Officials debate financial risk of sewer project

WESTERLY The towns potential financial risk was a chief concern Monday as the Public Works Committee reviewed a proposal to extend the towns sanitary sewer line to much of the Misquamicut area.

Committee member Howard Hyde asked whether the $24 million, 20-year bond proposed to fund the project would be a good investment. Other members of the committee asked whether the bond would have a negative effect on the towns bond rating.

The committee also discussed the towns risk in the event of a major hurricane or other catastrophic weather event, or if any of the businesses committed to helping pay for the project were unable to meet their financial obligations.

The committee, which serves in an advisory capacity to the Town Council, will eventually make a recommendation on the proposed project to the council.

Officials have proposed a two-phase project that would cost Misquamicut residents and business owners $19 million, with the town covering the remainder of the cost. The first phase would require bond financing of $9.3 million; the second phase would require $9.8 million in bond financing.

Town Manager Steven Hartford said the bond, to be issued by the state Clean Water Finance Agency, would be insured. The insurance would pay for the bond in the event that the town Sewer Department was in default and unable to meet bond payments, Hartford said.

Jack Armstrong, a committee member, said he was not convinced that the town would not ultimately be on the hook for paying off the bonds if property owners and businesses fail to meet their obligations.

Hartford said that the bond would be issued by the agency to the town but he said that in addition to insurance, the town would be protected by liens that would be placed on all of the properties affected by the project. While it is important to explore the towns risk, Hartford advised against basing public policy on worst case scenarios.

The project has to get done. The town, ultimately, has to figure out what to do with wastewater in Misquamicut whether its now or later, Hartford said.

Under the proposal, single family households would expect to contribute $1,227 annually for the project. Over 20 years the term of the bond the household cost would be $32,600. Examples of cost for commercial properties include the Breezeway, which would pay $17,795 annually and $355,899 over 20 years, and Marias, which would pay $23,062 annually and $461,241 for the term of the bond.

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Officials debate financial risk of sewer project