Donald council favors interfund loan to fund water service line replacements

On Oct. 6, 2025, the Donald City Council discussed options to finance replacement of private water service lines and reached consensus to pursue an interfund loan, City Manager Eric Underwood told the council. Underwood presented maps identifying priority areas and said some of the replacement work could be completed by the city’s Public Works Department during the current fiscal year.

Underwood outlined four financing scenarios: an interfund loan, federal funds through Business Oregon, a special public works loan fund, or a loan from a water/wastewater fund. He said an interfund loan would be the easiest, cleanest and fastest option and that, after a water rate study scheduled to begin next spring, the cost of the loan would be passed on to customers through water rates over 10 years. He noted that federal or state loans would typically spread payments over 30 years and carry extra administrative costs, including requirements to put the project out to bid, pay prevailing wages and have wage monitoring, which would increase the overall project expense.

Council members asked how the different loan terms would affect customer rates; Underwood said the comparison depends on the final project cost but that a 30-year loan would spread payments longer while the interfund loan would require higher annual payments over a shorter period. The council noted the city has 458 water rate accounts that would share the cost. Council President Jan Olsen and other members signaled support for moving forward with the interfund loan option. The session did not record a formal vote authorizing borrowing; staff were directed to proceed with planning under the chosen approach and to incorporate the financing into the upcoming rate study.