VALPARAISO | To make sure the city has enough water for at least the next 20 years, the city's Utilities Board agreed Tuesday to drilling a test well on a site it hopes eventually will generate 3 to 4 million gallons of water a day.
The move is more significant with the announcement that Pratt Industries plans to build a paper recycling plant that will need up to 1.2 million gallons of water a day. The city currently produces about 7 million gallons a day with an average use of about 4.5 million gallons.
Utility Director Steve Poulos said the goal is to increase the capacity to at least 8.5 million gallons, but the new well field could boost that to almost 11 million gallons a day. The contract with Peerless Midwest for the test well and two monitoring wells is $57,240.
Peerless President and CEO James Williams said the company should be ready to drill in about two weeks. The 180-foot well will take about a week. Water samples will be taken for testing, which will take another two or three weeks.
If everything is satisfactory, a larger well will be drilled at the same site and run for three days to test capacity. If successful, the well would be prepared for use and the utility would begin phasing in of up to three additional wells.
Poulos said the well is the preliminary step to beginning the design for the expansion of the Flint Lake water treatment plant. The board expects to use a $12 million bond issue in the spring to finance the improvements needed for the expansion.
Rate increases for both sewer and water were discussed at Monday's council meeting to finance improvements needed to keep up with the aging infrastructure in addition to expanding the service to meet future needs.
The rate increases were estimated at 32 percent for sewer and 34 percent for water, but the utility also took action Tuesday that could reduce those increases by a percentage point or so.
John Julien, principal with the financial consulting firm H.J. Umbaugh and Associates, said the board can save about $45,000 a year on each of two old bond issues, one for each utility. A $4.9 million water bond issued in 2002 has a 5 percent interest rate, while an $8.5 million sewer bond issue is at 3.9 percent.
Julien said the board might be able to reduce those to around 2.5 percent for the remaining life of the bonds. Even when the $120,000 in bond issue costs are added to the refinanced amount, the total savings will be about $775,000.
That savings will benefit the board in two ways. It will reduce the amount the board has to hold in debt reserve by about $300,000, which will help pay for the expected $1 million in engineering costs for the expansion. It also will mean smaller rate increases.
The board agreed to authorize Julien to proceed with the understanding that, if favorable rates aren't available and the board decides not to proceed with the refinancing, it would not have to pay the refinancing fees.