Sandpoint voters to consider $130M wastewater plant bond measure

Council approves language for Nov. 4 ballot

By Zach Hagadone
Reader Staff

Sandpoint voters will see a measure on their Nov. 4 election ballot asking whether they approve of the city bonding for up to $130 million to address the ailing wastewater treatment plant adjacent to Lakeview Park on the Pend Oreille River.

Members of the Sandpoint City Council voted unanimously Aug. 20 to approve the ballot language and adopt the ordinance that will allow City Hall to go to the voters in November, with the measure due to be filed Friday, Aug. 29 with the Bonner County Clerk’s Office.

According to the question that will be asked on the ballot, the $130 million would be put toward financing the design, acquisition and construction of a wide range of improvements to the aged plant, as well as pay for related expenses.

The anticipated interest rate would be 4.27% per year, with the total amount to be repaid over the 40-year life of the bonds estimated at $257,285,000 — including $130,000,000 in principal and $127,285,000 of interest. 

Public Works Director Holly Ellis told the council on Aug. 20 that the $130 million full-project bond contains 40% contingency.

“There’s 40% of unknowns. So the hope is that we go for grants and that we can also design and value engineer opportunities to get the price of this project down,” she said. “Those efforts have not started to date. We need to go to these grant agencies with a bond in hand so that they’ll consider our applications and we need to start the design and engineering effort in order to value engineer and find a lot more cost savings.”

Danielle Quaid, of bond counsel Hawley Troxell, reminded councilors that the bond measure is “just an empowerment to borrow the funds,” with no obligation to borrow the full amount. Rather, the city should be as aggressive as possible with seeking grants and low-interest loans to offset as much as possible of the project’s cost, therefore lessening the burden on ratepayers.

“Pretty much every stone is going to be turned over in an effort to make sure that we can do the best we can in finding that funding to keep this impact as low as possible to the constituents, because I think everyone in this room recognizes the overall cost of this is very impactful to everyone and it’s our duty to make sure that we are being advocates and doing our best diligence and finding the grants that we can,” said Kyle Meschko, Coeur d’Alene-based project manager with consultant Keller Associates, which is managing the wastewater treatment plant rebuild.

Councilors considered floating a “Phase 1” bond measure of $80.3 million as an alternative, which would have empowered the city to seek financing to that amount only to address the most critical aspects of the plant — many components of which date to the 1940s and were repurposed from the Farragut Naval Station when Sandpoint’s plan was constructed in the 1950s.

According to a survey conducted from late July to Aug. 14 and commissioned by the city from Boise-based communications firm Portman Square, 56.6% of respondents said they’d support the $80.3 million proposal — even knowing of a potential 60% rate increase— but only if the city committed to reducing the burden on ratepayers with other grants and loans. A further 22.7% were “not sure.”

The survey showed 36.88% answered the same way about the $130 million option — including up to 106% more in rates — with 29.5% stating they were “not sure.”

“We know that there will be voters for whom this is a non-starter regardless of what the city does to do cost sharing,” said Amy Holly, with Portman Square. “But we have a movable middle even with this $130 million full-freight bond. We’ve got 30% almost of voters who are unsure about their level of support and can be convinced through education and through conversation to support.”

Councilor Justin Dick said that based on the survey results, he had been in favor of the $80.3 million option. 

“But I think one of the things that we need to talk about is, ‘Why are we here, right?’ We’re here because we’ve kicked the can over and over and over and over again. We could be indebted up to 40 years either way with the $80 million or the $130 million,” he said, adding that if voters approved the Phase 1 measure they’d later be asked to approve a Phase 2 bond that would only lengthen the period of indebtedness and increase costs.

“The education piece is going to be everything for this, and understanding that this phased approach, albeit palatable, could cost us well more money than the $130 [million] that we may spend with this bond initiative here,” Dick said.

Councilor Pam Duquette said that while she had concerns about the price tag, “If we do not do the whole thing and something goes wrong in that time, we’re already spending that [much] more money, too,” she said. “I just think the outcome of that is totally unacceptable and hopefully a lot of people would realize that.”

Among the more worrying portions of the Portman Square survey results was that only 11% of the 927 responses — 671 of which were completed and 256 partial — felt that the city would be responsible with the money raised for the project.

“I think we’re in a situation where we go for the full $130 [million] and we look greedy. We go for the $80 [million] and then we have to go back. We look like, ‘Oh, government’s not capable.’ So it’s a tough call either way,” said Councilor Joel Aispuro.

“Eleven percent trust from the citizens — hey, we’re in North Idaho. That’s pretty good for me, 11%, so I’ll take that,” he said, adding that he preferred the $130 million option “with a strong emphasis on the education aspect … explaining the negatives if we don’t get it and the positives if we do.”

Holly, with Portman Square, said that given the community’s apparent low level of confidence in City Hall’s ability to responsibly manage the project, “I think that if and when this bond passes, continued community engagement, continued transparency around what the city is doing, funding options it’s pursuing are critical to helping rebuild some of this perceived lack or this lack of trust in in how the city is going to operate this.”

A number of outreach and education efforts are planned in the months leading up to the election, with a website and social media presence planned for early September, followed by a postcard mailer and utility bill insert in mid-September.

In late September, as absentee ballots are being mailed, the city anticipates the first of two open houses coinciding with presentations to various community groups. The second open house is planned as early voting begins in mid-October.

Council President Deb Ruehle, who has for years championed the wastewater treatment plant upgrade, said that it should be made clear to voters that a massive failure — or failures — at the facility would not only be environmentally disastrous, but threaten home equity.

“I appreciate the water quality approach, and ultimately it is a water quality approach, but I think that if we direct a little more of our education toward the pocketbook from the stance of, ‘You may no longer have home value,’ I believe the message may … give them a reality check of what we’re looking at,” she said.