Jun. 12—The city of Meridian is looking to the state’s Drinking Water Systems Improvements Revolving Loan Fund to help fund improvements at the north freshwater treatment plant as the City Council is set to vote on approving the application for the loan in its next regular meeting.

In a work session Tuesday, Jason Gault of Kimley-Horn, an engineering firm that assists the city on water and sewer infrastructure projects, said the city is looking at the loan to fund the installation of two new freshwater wells at the north freshwater plant. The plant currently has three wells, he said, but they need work.

“All three are functional, but there’s some issues out there with several of them,” he said.

The council in May 2022 approved an emergency repair to the largest of the three wells after a pump mechanism failed. A separate emergency repair was done in January to one of the plant’s mixers that removed iron from the water, which had begun leaking several weeks prior.

The city currently operates a total of eight wells, with three at the north plant and five at the freshwater plant on B Street. The north plant supplies water to the majority of the city north of 20th Street, while the B Street plant provides water to areas south of 20th Street.

The Drinking Water Systems Improvements Revolving Loan Fund is a state program managed by the Mississippi Department of Health to help counties, cities and water associations fund projects needed to repair, expand or build new water systems within the state. The loans are usually capped at a maximum of $5 million, however exceptions can be made if the circumstances call for it, MSDH states on its website.

According to MSDH, the loans are currently offered at 1.95% interest with repayment not to exceed 20 years.

City Attorney Will Simmons said the city’s request is for the council to approve the application for the funding. Further information will be provided to the council before any final decisions are made, and more details about the loan itself, including the interest rate and repayment terms, will be passed on to council members when available.

“This is simply the application process,” he said. “It’s not the closing of a loan.”

Although the Revolving Loan Fund is a loan and not a grant, Simmons said there are several opportunities built into the program for the city to see debt relief.

Gault said he understood approximately $500,000 of the loan balance could be forgiven per project phase. The city’s project can be divided into three phases, he said, so that could be as much as $1.5 million of the debt erased.

The city is working to narrow down the details of the project and get its application in order to submit next month, Gault said. If all goes according to plan, the city will know if it received the funds sometime this fall.

Councilman George Thomas said the council will need to keep the application in mind as it begins to work toward developing a budget for the 2025 fiscal year. A decision on the city’s application won’t be received before the new budget year begins on Oct. 1, he said, and the council may need to find money to cover debt service payments if the project moves forward.

Without knowing the interest rate and repayment terms, Thomas said, it is also difficult to know if the city’s planned increases in water rates, a 9% increase each year through 2025, originally implemented to help pay for the sewer consent decree, will be enough to cover the bill.

Simmons said he recommends the council speak with a bond attorney during its budgeting process as multiple water and sewer infrastructure projects are about to get underway. The council will need to make sure all of the financials are in order so work can begin.

The council is expected to vote on the loan application at its next regular meeting, which will be held at 5 p.m. Tuesday, June 18.

Contact Thomas Howard at thoward@themeridianstar.com