FAYETTEVILLE — The Arkansas Natural Resources Commission agreed to provide $4 million in loans to build a sewer line from the Valley View subdivision to Prairie Grove.
“It’s about 2.5 miles,” said Jerry Kopke, Arkansas state coordinator with Communities Unlimited, a nonprofit rural development organization that was appointed to oversee the sewage system. “We still have to secure the easements and bid out the project, then we’re looking at about 12 to 18 months construction period.”
Kopke said a rate increase will be needed to pay off the loans, but he’s not yet sure how much that will be.
Washington County Property Owners Improvement District No. 5 is the owner of the troubled community sewer system that provides service to about 500 customers in Valley View Estates, Walnut Grove Acres, and Meadow Sweet subdivisions in Farmington and Prairie Grove.
Complaints from residents about the sewer system started in 2011, according to the Arkansas Department of Environmental Quality’s website. Numerous state inspections found that untreated wastewater overflowed from the system’s aerator holding pond.
The system was placed in receivership in April in response to a lawsuit filed by Washington County, Farmington, Prairie Grove, Rausch Coleman Valley View and Valley View Estates Subdivision Property Owners Association. The lawsuit asked the court to appoint a receiver to take over the sewer system because of the “danger of harm to the health and safety of residents in the subdivision and the danger to the environment as a whole.”
The Natural Resources Commission voted Wednesday to loan the property owners association up to $3.6 million from the Arkansas Water, Waste Disposal and Pollution Abatement Facilities General Obligation Bonds, according to Mark Bennett, chief of the water development division at the commission. The loan is for 32 years at 4.25 percent interest. The money is set aside for projects such as Valley View.
A deferred loan of up to $1.03 million from the Arkansas Water, Sewer and Solid Waste fund also was approved Wednesday, according to Bennett. The loan is for 30 years with a repayment schedule of 25 years at 5 percent interest. There will be no interest or principle payments for five years.
“This is a step to go forward to get permanent financing to construct the line from the existing subdivision all the way to Prairie Grove,” Bennett said.
The new loans are in addition to a $1 million loan from the commission in November for engineering and design work, and to obtain easements to connect the area to Prairie Grove’s sewer system.
“I’m going to have to calculate the debt service,” Kopke said. “We’re going to have to start charging a flow charge to reflect our disposal fees to the city of Prairie Grove. We’ll get a monthly bill from them that will be basically charged on the flow that we send to Prairie Grove for treatment.”
Kopke said the initial charge will be about $6.22 per 1,000 gallons. The charge is currently $6.19 per 1,000 gallons.
Some of the money is paying to haul sewage to Prairie Grove’s plant until the pipe is laid. Sewage from houses served by the system goes into a holding pond, and from there it has been pumped and hauled by private companies.
Washington County Circuit Judge John Threet appointed Kopke and Communities Unlimited as the receiver last year. Threet signed an order Nov. 13 to allow the improvement district to enter into an agreement with the Resources Commission for loans.
Kopke said the property owners association may partner with Prairie Grove to provide sewer service along U.S. 62 between Farmington and Prairie Grove. Prairie Grove’s city limits extend well east of the Illinois River, but they have not been able to provide wastewater service to the area because they do not have lines extending that far east, limiting development potential. Prairie Grove would be responsible for any additional costs.
“It’s a long-term solution for a longtime problem,” Kopke said. “And, there was pent-up demand with development in the area.”
Earlier managers had signed connection agreements with developers before the real estate crash of 2008, but the homeowners association had no operating permit so there was a moratorium on any new construction in the area, Kopke said.
“Now we have a permit and our capacity is going to increase so we’re seeing a lot of interest for growth that will benefit not only the sewage system but will benefit the cities of Farmington and Prairie Grove,” Kopke said.