Finance director outlines $207 million wastewater financing plan, says principal payments likely deferred until FY2029

At the Jan. 28 meeting of the Yarmouth Finance Committee, Finance Director Jennifer Mullen delivered a detailed update on the town's wastewater project financing, saying the town's authorization stands at $207 million and that early principal repayments are likely deferred until fiscal 2029.

Mullen said the town is borrowing through the Massachusetts Clean Water Trust on an Intended Use Plan, borrowing in $50 million increments. She described the invoicing workflow: CDM Smith invoices the town monthly (commonly $4 million to $6 million per invoice), the town pays contractors and forwards packages to the Department of Environmental Protection for review, then the Trust reimburses eligible costs. "Monthly invoices are between $4 to $6 million," Mullen said.

She explained the project receives principal forgiveness: 6.6% under the Trust as a Tier 2 community and additional forgiveness from the state's Water Protection Fund, historically applied as a 25% credit. The Trust prepares a debt schedule when the project reaches more than 50% completion and had required repayment of the first $50 million by 2027; Mullen said the Water Protection Fund was used to pay the first two years so the town "won't see a large principal payment until year three, FY2029." (Mullen's presentation noted the Trust would apply forgiveness before preparing the schedule.)

Mullen listed prefunding sources that reduce what the town must borrow: a $3.5 million MassWorks grant, short-term rental (STR) tax proceeds that feed a Wastewater Stabilization Fund, and District Increment Financing (DIF) tied to growth along Route 28. She said DIF receipts have been conservatively projected and that early DIF receipts were modest (first-year DIF receipts noted in the presentation were $74,790).

A key operational constraint, Mullen said, is that the Treatment Plant is being constructed to accommodate three phases totaling up to 2,000,000 gallons per day (gpd) but currently holds permits for only 390,000 gpd. That mismatch prevents the town from assessing betterments on properties until additional permits and connections allow the plant to accept the higher flows. Mullen said the town plans a roughly $35 million warrant article to permit discharge to Bayberry Hills; that local funding would require a debt exclusion under Proposition 2'5.

On contract status, Mullen said Contract-1 (the Treatment Plant) is holding within contingency, Contract-2 (collections) is over budget after the scope was expanded and prices rose, and Contract-6 had not yet been awarded and contains alternates the town must decide on. She added the town has about $6 million earmarked for paving that could be used for cash-flow needs if necessary.

Committee members pressed for specifics. Robert Harding asked whether the $130 million treatment-plant budget was guaranteed; Mullen said the $130 million figure was the budgeted amount and the awarded contract (excluding contingencies) was under $100 million. Harding also raised concern about risks to federal SRF support; Mullen said she had assurances from DEP and the Trust that the $207 million authorization remains intact. Alyssa Mullin asked whether 100% of DIF would be applied to wastewater; Mullen confirmed new growth DIF revenue would be used to fund wastewater per the district plan.

Mullen cautioned that some elements remain uncertain: Contract-2's added neighborhood and collection work increased costs, Contract-3 has open details that she could not discuss at the meeting, and permitting for additional discharge remains a gating issue for betterments revenue. The committee scheduled follow-up: Jeff Coby and his team are expected at the next meeting to address additional technical questions.

The committee did not take a vote on project financing at this session; the update provided the committee with cash-flow projections, contract statuses and the timeline for seeking a warrant article and potential local debt exclusion.