The City of Monett has received preliminary approval for an unexpected grant of up to $2 million for the city's water system improvement project.
Utilities Superintendent Pete Rauch said the state's Drinking Water Commission reviews water projects that apply to the State Revolving Fund (SRF) for low interest financing. Points are awarded to projects.
In the latest round of grants, Monett's $12 million project received enough points to earn the last slot for grants. The commission initially approved giving Monett $1.69 million to help the project.
According to Dean Willis, project engineer for Allgeier, Martin and Associates, federal grant money for capitalization is added to the grants awarded. It appears federal funds were withdrawn from another project, making more available for others. Monett is now eligible for the maximum $2 million grant.
"When we sent an application for participation in SRF, we submitted an engineering report, a facilities plan, a water plant design and construction, and improvements to the distribution system," Willis said. "I would think we can use the grant money for any of those things."
Willis said the Missouri Department of Natural Resources (DNR) approved Monett's plan. The SRF has different criteria and will question other project specifics. Willis anticipated comments from SRF would require more documentation from the city but should raise no big issues.
All of the city's $12 million bond issue for the water system project has been accepted by the SRF. Closing on the bonds should take place in another two months after additional paperwork is filed.
Rauch said one of the SRF representatives questioned the purification system picked for the water treatment plant. The method has already been approved by DNR for use in West Plains.
"Typically the state likes to have more than one manufacturer for a process funded by the SRF," Willis said. "The one we chose is a little unique and is only made by one manufacturer. When the case is presented to the SRF folks, we'll have to explain why we're going in this direction and that it's reasonable. They typically accept well-founded projects, and I expect that to be the case this time."
Willis is working on the city's engineering design now. If it receives favorable comments from DNR, he expects to finish the project as early as another month. Closing on the SRF loan typically follows DNR approval.
Once the arrangement is completed, the city will proceed with construction, send monthly bills to SRF and receive funds accordingly. Unlike other bond sales where the debt on the entire bond issue gets financing, the city will have no debts to cover beyond the money spent.
Payments will start after construction is completed. Interest rates will run around 2 percent, significantly lower than regular market rates.
"We're extremely pleased and surprised at not having applied for the grant money," Rauch said. "We had more things on our plate in the facilities plan than the $12 million would cover. This will enable us to make more improvements to the water system that will be a long-term help for everybody."