Muskogee approves OWRB loan authorization as wastewater plant bids top earlier estimates

The Muskogee Municipal Authority and City Council on Oct. 27 authorized the authority to apply for a promissory note through the Oklahoma Water Resources Board and to execute financing documents to cover overruns on the city's wastewater treatment plant project.

City staff and their financial advisers told the council that the water-board program would let Muskogee participate in a larger December financing that should yield lower interest costs than bank borrowing, but only if the city submitted draft financials and a loan application immediately. Staff said they had submitted those materials over the weekend and asked council to approve the resolution so Muskogee could be included in the OWRB transaction.

The resolution read aloud at the meeting gave the authority a $37,170,000 ceiling but staff said they currently estimate needing about $33,700,000 for the construction account; the figure could be reduced if engineers identify scope items or alternates to remove before closing. The documents securing the transaction were described as being the same water, sewer and sales-tax revenues that secure the city's existing utility debt.

Council members pressed staff on why bids came back much higher than earlier estimates. Staff and consultants cited a mix of factors: sharp increases in construction materials, including concrete priced at roughly $370 per cubic yard; tariffs that affect equipment-line items; a thin vendor market that left only one responsive bidder (a Tulsa contractor, Crosswind); and a competitive contractor marketplace in which several expected bidders withdrew. The city said it conducted a pre-bid conference that drew six firms but that two larger firms declined to bid and a third pulled out at the last minute.

Sean, identified at the meeting as an engineer on the project, told council that staff had identified roughly $1 million of possible reductions in concrete admixtures and other nontechnical components but said that would not erase the bulk of the increase. Staff also said contingencies were being adjusted; the budget presented to council included a 5% contingency and staff said they had discussed lowering that to a more typical 5% from the higher contingency used in earlier estimates.

City and finance staff described the timeline for the OWRB financing: the water board will consider loans at its Nov. 18 meeting, and bonds would be marketed in late November with an expected bond sale around Dec. 3. Staff warned that missing the OWRB window would likely require rebidding the project, which could push the schedule past regulatory deadlines and risk higher prices and fines from the Oklahoma Department of Environmental Quality (ODEQ). The first consent-order milestone cited in staff remarks requires bids to be in by Dec. 1.

On repayment, advisers said the loan would increase debt service by about $1.9 million per year if fully funded; staff estimated that amount would equate to roughly $4 per month, per sewer account, as an upper-end estimate. They told council the water board did not require an immediate rate increase to approve the loan and that the council could consider rate changes later if it chose. Staff also said that, generally, OWRB loans cannot be prepaid for seven years.

Resident Ryan Lowe, who spoke during public comment, urged the council to pause and review the single-bid procurement, to demand greater transparency about the causes of cost escalation and to seek philanthropic support from local foundations before asking ratepayers to shoulder additional costs. Several council members and staff agreed to pursue foundation outreach.

Muskogee Municipal Authority moved to approve the financing resolution during the authority meeting and the motion passed by roll call. The city council later ratified related documents, including an agreement to engage bond counsel for the 2025 promissory note. Vote tallies for the core financing item in the authority meeting recorded seven in favor and two opposed; the council's ratifying resolution also passed with the same general vote pattern.

The council directed staff to continue identifying deducts or alternates that could reduce the loan amount before bonds are sold; council members also asked for clearer cost breakdowns and for follow-up briefings on how much the foundations could contribute before the Nov. 18 water-board meeting.

City officials said the OWRB participation is likely the most affordable financing option available and that rebidding risk and regulatory deadlines made the timeline urgent. The council approved the applications and authorizations needed to move forward with the financing process.