.

“We set out to do this two years ago,” Anderson said. “It took time to get the funding in place.”

The loan will be for 40 years at an interest rate of 1.5 percent. Design work has already begun, and construction is expected to begin during the summer of 2021 and continue for approximately 18 months. Anderson said for projects at an interest rate that is less than the current collateral protection insurance rate will provide good value to the sewer customers.
“There have never been lower interest rates,” Anderson said. “We hoped we could get some grants for this, but we don’t qualify because our rates are more reasonable than most. We’re going to see the maximum amount of projects we can do within our rate structure. We can get this done at less than the rate of inflation at today’s construction dollars. I think that it would be really good for ratepayers in the community to be able to do as much as we can at this time.”

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