The new board of the Clancy Water and Sewer District—comprised entirely of former board members—was sworn in at the board’s meeting on June 22. It then began plotting a path forward for possible grant funding through the American Rescue Plan Act.
Lori Gilliland, the former board secretary who resigned in November 2020, will chair the board. Bob Johnson will serve as vice-chair and Bill Hammer as secretary and treasurer. Johnson resigned in December 2020 and Hammer resigned in January 2020. The Jefferson County Commission reappointed all three on June 8 after sole remaining member and former board Chairman David Leitheiser resigned on May 22.
At the meeting, the board and community members were laser-focused on the upcoming July 15 deadline to apply for ARPA grants that could allow the district to pursue a centralized well system at a reduced cost to users. In a survey earlier this year, many of the district's residents opposed the project due to water rates that had been estimated by Leitheiser to be $111 per month plus water usage. That estimate was based on a 2018 preliminary engineering report.
Collette Anderson, a project engineer and architect with Great West Engineering, said the grant application takes into consideration the public health need for a central water system. Anderson believed that the district would get the maximum score on the grant application for public health and safety.
The application reflects concerns about elevated nitrate and uranium levels in wells tested within the district. Nitrates, according to a 2018 Treasure State Endowment Program grant application, can cause methemoglobinemia, or blue baby syndrome, in infants, which can be fatal. Uranium, according to the same application, "can cause kidney damage and has been linked to cancer."
Anderson presented four project and grant-application scenarios to the board. Two scenarios would address only the nitrates and would cost $4.7 million, but the scenarios differed in the water rates that would be charged to users to fund grant match monies. The other two scenarios would address both nitrates and uranium, and would cost $7.7 million, and also differed in the water rates that would be charged to users to fund grant match monies.
The original 2018 TSEP grant of $750,000 required that the monthly rate for system users be 150 percent of the district's target rate. The target rate, Anderson said, is what "the Department of Commerce calculates that your users in your district should be paying to demonstrate they are paying their fair share. It is based on a percentage of your median household income"
The target rate was $57 per month and the grant-mandated 150 percent rate was $85 per month. If users rates—which fund match money for the grant—are less than 150 percent of the target rate, then the district can access only a portion of the $750,000 grant.
Anderson explained that the cost estimate to address only nitrates rose from $3.1 million to $4.7 million, due to "One, delays—more inflation down the road if things are taking longer than originally anticipated. Two, the bidding environment—there is a big shortage of materials. There is difficultly in getting pipe on projects ... and on top of that, with all this influx of money into infrastructure throughout our state, contractors are going to be limited, which, when that happens, things get more expensive because it isn’t as competitive a bidding environment."
In the low-rate scenario to address only nitrates:
- Users would pay $85 per month for water and sewer—150 percent of the district's target rate.
- The entirety of the $750,000 TSEP grant could be used.
- The board would ask Jefferson County for $500,000 of the $891,913 in Montana ARPA funds the county received via state HB 632, which disbursed funds specifically for water and sewer projects.
- The district would request an ARPA Competitive Grant for $2.25 million.
- Remaining project costs would be funded through a state loan.
In the high-rate scenario to address only nitrates:
- Users would pay $57 per month for water and sewer—100 percent of the district's target rate.
- The district could only use $500,000 of the TSEP grant, because rates were not raised to $85.
- The district's request from Jefferson County's HB 632 funds would remain at $500,000.
- The district would request an ARPA Competitive Grant for $2.9 million.
- Remaining project costs would be funded through a state loan.
"That does also assume the county is willing or able to give you $500,000," Anderson reminded the board. She also said that the less money the district offered as a match for the ARPA grant—the lower the monthly user rate—then the less competitive the grant application will be. Anderson wrote an informal informational letter to the County Commission regarding the funding. Additionally, the Clancy board will send a formal request letter to the commission asking for the $500,000 in HB 632 funding.
County Commissioner Cory Kirsch told the board at the meeting that "I’m going to have to get with the commissioners to get a commitment on what we can do."
"One of the pros of the [high-rate] scenario is that you are providing a more than one-to-one match, so you will have a more competitive application ... in [the low-rate scenario], you only match about 66 percent of the ARPA funding, so you are going to be ranked lower on that criteria," Anderson said. "There are a lot of people applying for this money so it is going to be competitive."
Mitigating both nitrates and uranium was estimated to cost $7.7 million. The two funding scenarios proposed for full mitigation also differed on water rates: One scenario relied on an $85-per-month rate that would make the grant application more competitive; the other scenario would have users paying $57 per month, but would reduce the district's ability to raise matching funds, making its grant application less competitive.
Bob Mark, a Clancy resident and previous Clancy Water and Sewer District board member, supported funding full mitigation of nitrates and uranium, due to concern over public debt if the second phase of the project—the uranium mitigation—had to be funded after the ARPA grant period had ended.
"We stand a better chance if we go with [high-rate full mitigation], as far as the numbers go, but as far as what the affordability is for our community—realistically—that $30-a-month difference is huge for a lot of people on fixed incomes. I say we gamble on [low-rate full mitigation]," Johnson said.
Ultimately, the board decided to move forward with grant application scenario four: tackling both nitrates and uranium with a lower monthly user rate of $57 funding less match money and a less competitive grant application.
The board also discussed applying for a grant to move forward with a wastewater system.
A public wastewater system was discussed in 2012 because much of the nitrate contamination has been linked to failing septic systems within the district. The project stalled because of residents' concerns about the cost.
"The hard part with the sewer project," Anderson said, "is a very short window of time and there is no plan in place. We have an old [preliminary engineering report] that needs some pretty good updating, and we would essentially just be closing our eyes and throwing a dart at a board and hoping that we estimate a number as close to what we needed. Also, there is no match money out there."
Kirsch suggested using the possible $500,000 from the county as match money for both ARPA grant proposals—drinking water and wastewater.
"Obviously if you got funded for both of them, you’d have to pick one ... my thought is the wastewater is more useful in this setting," he said, "and you could echo that to the people that look at these [grant applications] that it will probably cost them more money but will be more beneficial to the community."
"The worst they could say is no," Anderson said. "The level of effort on our end, I couldn’t do a whole [engineering report], but I would have to do a technical memo and a cost estimate. That’s probably a $10,000 effort ... if the district wants to throw an application at wastewater, I shouldn’t discourage you, but [I'm] just recognizing some of the challenges."
"I think a $10,000 estimate to put that application in is worth a try," Johnson said, echoing Anderson’s earlier statement: "The worst they could do is say no."
The board approved applying for a wastewater system grant.
Gov. Greg Gianforte is expected to sign and award all HB 632 grants by December.