By RAELYNN RICARTE
News staff writer

The City of Hood River could soon receive a $10 million federal grant to defray some of the expenses involved in replacing an aging water main.

Bob Francis, city manager, said U.S. Department of Agriculture officials have assured him that the grant is forthcoming. The economic stimulus funding will be tied to a $13.1 million low-interest loan to complete the infrastructure improvements.

“It’s an outstanding grant. Basically, we were shovel-ready when a lot of people weren’t and we’re reaping the benefits,” said Francis.

Mayor Arthur Babitz said city residents should plan on a 5 percent increase in their overall utility bill to pay off the debt. The rate adjustment is planned for Oct. 1, shortly after the first phase of construction begins.

“We really have no choice but to do this project. The water line is 80 years old and it’s not going to get better by itself,” said Babitz.

Francis said that even if money from the American Recovery and Reinvestment Act doesn’t come through, the city will proceed later this summer with the first phase of work in the Dee area.

The utility bill increase will then be used to pay off a $5 million USDA loan that was authorized several years ago. The municipal government also plans to invest $1 million of its own capital into the project.

In the best-case scenario, said Francis, the construction would all be accomplished at the same time. That way, he said the city would save about $750,000 in mobilization expenses. In addition, he said costly complications could be avoided from connecting old and new pipes.

This fall the monthly base water rate for a family home will rise from $23.81 to $27.38. Babitz said the city is controlling expenses to avoid any rise in the sewer and stormwater rates this year.

“We really worked hard to figure out how to keep rates reasonable and still meet the expenses of the system,” he said.

“We’re always sensible of the fact that people are on fixed incomes but this year everyone is on a fixed income.”

Babitz said the city was positioned well — because of need — to receive stimulus dollars to replace 15 miles of main line. He admits to having concerns that the utility bill would end up being much higher to pay debt service.

But with almost half of the federal money arriving as a grant, Babitz said the cost to citizens is lower than expected.

Ray Bartlett, city consultant, told Hood River officials that the USDA typically requires a 10-percent annual rate increase to cover the expenses of materials and services. Another 7 percent is also typically leveled to offset personnel costs.

The city wants to reroute the water main from its spring source near Lost Lake to the reservoir in Dee. Francis said the line needs to parallel roadways and not meander through an orchard, under a house and across a deep canyon.

The city’s repayment schedule for the federal loans is expected to be about $1 million over a 40-year-period. Babitz said the city will then bank money for 10 years after the loan is retired to cover the next replacement of the line.