Council approves outfall loan
By Ryan Mavity | Apr 21, 2015
DOVER — Rehoboth Beach officials will ask voters to approve borrowing $71 million to pay for the proposed ocean outfall and City Hall projects. While a referendum is expected to take place in June, opponents of the outfall say it is not a done deal yet.
The borrowing includes a total of $52.5 million for the ocean outfall and wastewater treatment plant upgrades and $18.5 million for a new City Hall. A resolution setting a public hearing will be voted on at 9 a.m., Monday, April 27. Following that, a public hearing on the referendum will be held Friday, May 15, 7 PM, with the vote expected Saturday, June 20 or Saturday, June 27.
When asked what would happen if the referendum fails, Mayor Sam Cooper said, “I don’t even want to think about that. If it were to fail, we’d have to analyze why it failed. But it’s clear we have to do something.”
Engineer Mert Muftugil of GHD said the outfall portion of the project would cost $31 million, while the treatment plant upgrades would cost $8 million. The city commissioners also agreed to spend an additional $12.5 million to upgrade the plant's biosolids treatment.
The city currently transports and injects its treated liquid sludge on a farm off Route 16 in Milton. However, Muftugil said the city would have to get a permit to expand its application area to continue with this practice. Commissioner Stan Mills also raised concern for the safety of drivers hauling the sludge to the application site.
By upgrading the biosolids treatment, Cooper said the city would decrease the operational costs in the long run, although short-term costs would be higher.
Muftugil said the addition of the biosolids treatment would also have an effect on user rates, increasing the annual rate to $701; Cooper said they could be slightly higher than that, but not out of line with surrounding towns.
On April 15, the state Water Infrastructure Advisory Council approved a $25 million loan to finance Rehoboth’s ocean outfall.
Cooper said the loan amount was based on estimates from 2009 and that the the funding request would likely be modified.
The council approved the 20-year loan at 2 percent interest. The amount of the loan was based on an earlier cost estimate of $35 million for the outfall and upgrades to the wastewater treatment plant. In 2013, the council approved a loan for $10 million to pay for treatment plant upgrades but the money cannot be accessed until voters approve the public referendum.
At the April 15 council meeting, Cooper said, “Obviously, this is another big step in the process. We’re not home free yet.”
The interest rate on the loan fell from 3.1 percent to 2.0 percent after Rehoboth officials agreed to participate in one of two state loan programs: Land Conservation Loan Sponsorship Program or the Water Quality Improvement Sponsorship Program. Those programs allow the city to borrow additional money for potential improvements to five stormwater outfalls that empty into the ocean, a condition of Delaware Department of Natural Resources and Environmental Control Secretary David Small’s approval of the city's environmental impact statement for the outfall.
Greg Pope of DNREC’s Financial Assistance Branch said the city must submit a notice of intent to borrow by Jan. 31, giving city officials time to decide how much additional loan money they may need to pay for the stormwater outfalls. If the city does not submit a notice of intent, it will waive its right to borrow the additional money. However, funding for a stormwater project is not part of the proposed referendum.
According to a project schedule presented by Pope, construction on the ocean outfall would not begin until January 2017. The city’s architects, GHD, have said construction should be scheduled exclusively during the nontourist season. Pope’s schedule showed the outfall being completed by May 2018.
The council unanimously approved the city’s request, with member Hans Medlarz calling it “a fantastic project.” The only questions from the council were on a resolution requiring the city and Sussex County agree on funding terms. Rehoboth treats wastewater from Dewey Beach, North Shores and Henlopen Acres, which are all on county sewer. County taxpayers have a 40 percent stake in the Rehoboth project.
The resolution was proposed by former County Administrator and current advisory council member Dave Baker, who said it would ensure the city and county were on the same page. Terry Deputy of DNREC’s Financial Assistance Branch said the resolution was not necessary because it was the city’s job to keep the county in the loop; Rehoboth would be on the hook for the entire loan if the county fails to go along. The council approved Baker’s resolution by a 5-2 vote, with Medlarz and Chairman Jeff Bross voting no.
Meanwhile, an appeal of Small's approval of the outfall project is still on track to be heard by the state's Environmental Appeals Board Thursday, June 23, in Dover.
Gregg Rosner, chairman of the chapter's water quality committee, met with members of the League of Women Voters April 17 to discuss the project. He said while the council has approved the loan, the outfall is far from a done deal with permitting still to be done.
The Surfrider appeal states Small used outdated and inaccurate information about the prospects of land application when making his decision. They say the city's environmental impact statement was more about supporting the city's chosen alternative of ocean outfall than truly exploring alternatives.
In addition, Rosner said, there was no transparency or accountability for taxpayers here in Sussex County to have any input into how their tax dollars are spent.
"There are a number of people that are user groups here in the bays and in the oceans that do not want to see an outfall funded by county money," Rosner said.
He said the Surfrider legal team in California has been preparing their case for the June 23 appeal.
"This is what Surfrider does. They fight these issues all the time all over the world. I love their appeal that they've done. I'm very optimistic at this point," Rosner said.