Water System Upgrades - 2024 updates

April 2024:  What's going on with the Water Bond Project? 

Completing the Water Bond Project is the City's most important priority!  The City has been working hard on trying to complete this project.  Previously, bids were submitted in Fall 2021, and in late spring 2022.  The last bid was $2.7M over the budget we had originally set.  From the latest steps to the oldest since that time, (not counting completed projects) these are steps the City has taken below.

1. April 2024 - The City has been informed that the engineer working on the bid package is closer than ever to finally finishing the bid documents for the water bond project.  The City has almost completed the current budget documents for 2024-2025, and was able to funnel more funding into capital outlay in the water fund.  This is due to being understaffed, but also because interest the city is earning on the funds in the states investment pools has increased $137,080 over the budgeted amounts.
2. March 2024 - The City, several Council Members, and others sent off requests to the Co-Chairs of the Ways and Means Committee, but unfortunately, we have been told by Staff members from Jami Cate's office, that as much as we tried, that Harrisburg's request for $1.8 million did not get funded at the last meeting of that committee.  We were told that many cities try for years to get funding on various projects.  Obviously, we are continuing forward with the process of getting the 3rd bid out to contractors, and will seek additional debt to get to fund this super important project! 
3. March 2024 - After hearing from staff that works for the Governor's office, we have confirmed that the money from the EPA has gone to the State Revolving Funds.  There are grants available, but only for cities that have problems with contamination, distribution or capacity.  Therefore, we are asking for one last push for the inclusion of the Harrisburg Water Bond Project $1.8 Capital Request in HB 5202.  Please see the message above, and send the information
4. February 2024 - Harrisburg is asking questions through the Governor's office about what kinds of new grants, or new loans might be available for providing a solution to fix the aesthetic quality of water, based on the billions of funds the state is receiving from the EPA.  Current information shows that the funds are being put into the States Drinking Water State Revolving Funds, and the Clean Water State Revolving Funds. As always, we would prefer a grant or other type of program that will provide funding without the City applying for more loans.
5. January 2024 -Submitted another Capital Project Request for $1.8M in funding, which will be put in front of the legislature by Representative Jami Cate during the short session.
6. December 2023 - Met with Representative Jami Cate in relation to the Water Bond Project; used the information provided to adjust the Capital Project Request to be considered more attractive. 
7. November 2023 - After finally getting an answer in relation to the BABA waiver, the City instructed our engineers to start the next bid packet.  It is now in the process of being re-engineered to meet 2024 requirements.
8. November 2023 - RST and Congressional offices determined between them that the process to obtain a waiver to the Build American, Buy American Act (BABA) was too challenging for the City in order to utilize the almost $1 million in parts we have already purchased for the water treatment plants.
9. November 2023 - Working with the Governors Regional Solution Team; we have an application ready to go to apply for a loan through the Oregon Special Public Works Fund for a low interest loan.  The City has an A+ credit rating, so we will be able to get a really good interest rate, which is set once a quarter.  The City was told we aren't eligible for a grant, because we have to demonstrate that we have a problem with distribution, capacity, or not meeting Oregon health code requirements.
10. October 2023 - Verified that Bond Counsel feels that we are still in an 'unusual circumstances period', and therefore we are not yet required to use the $5.3M in bond funds that are collecting interest in the State Investment Pool. 
11. September 2023 - Attended the Infrastructure Summit in Corvallis with RST members.
12. Spent 8 months going through the statutory process in order to utilize the $2.1 million available in the HRA Fund.
13. Met with Congressional office staff, and the Statewide Regional Solutions Team. (RST).
14. Met with Senator Cedric Hayden and Representative Jami Cate (twice). 
15. Submitted Capital Funding Requests to the Legislature for the 2023 legislative session. (Two other requests for the 4th St./Rail Improvement Project, and the Eagle Park Development were also submitted.)

Following the Infrastructure Summit in September, Staff spoke with RST Staff and BIZOregon staff members who finally determined that the best option for the City would be to take on additional debt to bridge the funding gap. Because the City is fixing the aesthetic quality of the water system, and doesn’t have distribution, capacity or health problems with it, grants are generally not going to apply to us. Therefore, one of the cheapest options for the City is to obtain a low-cost loan from the Special Public Works Fund (SPFW).  These loans are available through the BizOregon network and are funded by bond dollars issued by the State of Oregon on an annual basis. 

The current interest rate for a SPWF loan was just lowered from 4.10% to 3.71% for a 30-year term, and 3.38% for a 20-year term for tax exempt projects.  Fees change on a quarterly basis.   Rates are checked monthly, so if the City applies for this funding, and the rate goes down, then the City would receive the advantage of the lower rate.  If they go up, we would still receive the quarterly rate.  The interest rate on a project is actually determined at the time the project is in underwriting, rather than when the application is received.  Once the project is slated for the bond bank, they generally issue a lower ‘interim’ interest rate during construction.  When the bonds are sold, the permanent loan rate would be set.  We have ten years in which to pay off the loan, or refinance it, and then the permanent loan would kick in. There is a bond issuance fee that would be disclosed during the loan approval process.  Our A+ rating will help keep our interest rates and fees lower than what some cities experience.

We have also explored obtaining our own municipal bonds through D.A. Davison, who financed the water bond project for us.  We can also obtain more funds through the HRA, as we haven’t yet met our maximum indebtedness ceiling.  Staff would prefer to keep this option open, as we would prefer to use these funds for the remaining projects in the HRA plan, as well as having them available for Economic Development. 

Our Finance Officer has worked through the budget numbers as though we had to obtain a low interest loan, and we are pleased to tell you that we can currently afford the debt payments on a loan, such as one through the SPFW, and will only need to increase the rates by 3% for the next fiscal year.  (This includes the projections for both revenue and expenditures in the 2024/2025 fiscal year.)

Unfortunately, the engineer who originally put together the bid documents is no longer employed, and as such, the City now has a different engineer who must now review those documents in their entirety in order to sanction/stamp them. The bid documents will hopefully be sent out sometime this spring.  Once the bid is received, we can decide how we will proceed on funding the remaining budget gap. 

Staff will continue to research, and work to find funding without needing to go into debt, whether that is through a grant, or if reworking our capital request should get approved during the short session this early spring.  Representative Jami Cate, who met with us in October is still very enthused by our shovel ready project, and has advised us on how to modify the current request so that it is likely more attractive to other legislators.  We will be submitting this prior to the start of the short session.

If you have questions about the project, please contact Michele at City Hall, 541-995-2200, or contact her via email at meldridge@ci.harrisburg.or.us.  You can also talk to any City Council member, who can keep you informed, or come to any City Council meeting to ask about the steps the City is taking.  Meetings are held on the 2nd & 4th Tuesdays of each month, with the exception of July, November, and December.

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October 2023 Message:   Citizens can read through the steps below of what steps the City is taking to improve the water.  As most people are aware, the increased price of stainless steel, PVC, and electronics has increased the original costs of the water bond project by an estimated $4.5 million dollars.  During the time of COVID, the Build America, Buy America Act also passed, which affected the almost $1,000,000 in parts we already had in stock, waiting for construction to start.  These parts are not usable now, if the City has access to federal funding, because of the BABA Act, unless the City pursues a waiver.

We applied for a $4.5 million dollar capital project request through the Oregon Legislature.  Unfortunately, the City did not get funded.  Because we don't have a problem with health issues, capacity, or our delivery system, we didn't qualify for other grant assistance programs. We then turned to our federal legislators, asking for funding.  The City also engaged the Governor's Regional Solutions Team asking for assistance.  They suggested that the City pursue a waiver to be allowed to use the parts we already had in stock.  Unfortunately, after reviewing the waiver requirements, the City was told that it would be better to pursue state funding options instead, as they would not be affected by the federal BABA Act. 

Therefore, we have sent the project back to the City Engineers, who are now working on dividing the bond project into two sections.  One bid will be for the water reservoirs, and the other will be for the filtration plants.  (This gives the City the opportunity to possibly apply for a different type of federal funding.) The City currently has $5.3million in the bank, collecting interest, and also has almost $2 million that was freed and is now available for use through the Harrisburg Redevelopment Agency.  With the total cost for the two water reservoir systems, and two water filtration plants now estimated to be $9.8 million, that brings us to $7.3 million in hand, and almost $2.5 million dollars that the City will need to fund.  After attending a recent infrastructure conference put on by the BizOregon team, the City is seriously considering a Special Public Works Fund loan through the State of Oregon, at an extremely low interest rate as a serious option.  Our citizens deserve a better aesthetic quality of water to drink, and the City has been working steadily to finding a solution that will get us to a point that we can start construction on the biggest items that still need to be completed. 

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Citizens and Staff are all looking forward to getting better water! Were you wondering why you haven't seen any significant construction other than water line replacement, and what the City has accomplished thus far? If so, please read on for more information.  We've left a lot of the original information below for you as well, so that you can see what the original proposals were, and what the City is still planning on doing.  Here is what the City has accomplished thus far:

(1) Over 9,450 linear feet of water line has been replaced throughout town, including replacement of some of the oldest water lines in town. 

(2) It took about 6 months for Linn County to approve our conditional use permit for Well No. 9, plus the water storage tank and filtration plant on city property north of the city limits (It's outside city limits).  The new well will replace Well No. 5.  (The biggest producing well with the highest sediment and minerals like iron and manganese.) The water rights the City has were also changed.

(3)The City has spent close to $1,000,000 through state and federal purchasing programs (mostly through SourceWell) for the parts, equipment, and electronics required for the filtration plants.

(4) It’s taken 2 years worth of design and engineering from 3 different specialty engineering firms, to create the bid packets for two new filtration plants, and two new storage tanks.  We were also required to update the water master plan, which was a planned part of the entire process. Because of state public contracting laws, we are required to go out to bid on these projects.  The first bid in early fall 2021 was almost $1.7 million over budget, even though the budget was based on similar projects in other Oregon cities that had finished only in the last 3 months prior to our bid.  Most of the cost overrun was due to the prices on steel, PVC, and electronics.  If the City had accepted that bid, we would have been responsible for paying the difference between what was bid, and what prices were starting to increase to.  The City Council determined reluctantly that it was better to wait to see if prices would come down.

(5) In April 2022, the second bid was advertised. The five companies who returned bids were $2,662,500 over the estimate.  Again, the cost overrun was due to the high costs of steel, PVC, and electronics.  The high costs of fuel and  inflation are both still an issue; and let’s not forget supply shortages.  Again, City Council made an agonizing decision to delay the project for the time being, while we pursue other ways to fund the gap.  

(6) City Staff are now looking at ways to try to bridge the cost differences.  That includes grants, although most infrastructure grants are for multi-million dollar projects.  We are considering the possibilities of going out for another loan, although that’s an idea at the bottom of the list.  We’ve also purposely saved about $400,000 of the American Rescue Program Act funds to apply to the funding gap, if grant funds can’t be applied.  Those funds must be used by 2024.  Another idea is to use the money in the Harrisburg Redevelopment Agency, which ironically, consists of funds left over from other public projects inside HRA boundaries.  That process cost about $38,000, and took 6 months to complete, due to state statutes. 

2023 News

The City Council approved Substantial Amendment No. 6 on March 14, 2023.  If nobody opposes this step over the next month, then as of April 14, 2023, the City will be able to utilize the funds in the Urban Renewal Program (HRA), for the next time we go out to bid on the Water Bond Project. 

When planning a water bond project, we knew that lots of things could change in the future.  But nobody was prepared for a world-wide pandemic that stopped all progress and caused a recession with an inflation factor that is now higher than it’s been in the last 40 years.  Ultimately, we are doing everything we can to deliver on providing a better aesthetic quality of Harrisburg water, while still being good stewards of the use of the tax dollars that come from the hard working citizens of Harrisburg.  Please keep your fingers and toes crossed, that prices will come down in the future, and that we can find a way to finish this project for lower costs than what we are currently seeing.  

When is the City planning on going out for bid No. 3?

We are waiting until an auspicious time where construction and material prices are being lowered, and when supply shortages aren't as prevailing as they are now. 

Some citizens have asked us what happens if prices don't come down?  The city has some options available, which is part of what we are doing with planning Substantial Amendment No. 6, of the Harrisburg Redevelopment Agency.  Other options include phasing the project even more, as well as going into more debt.  We'd prefer to complete this project the way it was planned, otherwise, that means a longer period of time before the taxpayers get to have a better aesthetic quality water product.  

I've heard that the City was going to just drop the whole project, and not do anything more.  Is that true?   No, absolutely not!  We told the tax payers what we were doing to try to fix the aesthetic quality of the water, and that's important to everyone.  At worst, it may take longer to get there, but there is no intention of stopping the process. 

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The City Council of the City of Harrisburg has been working hard to find a way to fix the aesthetic quality of the City's water system over the last few years.  Following an intensive study of the actual water in 2016, the Council took a referral ballot measure to the public, which passed in November, 2017.  This approved the issuance of bonds in the amount of $7,500,000 which will fund the following improvements:

1.  The construction of two new water reservoirs

2.  The construction of two water filtration systems

3.  The removal of Well No. 5, and construction of a new City well

4.  The replacement of approximately 3.5 miles of main waterlines

Significant progress has already been made in terms of engineering and design work for the improvements, including preparation of a new water system master plan. The next steps will be to have the water system master plan approved by the State of Oregon, and to complete the financing for the improvement project.

A current schedule/summary for the entire project, milestones and completed projects are as follows:

• Summer 2019 - Begin survey and design of phases 1-2 of the waterline replacements Complete
• Fall 2019 - Begin design of the water treatment facilities and storage tanks Complete
• October 2019 - New Water Master Plan complete and approved by the State of Oregon - DHS

Waterline Distribution Projects - Construction begins

• Spring 2020 - Construction begins of downtown Waterline replacement, storm system upgrades and street improvements and beautification of Macy 3rd to 2nd street. 2nd street from Macy to Smith street and then Smith Street from 3rd to 1st . Completed
  • September 2020 -Waterline Mainline Replacement and street improvements on 5th Street Completed
  • September 2020 - Waterline replacement, storm system upgrades and street reconstruction of LaSalle street from 6th street to 9th street begins. Completed
  • October 2020 - Begin main waterline replacement on Eagles Way & 8th Place.  Scheduled Completion by the end of 2020 - Completed
  • December 2020 - Begin main waterline replacement on 6th street from Territorial street to Dempsey street. Scheduled completion by the end of March 2021. Completed
  • Summer 2021- Bid waterline replacement on Diamond Hill road from 7th Street to 9th street. Estimated completion, winter of 2021. Completed

Water Treatment & Storage Systems

• Spring 2022 - Bid and award for construction of water treatment and Water Tanks (Bids were completed, the decision to award the bid was DELAYED)
• Late Fall 2023 - Treatment/storage systems completed and brought online (DELAYED, based upon when the City has the additional funding needed to complete these projects)

Water Distribution - Future Phases

• 2020 - 2021 - Bid and award water distribution phase 2 Complete
• 2022 - 2023 - Bid and award water distribution phase 3 (DELAYED)

Summer 2024 - Project Final Completion. (DELAYED)  

2024:  [Please Note:  After the 3rd bid for the water distribution phase 3 is completed, and the City awards the bid, it will take about two years of construction before the water storage and water filtration systems are ready to go live.]