Westerly Council approves financing plan for roughly $85 million sewage plant upgrade

Westerly's Town Council voted to approve a financing plan for an estimated $85 million upgrade to the town's wastewater treatment plant, adopting a manager-proposed option that spreads costs between sewer users and the townwide tax base.

The council voted to authorize the resolution that bundles financing and interim sewer rate changes after public comment and more than two hours of technical and budget discussion. Councilor Chris Petri moved the measure; Councilor Ela Shalaba seconded it. The approved approach uses a 50/50 split of debt service between the sewer enterprise and the general tax base, an initial flat sewer fee for in-district residential units set at $400 (the manager said that would later rise in a second step), and a separate property-tax surcharge for out-of-district properties of 15 cents per $1,000 of assessed value that would be phased to 25 cents when the second tranche of borrowing is issued.

Why voters and residents heard urgency: the town is operating under a consent agreement with the Rhode Island Department of Environmental Management that requires more stringent effluent limits (staff described a nitrogen limit moving from 15 mg/L to roughly 5 mg/L and tightened ammonia limits). The engineering designs, updated to meet DEM requirements, are complete; bids for the construction contract were set to close in mid-February. The town has a firm deadline in the consent agreement to complete construction by early 2029.

The manager and finance staff emphasized why the estimate reached about $85 million: new treatment processes to meet lower effluent limits, flood-resiliency measures because key pump stations and buildings sit in a flood plain, market conditions that have driven construction costs up (contractor capacity, higher labor costs, heavy regional competition for materials), and design clarifications during final review. The design team and the town said earlier estimates were revised upward during design progression and that a small scope reduction brought the number down from a higher figure in some internal runs.

Public comment focused on scale and fairness. Former councilor John Gier, who has followed plant issues for years, told the council: “85 million a whole lot of money. Whole lot of money.” Citizens and several councilors urged the council to look for state or federal assistance and to shield low-income ratepayers where possible.

Financial trade-offs and safeguards: staff presented three illustrative scenarios in public materials. The approved scenario (the manager's "scenario 3") keeps a 50/50 split of debt service (enterprise and townwide), sets the initial flat in-district fee at $400 (with an illustrative later step to $450), and applies a 15-cent-per-$1,000 out-of-district property tax that rises to 25 cents when the second borrowing occurs. Staff provided examples to show scale: depending on timing and district status, the manager's packet showed $600,000 and $1.2 million house examples to illustrate the range of possible annual impacts; staff cautioned the public that final numbers depend on bid results and interest rates when bonds are sold.

Councilors debated other elements before approving the resolution. Several members urged using some of the town's fund balance to reduce borrowing costs; others warned rating agencies weigh reserves when setting municipal credit ratings and said drawing reserves now could raise the town's interest expense over time. Finance staff and the town's bond advisor recommended limiting debt to a 20-year structure rather than longer maturities because longer terms would increase total interest paid even if annual payments fall.

What comes next: the council's action authorized staff to proceed with the financing approach and to present related sewer-rate steps at the timetable required by the Infrastructure Bank and the DEM agreement. Staff said bids could come in above or below the $85 million projection once the formal procurement closes; the town will return to the council if numbers change materially. The town manager also said the second step of rate/tax increases would not occur until a second tranche of borrowing is needed, roughly when the project reaches the next funding phase.

The council recorded a formal vote on the bundled resolution and sewer-rate authorization during the meeting; the resolution passed and staff were directed to move forward with the financing schedule necessary to meet the DEM consent-decree timeline.

Why it matters: Westerly must upgrade treatment processes to meet state water-quality requirements; those upgrades will improve local water quality but carry a large price tag that will be distributed across users and the tax base. The council's decision balances technical compliance, near-term affordability and the town's credit profile. Residents and property owners should expect more detailed billing and outreach from the town finance office in the weeks ahead as the loan documents are finalized and the first rate steps are implemented.