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Bond issue’s principal amount for Madison Village project increased to $12 million – News-Herald

Madison Village will borrow more money than it originally intended to finance the cost of a sanitary sewer interconnection project.

Village Council recently approved an ordinance to increase the principal amount of a bond issue for the interconnection endeavor to $12 million from $11.3 million.

The village will issue that bond to be purchased by the Ohio Environmental Protection Agency’s Water Pollution Control Loan Fund program. By acquiring the bond for $12 million, the program essentially will loan that same amount to Madison for its sanitary sewer interconnect project.

The village will repay the loan over 45 years at zero percent interest through surcharges added to the water and sewer bills of the community’s residents.

While Village Council originally authorized an $11.3 million bond issue for the project, costs for interconnection have been driven up by inflation, said Village Administrator Dwayne Bailey. The amended ordinance approved by council on Nov. 1 states that additional borrowing is required to ensure that the undertaking is fully funded.

The sanitary sewer interconnection project will involve construction of a new trunk line to convey the village’s wastewater to Lake County’s sanitary sewer pump station, which is located near the 2700 block of Hubbard Road in Madison Township.

Lake County then will complete a companion project to either make improvements to that pump station or put in a new trunk line to direct the village’s sanitary sewage to the Lake County Utilities Department Wastewater Plant on Dock Road in Madison Township.

Village Council, at its Aug. 22 meeting, awarded a contract for the sanitary sewer interconnection project to Chivers Construction Co. of Fairview, Pennsylvania. Chivers submitted a bid of $7,413,554 as its price for performing the work.

Bailey said on Nov. 7 that crews from Chivers “are in town establishing material storage areas and will begin mobilizing equipment and personnel in the coming week.”

In a Nov. 2 interview, he also noted that when the village began researching this project “way back when,” the engineer’s estimate for basic construction of the sewer was $3.8 million.

“And we wound up at $7.4 million (in 2022),” he said. “So obviously, there’s been quite a bit of inflation.”

In addition, Bailey explained that the village’s pact with Chivers isn’t the sole expense for this project.

“The loan is not only for the construction of the interconnect, it’s for the design of the interconnect and also the capacity feeds we have to pay the county to join their system,” he said. “That’s where the total accounting comes from.”

For example, he said Madison Village will be paying the Lake County Utilities Department about $3.04 million for capacity feeds to join their system, a sum that is based on a per-gallon, per-day formula.

Engineering services for the project will cost $250,000. Beyond that, additional expenses include the actual design of the interconnect; a loan payoff for that design; and contingencies.

Combined, those items add up to about $11.76 million, he said.

Once the interconnection is completed and functioning, the village will stop accepting and treating wastewater, and decommission its wastewater treatment plant on Middle Ridge Road.

In addition, the village ultimately will transfer billing, operations and administration of sewer and water service in the community to the Lake County Utilities Department.

“(The $12 million loan) will be repaid through a surcharge,” Bailey said. “Right now, it looks like it’s going to be $18 per customer, per month.”

However, he said that even with the surcharge, the average village water and sewer customer still will see lower bills after the Lake County Utilities Department takes over.

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