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Delray Beach to move forward on $280 million water treatment plant; commission gives consensus to begin procurement and financing steps
Summary
City consultants told the commission that EPA PFAS rules forced a redesign and cost increase to a new treatment plant that will replace the existing facility. Commissioners gave consensus to begin long‑lead procurements, advertise deep injection wells, pass reimbursement steps and begin multi‑year rate adjustments to fund bond financing.
The Delray Beach City Commission on March 11 signaled support for moving ahead with procurement and financing steps for a new water treatment plant after consultants said new federal PFAS rules made full replacement the only feasible option.
Consultants from CDM Smith and financial advisers from PFM and Willdan told commissioners that what began as a modification project in 2023 is now estimated at about $280 million and will require a staged bond financing program, long‑lead equipment purchases and two deep injection wells to handle concentrate from the process.
Why it matters: Officials said the project is needed to meet current and anticipated Environmental Protection Agency (EPA) requirements for contaminants of emerging concern and to maintain the city’s drinking‑water supply. The scale of the upgrade will change utility financing and customer rates for several years.
City staff and consultants said the change in scope followed EPA actions in early 2024 that tightened PFAS-related requirements. CDM Smith said reuse of the existing plant was no longer technically feasible, prompting a full replacement design. The consultants outlined an approximate construction split: about $226 million for the plant itself, roughly $33 million for two deep injection wells, and about $21 million in long‑lead equipment/pre‑purchases. They showed a current total project estimate near $280 million.
Public finance plan: PFM and Willdan presented a base‑case financing scenario calling for two bond issuances of roughly $140 million each timed to match the project’s expected cash flows and internal revenue requirements. The advisers recommended capitalizing interest through Oct. 1, 2027, so debt service would begin in fiscal 2028 and the utility’s debt‑service coverage ratios would meet market and covenant targets. The advisers used a conservative interest‑rate assumption of about 4.75% for modeling but said actual pricing would be set at market when the sales occur.
On rates: Willdan projected a staged multi‑year rate path to pay debt service and operating costs. For a typical 6,000‑gallon combined residential customer, staff showed an incremental increase of about $9.32 per month in the near term (that figure combined a previously adopted step and an additional proposed adjustment of roughly $6.23). Staff said the path was intended to smooth impacts over several years rather than require a single large increase.
Schedule and permits: Consultants said design work continues and construction is expected to begin later this year. They said the city must meet an EPA compliance milestone in April 2028 and that failure to complete the new plant by that date could expose the city to regulatory fines. CDM Smith said two new raw water wells and deep injection wells are required parts of the design.
Commission action: City staff asked the commission for consensus on four actions: (1) begin procurement of long‑lead equipment now, (2) advertise for construction of the deep injection wells, (3) adopt a reimbursement resolution so the city can spend reserves and later reimburse itself from bond proceeds, and (4) begin the multi‑year rate adjustment process needed to support the financing. Commissioners verbally offered consensus and directed staff to proceed; no roll‑call vote was recorded.
Next steps and oversight: Staff said the first bond issue would be timed to match the cash‑flow needs and IRS reimbursement rules and that the city will continue to pursue grants and subsidized loan options that could reduce borrowing needs. Consultants and staff said they would return with formal financing documents, details of the reimbursement resolution and the rate ordinance language for future public hearings.
What remains uncertain: The project estimate has increased several times during design, and staff said the city will continue to seek grant/SRF alternatives that could reduce the amount of debt. Exact bond pricing and the timing of any rate ordinance will depend on market conditions and future design updates.
Ending: Commission members thanked staff and the consultant team and recorded consensus to proceed with the procurement and financing steps so the city can meet the EPA schedule.
