City approves sending ‘letter of interest’ to state for wastewater treatment plant funding

By Zach Hagadone
Reader Staff

Sandpoint City Hall moved the ball forward on the long-running effort to replace and rebuild the aged wastewater treatment plant, with approval at a Jan. 8 special meeting of a letter of interest to the Idaho Department of Environmental Quality seeking as much as $130 million in funding for the project.

The unanimous vote signified City Council’s direction for Sandpoint to submit the letter, which seeks dollars from the DEQ’s State Revolving Loan Fund. It describes a timeline that includes a revenue bond in 2025, design efforts throughout the year and extending into 2026, with construction beginning in 2027 through 2029.

“The majority of the city’s WWTP facilities are beyond their useful life and date back to being constructed prior to 1983,” the letter stated, though many components of the treatment plant date back even further, including to the 1940s and ’50s. 

“These facilities are frequently failing and temporary solutions are completed to keep the system functioning,” the letter continued. “The city struggles to find equipment replacement parts, which require specific fabricated solutions for interim fixes. The existing treatment infrastructure does not meet treatment capacity for existing conditions.”

Sandpoint Public Works Director Holly Ellis said Jan. 8 that the letter of interest — which is due to state officials by Friday, Jan. 10 — positions the city for different state funding streams, but nothing is guaranteed. In the meantime, she said the city will launch a series of informal, biweekly informational sessions for citizens at City Hall during the noon hour.

The WWTP preliminary site plan shared at the Jan. 8 Sandpoint City Council meeting. Courtesy image.

“One takeaway I heard from the last council meeting is we’ve really got to bring everybody up to speed,” Ellis said, adding that the city is also working on a dedicated page on its website to provide periodic updates on the project and background information, “So we can be fully transparent about what we’re working on.”

The approximately 15-page letter of interest includes details about why the project is needed, what the city is planning to do, the timeline and whether the current plant complies with regulatory standards. 

Sandpoint paid a penalty of $3,450 for violations of the National Pollutant Discharge Elimination System permit, according to an audit conducted on May 1, 2024, but otherwise — and despite its decrepit condition — the plant has a record that Sandpoint Mayor Jeremy Grimm described as “incredible.”

“And it’s maybe a bit unfortunate, right? One of the things that’s become abundantly clear is that our exceptional staff has done an amazing job running an obsolete plant at the end of its useful life very well,” Grimm said. “And we’ve done an incredible job maintaining compliance. But it ends up actually harming you in the application ranking process.”

Kyle Meschko, Coeur d’Alene-based project manager with consultant Keller Associates, which is managing the wastewater treatment plant rebuild, said he wouldn’t “sugar coat” the hurdles faced by the city in securing state funding.

According to Meschko, when Sandpoint submitted a previous letter of interest seeking $80 million for the project, it ended up being ranked 29th out of 73 applications, and three were funded totaling $63 million. The paucity of available funding is relative to the glut of monies that flowed from the American Rescue Plan Act during the COVID-19 pandemic. When those allocations ended, “I think that threw a lot of communities for a loop,” Meschko said.

He also noted that inflation has played a part in making funding scarcer in recent years, adding that funding demand to DEQ in 2018 was $265 million, while it rose to $963 million in 2023.

“It makes the competition for this funding extremely competitive,” he said.

But DEQ isn’t the only potential source of project support, as Meschko told the council that the U.S. Department of Agriculture’s Rural Development Loan program is also an option — about which he feels “more bullish” and through which he suspects Sandpoint has “higher odds of getting a project funded.”

However, neither the DEQ nor USDA funding sources can be executed until a revenue bond has been passed or it is judicially confirmed that the city has the authority to go into debt for the project.

The city has already completed a rate study with a scheduled rate structure to cover the debt for a $61.5 million loan, with a preferred 30-year repayment period. 

According to the letter, the current average user rate is $85 per month, but with the expected change in operations and maintenance cost upon completion of the project — including debt service — would increase by $25 per month.

Broken down further, the rate study indicates that the fixed charge for all user classes would be $1,281.58 for six-inch meters in fiscal year 2025, going up to $1,433.30 by FY’28.

Grimm suggested Jan. 8 that a bond election is more than likely to go before voters “next fall.” In the meantime, he added that the strategy for the city is to see how the letter of interest shakes out with DEQ while also assessing USDA Rural Development funding.

Meschko provided an update on the preliminary engineering report for the wastewater treatment plant, and emphasized that “nothing is set in stone” at this point.

“With this letter of interest … there’s no obligation, there’s no commitment; it’s really to get your name in the hat,” he said.