Officials outline $3.7M biosolids project and larger plant upgrade needs; bonding and ownership options debated

At an informational session, wastewater plant staff and legal counsel described a near-term $3.7 million project to reduce biosolids hauling costs and outlined longer-term treatment-plant upgrades that could total $15 million to $20 million within five to seven years.

Casey Rose, director of the wastewater plant, said the plant stopped selling composted biosolids after state regulators tightened requirements related to PFAS. ‘‘Because of the current concerns of PFAS, they decided that we are no longer allowed to compost our biosolids and sell it to the public,’’ Rose said. He told meeting participants that the change forced the plant to landfill all biosolids and raised annual disposal costs from about $40,000 to roughly $250,000.

To reduce hauling volume and long-term disposal costs, plant staff and engineer GEI have proposed replacing the existing belt press with a screw press and adding a dehydration step. Rose said the plant’s current solids ‘‘cake’’ is about 14–15% solids; a screw press would raise that to about 18–20%, and a dehydrator could raise solids to 70–90%. At 70% solids, Rose estimated the plant could reduce tonnage sent to the landfill by roughly 80%, saving on the order of $200,000 a year.

Project funding and authority to borrow remain open questions. Rose said the plant applied for State Revolving Fund (SRF) funds but was unsuccessful in the last two funding cycles. The plant cannot unilaterally issue municipal bonds under its current interlocal agreement, Rose said; the agreement expires in 2030 and would need to be extended to match any long-term financing term.

Kevin Kilby, attorney with McGraw Morris who prepared a legal analysis, reviewed the board’s statutory formation and financing limits. ‘‘The board shall not have the power to issue bonds whatsoever,’’ Kilby said, citing the language in the Act 7 interlocal arrangement. Kilby said municipal financing options remain possible — including a direct loan from a local financial institution secured by promised revenues — but collateral and tax-exempt status are key questions and require bond counsel and municipal-finance expertise.

Kilby said Act 233 (a commonly used Michigan public-works authority statute) could be a pathway to form an authority that would own the plant and issue negotiable or revenue bonds. Under that model, the plant’s assets would be transferred to the new authority; the authority could issue revenue bonds that would be repaid from user charges without the full faith and credit of the city or township, but the setup raises governance, employee, insurance and asset-disposition issues.

Participants discussed Negaunee’s existing customer contract. Kilby said Negaunee paid roughly $1.9 million when it joined the system (an $800,000 initial payment, about $1 million in June 2009, and a final $104,881.23). Negaunee’s maximum dry-weather flow entitlement in the contract is 1,160,000 gallons per day. The agreement automatically renews and will not terminate before USDA loan repayment; Kilby noted this could complicate any dissolution or change of the board.

County conduit bonding was discussed and appears unlikely: county officials have told board representatives they will not act as a conduit to issue bonds on the board’s behalf. That leaves options such as asking a municipality to bond on behalf of the plant, forming an authority under Act 233, or seeking a taxable or tax-exempt loan from a bank. Kilby highlighted that revenue bonds would require automatic rate adjustments or other protections for bondholders if revenue fell short.

Operational and regulatory risks were also detailed. Rose said the plant is roughly 40 years old; several system components are aged or undersized, including headworks, grit-handling equipment and a failing band screen. He said the plant has approached or exceeded design capacity on several treatment parameters — ammonia was cited at about 127% of design capacity — and EGLE (the state environmental agency) has added monitoring for sulfates and chlorides that may lead to numeric limits in the next permit cycle.

Plant staff and counsel described choices ahead: seek funding now for the pressing biosolids press-and-dryer project (estimated at $3.7 million), continue to pursue grants, consider whether to invite Negaunee to buy into ownership (Kilby presented a model buy-in estimate of $1,784,322 with $1,196,735 to the city and $587,587 to the township under an illustrative accounting), or pursue conversion to an authority to gain bonding powers. No decision was required at the meeting; staff requested direction and said they will schedule tours and follow-up sessions with elected officials and members of the public.

The meeting was informational and no formal action on bonding, transfer of assets, or authority creation occurred during the recorded session.