Rehoboth moving forward on more wastewater improvements

Now that the ocean outfall is online, Rehoboth commissioners have turned their attention to other much-needed wastewater capital improvements.

During a meeting July 20, commissioners voted unanimously to take Sussex County up on its offer to fund approximately $5.7 million in improvements that include a switchgear and structural upgrades to the city's wastewater treatment plant. The county is financing the project, but the two governing bodies are splitting costs 50/50, which means the city will be on the hook for approximately $2.86 million.

There wasn't much discussion before the vote; this was the third time the item had been before the commissioners.

During a meeting June 4, Sussex County officials offered to fund these capital improvements for the city because it was doing similar electrical upgrades to its wastewater treatment facility in Bethany Beach, and working together would be financially beneficial to both. At the time, Hans Medlarz, Sussex County engineer, said the county was willing to fund the city's portion of the project through a 10-year loan with zero percent interest.

The city's other option was to continue to use state revolving loan funds. Prior to the building of the outfall, city voters approved a $52.5 million referendum. City officials secured that funding in the form of two revolving loan funds – one for $40.5 million with a 25-year payment term, and one for $12 million with a 20-year payment term. Each has a 2 percent interest rate. The city has spent approximately $42 million of those loans.

During a July 9 workshop, GHD, the city's third-party engineer, prepared a debt service analysis between using the county or federal funds.

According to the analysis, if the city were to go with federal funds, it would cost nearly $8 million in engineering, construction and interest costs over the life of the loan. The estimated annual payment for the city on the 20-year loan would have been roughly $199,000.

The same analysis showed partnering with the county would cost roughly $5.7 million total, with all three costs included. The majority of savings result from not paying prevailing wage as required with federal funding, and not paying interest. The estimated annual payment on the 10-year loan is about $286,000.

During the July 20 meeting, Mayor Paul Kuhns said this will save the city a little more than $1.1 million in the long run.

The county is paying for half the construction costs, because the county and the city have an agreement that the county is allowed to use between 42 percent and 50 percent of the city wastewater capacity.