Loan’s impact on CU major
by By RICK NORTON Associate Editor
Jul 08, 2013 | 1445 views | 0 0 comments | 43 43 recommendations | email to a friend | print
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July’s wet kiss blown in the direction of a rain-weary and flood-prone Bradley County is pointing even further to the significance of a low-interest $10 million loan that Cleveland Utilities will put to good use rehabilitating its aging and much maligned wastewater system.

Compliments of the State Revolving Fund Loan program, CU is receiving the package in two sums. One totals $1.82 million for sewer system rehab, and includes $451,022 in “principal forgiveness,” meaning this portion of the loan will not have to be repaid.

In this part of the funding package, which is administered through the Tennessee Department of Environment & Conservation, $1.38 million is being loaned on a 20-year repayment term with a fixed interest rate of 1.15 percent.

The much bigger second chunk of SRF money includes $8.17 million for sewer system rehabilitation in the Wildwood Avenue and 9th Street drainage basin area. This part of the state loan package carries with it a 20-year repayment plan at the same fixed interest rate of 1.15 percent.

Announcement of the state loan to Cleveland Utilities came in late June. In a formal monthly session today of the Cleveland Board of Public Utilities, the governing body was expected to hear a report further detailing the TDEC loan package from Ken Webb, senior vice president and chief financial officer; Tom Wheeler, president and chief executive officer; and Craig T. Mullinax, vice president of the CU Water Division.

TDEC administers the state loan program in conjunction with the Tennessee Local Development Authority. The U.S. Environmental Protection Agency, which monitors and enforces the federal Clean Water Act, provides grants to fund the SRF program. The state of Tennessee provides a 20 percent match. Loan repayments are returned to the program and used to fund future SRF loans.

The state’s approval of the Cleveland Utilities loan application, which has been in the works for the past year, put the local utility in some good company for financial support of water and wastewater projects. Totaled, 11 Tennessee communities have been approved for $203 million in low-interest loans for an array of infrastructure improvement projects, according to the announcement made jointly by Tennessee Gov. Bill Haslam and TDEC Commissioner Bob Martineau.

Communities and utilities receiving wastewater loans that included different levels of principal forgiveness included Hamilton County, $4 million loan with $400,000 in forgiveness; Oak Ridge, $4 million with $400,000 in forgiveness; White House, $2 million with $400,000 in forgiveness; and Cleveland (CU), $1.82 million with $451,022 in forgiveness.

Communities and utilities getting drinking water loans are Big Creek Utility District (Grundy, Sequatchie and Marion counties), $2.42 million with $484,000 in forgiveness; Cumberland Utility District (Roane and Morgan counties), $2.5 million with $750,000 in forgiveness; Elizabethton, $650,000 with $195,000 in forgiveness; and Minor Hill Utility District (Giles County), $1.1 million with $220,000 in forgiveness.

Communities approved for traditional wastewater loans (no principal forgiveness) include Chattanooga, $33.1 million; Memphis, two loans of $22 million and $100 million; Morristown, $5 million; Oak Ridge, $14 million; and Cleveland (CU), $8.17 million.

Also, a traditional drinking water loan with no principal forgiveness was approved for the Cumberland Utility District totaling $3 million.

“I am pleased to see local governments using this important program to help address critical drinking water and wastewater needs, making infrastructure improvements that will benefit the health of these communities, and economic growth,” Haslam said.

The SRF program is considered a “community investment to help maintain environmental and public health,” according to Martineau. He pointed out the fund loans are repaid by communities and utility districts back into the SRF. This allows the program to remain solvent while serving as a source of funding for future projects in other Tennessee communities.

According to a TDEC media statement that announced this year’s SRF loans, “The funding order of projects is determined by the SRF Loan Program’s Priority Ranking Lists that rank potential projects according to the severity of their pollution and/or compliance problems or for the protection of public health.”

Two years ago Cleveland Utilities launched its comprehensive sewer rehabilitation program known as SCOPE 10, an acronym standing for Strategic Commitment to Protect the Environment. The systemwide initiative is expected to take at least 10 years to complete at a projected cost of about $30 million.

Wheeler and Webb believe the $10 million SRF loan should cover SCOPE 10 costs for the next three to four years.

The objective of SCOPE 10 is to drastically reduce the amount of inflow and infiltration (I/I) into cracked or damaged sewer lines. I/I contributes to manhole overflows and isolated flooding in some areas of the city. In some cases, residential sewer backup has been reported during periods of excessive rainfall.

Wheeler is especially excited about the SRL financial support because it will keep the door open for continued work on the sewer rehabilitation project through a technology known as Cured-in-Place Pipes. CIPP is being incorporated into the CU sewer system repairs by Insituform, a SCOPE 10 contractor.

With CIPP, Insituform workers are installing resin-enriched linings inside existing CU sewer pipes. The new lining is then steam-sealed which results in a new pipe within an existing sewer pipe. The resin-felt seals are tested using water flow monitoring in order to assure the rehab is performing to expected standards.

Not only is the CIPP technology less complicated, it is allowing major repairs to the existing sewer system without tearing up city streets.

“It’s a good process,” Wheeler said. “It renews the [existing] pipe from the inside. One of the huge benefits of doing it that way is we don’t dig up the streets. If we were doing this the old-fashioned way, we’d have the city of Cleveland in a mess with so many streets being dug up.”

Wheeler said the CIPP process addresses concerns from the Cleveland City Council about the number of streets being ripped up for utility repairs.

“When you consider the cost of digging up the streets and then repairing them, as well as the traffic disruption and the lost business (from impacted companies), it’s a cost-effective way to do this,” Wheeler said.

Wheeler called the SRF loan to Cleveland Utilities a “real shot in the arm for us” because it will keep SCOPE 10 alive and progressing. He described SCOPE 10 as a project that is “so important for Cleveland.”

News of the SRF loan approval was met with excitement among CU administrators, but Wheeler cautioned against excessive celebration.

“It’s time to go to work,” he said. “It’s too early to celebrate. We’re pleased we’ve gotten this funding, but we’ll be happier when the whole project is completed, and that we’ll be showing some significant results.”

More instances of isolated flooding along certain city streets caused by heavy rainfall over the wet Fourth of July holiday period again brought SCOPE 10 into the limelight.

Wheeler credited the foresight of utility board and Cleveland City Council members who earlier this year approved a 5 percent CU sewer rate increase that was required in order to keep the local public utility in line for the SRF funding package.