Central Arkansas Water will get up to $22 million in loans for improvements at its two wastewater-treatment plants after approval Wednesday morning by the Arkansas Natural Resources Commission's board.
The two loans -- one for up to $17 million and one for up to $5 million -- were among about $29 million in loans and $236,900 in grants approved by the commission at its July meeting. Two other loans -- up to $1.6 million to Huttig (in Union County) for reducing water leakage by about 40 percent and up to $2.6 million to Stamps (in Lafayette County) to reduce water leakage in the town with no loan capacity -- are principal forgiveness loans, meaning the cities doesn't have to pay them back.
The $17 million loan to Central Arkansas Water will go toward rehabilitation at the Ozark Point water-treatment plant, while the $5 million loan will fund motor and electrical upgrades and building renovations at the Wilson water-treatment plant. The loan terms and annual interest rate have not been set. Loans from the commission are often sought by communities and utilities that anticipate a lower interest rate than what a bank would charge.
Commissioners did not discuss the loans at their meeting prior to voting on them. The loans already had been recommended by staff members.
Utility spokesman Doug Shackelford described the projects as "major upgrades" that had been planned for some time. While the utility's board unanimously voted in December to raise water rates in 2017 and 2018 for anticipated infrastructure projects, he said, the water-treatment projects were not specifically proposed in light of the rate increase.
"We're constantly looking to upgrade the system and the infrastructure," he said.
Customers' bills will change based on the amount of water they use in a month. For example, residential customers who use less than 3,300 cubic feet of water are currently charged $1.61 per 100 cubic feet. That will increase to $1.65 in 2017 and $1.71 in 2018. Commercial customers now pay $1.51 per 100 cubic feet but will pay $1.54 in 2017 and $1.60 in 2018. The base rate charged to all customers who use more than 300 cubic feet of water per month will rise from $5.85 to $6.85 in 2017 and $7.85 in 2018.
Across the country, replacing or fixing aging infrastructure that can crack or leak chemicals into drinking water is a multibillion-dollar undertaking that often requires rate increases for utility customers. Central Arkansas Water officials said last fall that they wanted to speed up pipe replacement by increasing spending on those projects from about $1.4 million annually to between $8 million and $10 million.
The Ozark Point project will allow the facility to eventually expand, Shackelford said. The loans approved Wednesday won't cover expansion, he said, but the work will make it possible to expand from a capacity of 24 million gallons per day to 33 million gallons per day.
The utility's only other treatment plant for Lake Maumelle and Lake Winona waters -- the Wilson plant -- has the capacity to treat 133 million gallons per day.
Ozark Point is located just a few side streets off Kavan-augh Boulevard in Little Rock's Hillcrest neighborhood and has operated for more than 100 years. But rather than replacing the facility, utility officials say its operation is advantageous because water is set up to flow in by gravity, meaning it doesn't have to be pumped in. That means lower overhead costs, even if the plant is small, Shackelford said.
Central Arkansas Water serves about 400,000 customers.
The commission's board also approved water-project loans of up to $2.5 million to Wooster in Faulkner County for expansion in the growing town, up to $525,000 to Huttig to reduce water leakage, up to $154,500 to purchase emergency power generators, up to $51,500 to St. Francis River Regional Water District in northeast Arkansas for replacements and repairs, and up to $5,150 to Boeuf-Tensas Regional Water District in southeast Arkansas for costs associated with a federal study being conducted.
The commission approved grants of up to $82,400 to Delaplaine in Greene County for bid overruns, up to $77,250 to Hosanna Heights Property Owners' Association in Fulton County for replacements and rehabilitation work, and up to $77,250 to Greenway for rehabilitation work.
Metro on 07/21/2016