Council hears engineering, financial plans for wells, treatment and water‑line replacements

Junction City staff and outside advisers on Tuesday outlined a short list of water system projects the council should prioritize, including new wells, a possible water treatment plant to address iron and manganese and extensive distribution line replacement — and sketched how the work might be financed.

City engineer Rod Henry said the city’s near‑term water priority is completing two new wells and associated infrastructure. He described Raintree (and a related Overdale/“Alderdale” well search) and said finishing the Overdale/Raintree well effort is estimated at roughly $5.5 million; the city’s “first‑priority” water package (wells plus prioritized line replacements and an updated water master plan) was shown in staff materials at about $11.7 million. Henry said the city’s broader water capital improvement plan runs substantially higher — several tens of millions of dollars — and that a longer list of water‑line projects amounts to roughly $59 million in total planning estimates.

Henry and city staff said water quality complaints from some neighborhoods stem from iron and manganese in groundwater. A supplemental treatment plant at Raintree was discussed to remove those constituents before distribution; Henry said such a plant would allow the city to place additional wells on the system without degrading distribution water quality. He noted a grant opportunity for a treatment plant and warned that construction costs and regulatory requirements can change estimates.

Council then heard from Duncan Brown of PFM Financial Advisors, who summarized financing approaches: state loan programs (including the Clean Water and Safe Drinking Water State Revolving Funds), federal programs, commercial bank loans and the public bond market. Brown said each option has trade‑offs: state SRF programs can offer subsidized rates but generally fund specific projects, banks move faster but typically offer shorter terms, and publicly offered bonds require more upfront work but can be the most efficient route for larger bundled financing. He recommended the city consider a short bank loan for an isolated, near‑term well project while packaging larger needs (multiple water and wastewater projects) into a broader bond or state loan package.

Brown explained why cities borrow: to spread costs across current and future users, manage inflation and avoid placing all costs on prior ratepayers. He highlighted that some federal programs (for example, WIFIA) are not subsidized and can carry added requirements such as Buy America provisions, and that tax‑exempt bond treatment — which lowers investor rates — remains subject to federal policy.

Staff noted one grant tied specifically to the Raintree project has a use‑by deadline of roughly three years; city administrator Jason said staff do not want to return grant funds if they can reasonably be used. City staff and PFM agreed to coordinate the engineering cost estimates, the rate consultant and PFM to produce financing scenarios and rate‑impact modeling for council review.

Councilor Hancock and other council members emphasized the importance of seeing the engineer’s final priorities and cost breakdown before choosing financing. Henry and Brown both said the city should aim to combine projects where practical to reduce financing transaction costs but acknowledged state and federal programs may require project‑level loans.

Next steps: staff will coordinate PFM, the city engineer and the rate consultant to produce short‑ and medium‑term financing scenarios and return to the council in a March work session. No council votes were taken.