Serving Gogebic, Iron and Ontonagon Counties
Serving Gogebic, Iron and Ontonagon Counties
By TOM LAVENTURE
Ironwood — The city of Ironwood is moving ahead with securing the best possible grants and low-interest loans possible for a water filtration system project, according to engineers at the city commission meeting Monday.
The commission unanimously approved a letter of intent that the city intends to move forward with closing financing for an estimated $9.7 million concrete, gravity filtered water treatment plant and pump station to better address manganese and iron water quality issues and discoloration in the city’s water system. The action followed information from the U.S. Department of Agriculture office of Rural Development that two grants totaling $3,192,000 and $1 million, along with a $5,439,000 Strategic Economic & Community Development funding loan at 1.25% interest, were approved for the city’s project financing package.
Jeff Sjoquist, a project engineer with Coleman Engineering, said there were two significant outcomes in the search for financing the project through USDA-RD. The first was that the Emergency Community Water Assistance grant provided the additional $1 million was the first time the Michigan USDA office applied for it on behalf of a community, and the second was the reduction of the loan interest rate from 2.75% to 1.25%.
“We believe that this is the maximum amount of grant the city could possibly get (through USDA-RD),” Sjoquist said. “This is an excellent offer and will result in lower user rates than a project with more loans than grants and higher interest rates.”
City Commissioner Kim Corcoran asked if the financing package would provide for all the project costs. She said construction costs tend to increase annually along with inflation and with the design and bid phase expected to last through 2021 then costs could increase significantly by the time construction starts in 2022.
Erickson said the project estimates account for anticipated increases and that contingencies are included in the project estimates.
The additional $1 million grant and lower loan interest rates also reduce the expected costs to the city from the initial estimates, he said.
Mayor Annette Burchell wanted to know if the project would impact the city water customer rates.
Sjoquist said that with the unanticipated grant increases from $3.3 million to $4.2 million would reduce the anticipated burden on the city by over 30%. This would mean approximately $1.50 less per customer but that it was not possible to make a precise estimate until the design and bidding phase is completed.
The design and engineering process will take several months, he said. The bids should go out next fall or winter and construction should start in 2022.
“In my mind this is the best deal you will ever get,” he said.
Erickson said the city commission resistance to approve a funding package early on has paid off with the maximum grant amount possible to reduce costs to the residents. This was a concerted effort over three years to bring a project to reality that was previously not considered financially possible due to the lack of grant eligibility.
