Fate of financing put into voters' hands

SEELEY LAKE – The Seeley Lake Sewer District Board of Directors voted at their Nov. 19 meeting to call for a bond election to be held Feb. 22, 2021 to finance the proposed wastewater treatment plant and Phase 1 of the collection system. In doing this the Board abandons the previously approved financing method.

The idea of a bond election was floated several months ago as a compromise to keep the project moving forward after voters elected two new directors. In their campaigns, Tom Morris and Jason Gilpin were very vocal that they wanted the community to have the opportunity to vote on the project before it moved forward, a stance also supported by a Director Beth Hutchinson who was already on the board.

Director Walt Hill opposed going to the bond election because there is no financially secure alternative funding available. If the bond election failed and the grants are lost, Hill said the entire cost could fall on Seeley Lake.

“As a community we’re draining an estimated 150,000 gallons of urine annually into our aquifer. As responsible citizens we have no right to pollute our pristine watershed,” said Hill.

Hill said that the primary reason to not have a sewer is the cost but he felt that there is no other system that could solve the pollution issue that would cost as little as the proposed system. He explained that under the present funding scenario the community would only be paying for 30 - 40% of the cost of construction.

The question was asked if the project could go to bid this winter under the current funding scenario due to the budget shortfall of $1,185,000 mentioned at last month’s meeting.

The District’s Bond Council Dan Semmens said he has been told numerous times that the budget gap needs to be filled before the project can go to bid.

The budget shortfall mainly came from two changes made to the project after the Letter of Conditions was issued including changing the force main route and Missoula County backing out of providing free construction engineering for the project. The cost overrun of legal fees last year was not part of the project’s budget.

District Manager Jean Curtiss explained that it is one of the conditions in the Letter of Conditions from the United States Department of Agriculture - Rural Development (RD), the projects primary funding agency. She said they have to be able to show they have the money to meet the project estimates before going to bid. Aside from asking RD for additional funding, there are no other funding options available to fill the gap.

Semmens said the proposed bonds, if approved through the election, would allow the District to go to bid because it would allow for approximately $1.2 million dollars in extra funding.

The money raised by the two bonds will be matched with approximately $10 million in grants already secured by the District to complete the estimated $17 million dollar project.

President Morris, Vice President Hutchinson and Directors Pat Goodover and Gilpin voted in favor of calling for a bond election while Hill opposed it.

The people qualified to vote on the bonds include any active registered voter residing within the Sewer District whether they are a landowner or a renter as well as sole landowners who live outside the District. Properties owned by multiple owners, a business entity such as a corporation or LLC or a family trust could also designate a voting agent.

Semmens noted that water and sewer district bond elections in Montana have a voter turnout requirement. For the bonds to pass they must have a majority of voters in favor of them with at least 40% turnout or must have 60% in favor if the turnout is between 30 and 40%. Less than 30% voter turnout and the election fails.

Semmens said he felt like the voter turnout requirement wouldn’t be an issue. Curtiss agreed saying that the last couple of Seeley Lake Sewer elections have been around 60% voter turnout.

Voters across the entire District will be voting on a General Obligation Bond in the amount of $4,942,000 to finance the construction of the wastewater treatment plant, lift stations and force main.

The General Obligation Bond is spread across all the properties in the District based on their market value as determined by the Montana Department of Revenue. A $100,000 property would pay an estimated $11.59 per month while a $200,000 property would pay $23.18 per month.

Voters in Phase 1 will also be voting on a Revenue Bond in the amount of $1,488,000 to finance their collection system. This includes the cost of abandoning existing systems and connecting properties to the sewer that have signed up by a yet to be set date.

The Revenue Bond would spread the cost equally across each of the properties in Phase 1 and is estimated to be $25 per month per lot.

Because Phase 1 properties would start out paying both bonds the amounts would be added together for their total cost of constructing the project. Initially properties in future phases would only pay the General Obligation Bond until their phase of the collection system is constructed. Then the cost of their collection system would be added in.

On top of the costs of constructing the sewer, properties that are connected to the system would also pay Operating and Maintenance (O&M) of the system. Currently O&M for Phase 1 is estimated to cost approximately $70 per month after the District and county provide $100,000 in subsidy and based on having 150 connected properties. Currently only about 50 properties have signed up.

To keep the O&M cost from climbing when subsidies run out in three years, the District is counting on future phases to start connecting. The more users connected, the lower the O&M per user.

A District resident questioned why the examples were only for properties with market values of $100,000 and $200,000. Many lakefront properties are valued in the $700,000 range.

Semmens said that it is standard ballot language to only give examples of the two lower amounts. Curtiss said a table showing more levels would be available on the District’s website ahead of the election. To calculate the amount for a $700,000 market valued property multiply the estimated rate for the $100,000 market value by seven. A $700,000 property would pay an estimated $81.13 per month for the construction of the treatment plant.

The District is planning on sending out a letter to landowners explaining the project and its financing in the coming months as well as updating its website will information to help voters make their decision. The election will be held Feb. 22 and will be mail-in.

The next regular Sewer District meeting is scheduled for Dec. 17 at 6 p.m. Check the District’s website https://seeleysewer.org/ for information on how to participate.