Frequently Asked Questions

See full question below:

Q:

Ashland claims to have obtained a $73M loan from WIFIA, which fully funds the new water treatment plant. The plant has been estimated to cost between $55M and $75M. However, WIFIA caps funding at 49%. The numbers do not add up. If $73M is 49% of the cost, then the estimated cost is around $150M. I, and other citizens, would appreciate a more complete explanation of funding. That said, I am fully in favor of the new plant but am troubled by inconsistencies in the funding amounts.
 
 A: 

The City of Ashland has qualified for the WIFIA (Water Infrastructure Finance and Innovation Act), which funds up to 80% of the project total, under the eligibility guidelines for small communities serving fewer than 25K people. Small communities can then provide the additional 20% through cash or “in-kind” matching funds. 

The City of Ashland is contributing in-kind funds based on the land value of the parcel where the future plant will be constructed, as well as previously incurred costs related to preliminary and final engineering work conducted during project development. These matching funds were used by the EPA (Environmental Protection Agency) to calculate the maximum borrowing amount through the WIFIA program, resulting in the noted $73 million figure.

From the EPA site:

The WIFIA program can fund a maximum of 49 percent of eligible project costs for large communities and up to a maximum of 80 percent of eligible project costs for small communities (populations less than 25K). Learn more. 

View Resolution 2024-05 (PDF)

OUTCOME

Financing for the Water Treatment Plant was on the November 2024 Ballot... Resolution 2024-05 Authority to Issue Water Revenue Bonds has passed. The total votes were 10,597 --- 73.18% - YES / 26.83% - NO. 

BACKGROUND

* PROPOSED BALLOT MEASURE: 

Caption: Approving Ashland Resolution 2024-05 authority to issue water revenue bonds.

Question: Should the City be authorized to use revenue bonds to ensure construction of its water treatment plant?   

Summary: This measure seeks voter approval of City Resolution 2024-05 to finance the replacement and construction of the City's water treatment plant and rehabilitation of the east and west forks transmission line, which are at the end of their useful life, through the issuance of revenue bonds, likely to the federal Environmental Protection Agency (EPA) as a favorable alternative. This resolution is required to allow the City to issue revenue bonds backed by future water system revenues, including borrowing from the EPA under the federal loan program that is designed to help local governments invest in the replacement of aging water infrastructure. If the measure is approved, the resolution grants the City authority to access this funding through the EPA for its construction of the water treatment plant, addressing crucial water infrastructure needs.   

A "Yes" vote supports Resolution 2024-05, endorsing the issuance of revenue bonds, such as through the EPA, as the means to fund plant construction.

A "No" vote opposes the resolution, requiring the city council to consider alternative methods to finance plant construction. 

* In mid-March 2024, a petition was filed with the Ashland City Recorder, which would place, "Resolution 2024-05 - Authorizing the Issuance of Revenue Bonds for Water Projects and Repealing Resolution No. 2022-29," on the ballot. As a result, the City Attorney drafted the proposed ballot language, in adherence to the guidelines established by the Secretary of State.

Posted October 16, 2024: 

For fiscal year ending 2024 (not final/unaudited), total long-term debt is $26M, with approximately $3.7M retiring in 4 years. Moody's Investors Service rates the City of Ashland Aa3, which is considered a high rating for a city of Ashland's size. Moody's noted that the City's debt level is 28% lower than median/comparable cities, and the long-term liabilities ratio is also very strong, indicating the City's capacity to cover its long-term debt.

Further, the EPA WIFIA (Water Infrastructure Finance and Innovation Act) loan would be fully covered under the Water Fund versus being backed as a general obligation of the City. This matters as the full faith and credit of the City, or general obligation debt, could effect the credit rating of the City and impact future financing of other general government projects. Also, the EPA WIFIA loan is structured to act like a line credit where the City only draws on what it incurs for construction, versus having the pay back the full amount of a debt instrument at inception, thereby reducing debt service on the loan. Should the City receive other funds, such as grants, during construction, it would allow less to be drawn-down and there is no pre-payment penalty on the WIFIA loan.

The EPA did not require an EIS for the water treatment plant project in order to secure funding through the WIFIA program. The project will be built on a previously disturbed site at the Granite Rock Pit, meaning it has no significant environmental impact. Earlier, when the City applied for state funds to support the design, it was granted a Categorical Exclusion (Cat-X) from environmental review by the Oregon Health Authority because the site was previously a quarry.

The EPA conducts its own environmental review for WIFIA funding, which includes ensuring the project complies with various federal and state laws. The City has been coordinating with the EPA and other regulatory agencies throughout the duration of the design, and no issues have arisen regarding environmental concerns that would necessitate an EIS. The EPA review process involves development of a "Programmatic Environmental Assessment" (PEA) to outline the environmental permitting requirements and ensure the project meets necessary environmental standards.

The City has already completed several steps, including working with the U.S. Forest Service, the State Historic Preservation Office, and obtained local land use approval. Remaining steps include acquiring building and stormwater permits before construction begins along with a final consultation with the National Marine Fisheries Service on the culvert replacement portion of the project. A significant component of the final engineering for the project was focused on regulatory compliance and environmental permitting requirements, which is typical for large-scale projects.

To date the City has spent approximately $6.3 million on preliminary and final engineering along with other costs associated with the project.  

The City is working to expand the low-income utility assistance program by eliminating the age requirement and opening the program to all qualifying low-income residents. 

The proposed plant is designed with a 100-year life cycle in mind, along with resiliency factors associated with recovery after a major event such as an earthquake, fire, flood and so on. 

The new plant location was selected specifically to mitigate known risks at the current plant location. This includes protection from fire as the site is cleared and out of the canyon, protection from flood as the site is out of the flood way, protection from landslide as the site has good geology and protection from earthquake as the new structure will be built to current building codes. The existing plant is un-reinforced concrete and does not meet current building codes for seismic stability. The new site is also City owned property, so the City did not have to purchase additional land to support construction of the new treatment plant.

The City's initial expectation was to bid in May/June 2024, and award the construction phase in July/August 2024, with work beginning shortly thereafter. This theoretically would have tied into the City closing the loan with the EPA for the construction phase as well. The contractor is responsible for developing the final construction phasing plan, but it is estimated the work will take 30 months to complete and then an additional three to six months of startup and decommissioning of the old plant. We originally expected to be complete by the end of 2027. This schedule could shift if the funding of the plant is put on the ballot, as the City would need to wait for the outcome.

The construction company will be chosen using a two-step process of price and qualifications. 

HDR, the engineer of record, estimates it will take 30 months to complete the full construction of the new plant, including site work, offsite piping connections and building of the structures.

The cost has increased primarily due to construction inflation increases hitting the industry since 2020. The pacific northwest has seen 30-40% increases in construction costs over the past two to three years. This is another factor when considering the timing of financing and construction.

Yes, the new plant will follow the EPA’s guidelines and provide a multi-barrier treatment approach of Ozone for algal toxins, sedimentation for turbidity and filtration. Much more robust than the current plant.

The existing plant was built in 1948. 

 No change to sewer associated with the new water treatment plant.

^{The EPA funding model can also be referred to as a bond because water revenues support the debt service, rather than having the City as a whole - thus taxpayers - pledge full faith credit for the loan. The EPA loan allows the Water Fund to secure 100% funding for the project under favorable terms- 35 years at approximately 4% interest rate.  If the City were forced to seek alternative financing, the City would lose the opportunity for the following: deferred payment structure, extended repayment period, favorable drawdown/reimbursement during construction, and it would potentially be a higher cost of debt. More importantly, the City may have to guarantee/pledge full faith credit to secure the loan. From a financial and taxpayer perspective, it is beneficial to have debt secured by revenues of the Water Fund rather than the full faith credit of the City, which will impact overall credit capacity for all other projects and the City’s long-term credit rating.}

The City would need to severely reduce the planned capital program for the water system and develop a plan of action that provided the least amount of impact to the community, while still meeting the regulatory requirements dictated by the Oregon Health Authority. This would likely result in a significant increase to deferred maintenance, which is already approaching unsustainable levels. Further, staffing levels may need to be reduced, which could affect operations as staffing levels are currently running at a bare minimum. 

The project will be publicly bid as required by ORS. 

This has been analyzed in our water conservation and management plan - Learn more (PDF). 

The City’s Water Rate Cost of Services Study was completed by Hansford Economic Consulting. View the study. Given that we have not had a rate increase for almost five (5) years, it was recommended that a 10% rate increase annually over six (6) years would support our water infrastructure needs. What this really equates to is a $3.29 monthly increase the first year on a typical water bill. 

Please note – An Ashland utility bill may contain charges on multiple utilities such as electricity, sewer, internet, etc. When considering a water rate increase, it would only be to the usage portion of one’s water bill. The base rate and customer charge remain the same. If conservation methods were employed, one may not see increases at all to their bill.

Do nothing is not an option that is available. If the water treatment plant is not replaced, the City would need to prolong the life of the existing water treatment plant. This would require an estimated $15 to 30 million dollar investment depending on final improvement plan, to maintain the plant and continue to meet the regulatory requirements dictated by the Oregon Health Authority. This could potentially lead to higher utility rates in the long term as maintenance costs would continue to rise in an aging plant. Eventually the plant will need to be replaced and thus expenditure and improvement in the existing plant would be considered a sunk investment.

The economics of both options were presented to the City Council during the 2022 Strategic Choices special meetings. View the City’s Strategic Choices presentation that contrasts the options (PDF). 

Below is background information on the steps the City has taken regarding the water treatment plant. 


April 17, 2012-2012 Comprehensive Water Master Plan

Council adopted the master plan at the April 17, 2012, Business Meeting. The plan included development of a 2.5 MGD (million gallons per day) water treatment plant and 2.6 MG storage reservoir.

2.5 MGD Plant estimated at $12 million plus one additional employee requirement.

2.6 MG storage reservoir estimated at $6.7 million.

April 17, 2012 Minutes

April 7, 2015-2015-2017 Capital Improvement Program

Council approved the 2015-2017 Capital Improvement Program(CIP) at the April 7, 2015, Business Meeting. The CIP included the 2.5 MGD water treatment plant and 2.6 MD water storage reservoir.

2.5 MGD Plant estimated at $14.5 million plus one additional employee requirement.*

2.6 MG storage reservoir estimated at $8.13 million.*

*Numbers inflated annually from the 2011 master plan project estimate.

April 7, 2015 Minutes

June 16, 2015-2015-2017 Biennium Budget

Council approved the 2015-2017 Budget at the June 16, 2015, Business Meeting that included appropriations for the 2.5 MGD water treatment plant and 2.6 MD water storage reservoir.

2.5 MGD Plant estimated at $14.5 million plus one additional employee requirement.

2.6 MG storage reservoir estimated at $8.13 million.

June 16, 2015 Minutes

 
June 7, 2016-Infrastructure Finance Authority Funding Resolution

Council approved a resolution at the June 7, 2016, Business meeting authorizing an Infrastructure Financing Authority loan for engineering and construction of a new 2.5 MGD water treatment plant. The terms of the loan include $14,811,865 in principal, $1,030,000 in loan forgiveness and an interest rate of 1.79% for 30 years.

June 7, 2016 Minutes

December 6, 2016-2.6 MG Storage Reservoir Reimbursement Resolution

Council approved a reimbursement resolution at the December 6, 2016, Business Meeting associated with the 2.6 MG water storage reservoir recommended in the 2012 master plan. The reimbursement resolution allows the City to reimburse itself via loan proceeds for all engineering work completed prior to construction.

December 6, 2016 Minutes

March 21, 2017-2.5 MGD Water Treatment Plant Preliminary Engineering

Council approved a professional services contract with Keller Associates at the March 21, 2017, Business Meeting for the design development of a 2.5 MGD water treatment plant and 2.6 MG water storage reservoir. The preliminary engineering included a siting study and treatment process analysis.  

Initial site costs:*

1. Concrete Pit (high) $11.6 million
2. Concrete (low) $13.5 million
3. Granite (high) $14.7 million
4. Granite (low) $11.6 million
5. Asphalt Pit $15.4 million

*The initial site costs developed by Keller Associates in the preliminary phase only account for site work (grading/excavation), piping, pumping and electrical. Total cost was evaluated after the Granite low site was selected. All sites evaluated are on city owned property.

Total estimated cost of construction for the Granite low site:

1. Granite Low Membrane Filtration $26.2 million
2. Granite Low Membrane Filtration + UV $24.4 million
3. Granite Low Membrane Filtration + Ozone $29.4 million
4. Granite Low Conventional Filtration $30.7 million

March 21, 2017 Minutes

November 6, 2017-2.5 MGD Water Treatment Plant Project Review

Council received a presentation at the November 6, 2017, Study Session from the Director of Public Works who recommended a fresh look at the proposed 2.5 MGD water treatment plant. Options provided to Council were to analyze and compare costs and risks associated with rehabilitation of the existing plant to provide a 20-year useful life vs. construction of a brand new 7.5 MGD water treatment plant. The proposal was to compare the City’s current water treatment plant with a new one that would treat water in exactly the same way. At this time the City wasn’t looking at other water treatment alternatives. In addition, prior to this meeting the Director discussed these options with the Ashland Water Advisory Ad-Hoc Committee (AWAC) at their regular meeting on September 26, 2017. The Committee unanimously supported the Director moving forward with the analysis.

November 6, 2017 Minutes

 
April 2, 2018-Water Treatment Plant Next Steps

Council received a follow up presentation at the April 2, 2018, Study Session from the Director of Public Works regarding an analysis done by Black and Veatch and RH2 regarding improvements to the existing plant and risk mitigation compared to building a new 7.5 MGD facility at an alternate site.

Existing plant rehabilitation (20-year life) $5.57 million.

No feasible cost developed for risk mitigation (fire, flood, landslide, seismic).

7.5 MGD Plant (new) $22.59 million (direct filtration-same as existing plant).

April 2, 2018 Minutes

October 2, 2018-Preliminary Engineering 7.5 MGD Water Treatment Plant

Council at the October 2, 2018, Business Meeting approved a professional services contract with HDR Engineering for the preliminary engineering phase for the new 7.5 MGD water treatment plant.

October 2, 2018 Minutes

April 2, 2019-2019 through 2039 Capital Improvement Program

Council approved the 20-year CIP at the April 2, 2019, Business Meeting. The 20-year CIP contained the proposed 7.5 MGD water treatment plant project in the water fund.

7.5 MGD water treatment plant 5% design opinion of cost $32 million.

April 2, 2019 Minutes

June 4, 2019-2019/2021 Biennium Budget

Council approved the 2019-2021 biennial budget at the June 4, 2019, Business meeting, which included appropriations for the 7.5 MGD Water Treatment Plant.

7.5 MGD water treatment plant 5% opinion of cost $32 million.

June 4, 2019 Minutes

June 4, 2019-FY 2020 Water Rates

Council approved a 4% water rate increase at the June 4, 2019, Business meeting. Water rates/revenues support the water fund and in turn all water capital improvement projects including the 7.5 MGD water treatment plant.

June 4, 2019 Minutes

August 5, 2019-7.5 MGD Water Treatment Plant Progress Update

Council received a presentational update on the preliminary engineering phase for the new plant at the August 5, 2019, Study Session.

7.5 MGD water treatment plant 30% design cost estimate $36 million.

No proposed staffing increases.

August 5, 2019 Staff Report

August 5, 2019 Minutes

In addition to Council actions, staff has continuously updated AWAC during their regularly scheduled public meetings on project status during 2019. This included a presentation by HDR Engineering, Inc., similar to the one given before Council on August 5, 2019.  

October 1, 2019- Award of a Professional Services Contract; Phase 2, Final Engineering for a New 7.5 Million Gallon per Day Water Treatment Plant

Council authorized a professional services contract with HDR Engineering, Inc. for Final Engineering. The Final Engineering contract allows HDR to proceed forward with the 60%, 90% and 100% iterations of design and cost estimating.

October 1, 2019 Staff Report

October 1, 2019 Minutes

November 19, 2019-Envision Water Treatment Plant Solar

Council clarified their position regarding expectation for solar power and the Envision program associated with the design for the new plant.

November 19, 2019 Minutes

April 19, 2021 – Water Treatment Plant Design Envision Update

Provided and comprehensive project update including potential Envision component enhancements for energy efficiency.

Staff Report

January 3, 2022 – Water Treatment Plant Project Update

Provided an update on the project and answered questions that were developed by Council from the April 19, 2021, Study Session.

Staff Report

May 23 & 24, 2022 – Special Meeting

Provided a review of the Capital Improvement Plan with a focus on the water system and treatment plant project.

Minutes and Staff Report Information

September 6, 2022 – Contract Amendment with HDR Engineering, Inc.

Council approved a contract amendment with HDR Engineering, Inc. to finalize the plans, specifications and estimates. The Contract amendment was necessary to do additional work required through the process.

Staff Report

 
September 20, 2022 – Water Bond Resolution

Council approved a water bond resolution for borrowing to support the Water Treatment Plant Project using Environmental Protection Agency Funding.

Staff Report

December 4, 2023 – Water Rates Review     

Provided update on water rates analysis performed by Hansford Economic. The updated rate analysis used the existing biennium budget and projected water treatment plant cost along with forecasting trend increases over the next two bienniums.

Staff Report

 
March 5, 2024 – Water Bond Resolution

Council approved an updated water bond resolution that repealed the one passed in 2022. The borrowing resolution was updated to reflect full funding for the project from the Environmental Protection Agency.

Staff Report

Back to the Water Treatment Plant FAQ/fact page.

As part of the City’s TAP (Talent-Ashland-Phoenix) connection to the Medford Water Commission there are a few significant hurdles.

The City currently has 1000 acre-feet of storage in Lost Creek Reservoir. To expand for full demand of the community more water rights would need to be purchased and approved. This involves The Army Corp and Water Resources. The City would expect significant challenges from a regulatory standpoint because the City already has a full supply within Reeder Reservoir as developed in the Water Management and Conservation Plan with some assistance from the existing TAP system. To get to the annualized demand using the TAP system the City would need around 3500 acre-feet of stored water right in Los Creek.

The Medford Water Commission has previously stated the maximum they will provide the City of Ashland through the TAP system is 3 million gallons a day (MGD), which is 4 MGD less than the design criteria and future demand projections of the City.

If the Medford Water Commission were to agree to an increase to account for the full demand of the City, there would be significant infrastructure improvements required to get to a peak capacity of 7 MGD, which is what the new plant is designed for. These improvements would be in Medford, Phoenix, Talent, Ashland and some within ODOT right of way. Nothing is designed and constructed currently to handle Talent, Phoenix and the maximum daily demand of Ashland at 7 MGD. Significant modeling analysis would need to be done to define the system improvements both from a pipeline standpoint, but also from a pump station standpoint. Depending on the outcome of the analysis minor or major changes to the TAP Master Plan would be required to define infrastructure maintenance responsibilities along with cost capacities. A minor example of infrastructure issues is the current Ashland TAP station and connecting pipelines were designed for the maximum 3 MGD flow. In addition, there is not a booster pump station in the City’s system that moves TAP water from the Granite Zone to the Crowson Zone feeding residents southeast of the Ashland Creek divide. There is a project to install a station, but it is not in the plan for a few more years.

The City would need to negotiate with Medford Water Commission on system development charges for the increased demand and the City expects the cost for this alone to be in the millions of dollars. The City negotiated a $2.6 million-dollar SDC (System Development Charge) with the Medford Water Commission for the current 2.13 MGD delivery of TAP water.

The current rate for TAP water is 0.97 cents/1000 gallons in the summer and 0.77 cents/1000 gallons in the winter. This recently increased by 0.4 cents in a recent rate adjustment. The City expects regular annual increases from the Medford Water Commission as they move forward with major expansions and system improvements. For example, currently the annual people and maintenance budgets for the water fund is approximately $8 million; divided by total gallons produced annually, approximately 1 billion, for .01 cents/gallon. This is expected to also be low considering the new plant, because chemicals and power requirements will be less than the current plant.

If the City were to move forward with a project to determine the feasibility of a full connection and the Medford Water Commission approved, the City expects the entire process would last anywhere from 5 to 10 years. This includes modeling and feasibility analysis, infrastructure planning, public outreach/education, multijurisdictional coordination, environmental permitting, preliminary design, final design, construction, and development of the funding process for all improvements required to create a full connection. All the while the City is still paying to maintain the existing plant.

Did you know? The Medford Water Commission obtained WIFIA funding for their projects? Learn more. 

View Resolution No. 2024-05 from the March 5, 2024, City Council Business Meeting

The Comprehensive Water Master Plan was approved by City Council in 2012. In the summer 2020, the Water Master Plan was updated and approved by Council. 

View the Water Master Plan Update (PDF)

Both the cities of Medford and Talent have recently increased their water rates, recognizing that costs have increased from inflation and overall infrastructure needs.

The Medford Water Commission obtained WIFIA funding for their projects? Learn more

The proposed location is the Granite Low site. Learn about actions the City has taken regarding the water treatment plant in our background information.

Take advantage of the City’s conservation program incentives, ashlandsaveswater.org.

The proposed water treatment plant is meant to serve the projected growth of the community as analyzed multiple times through our water master plan process, our water conservation and management plan and also a stand alone analysis done by an independent contractor (view report - PDF). The growth has been looked at through 2070. The original plant is sized at 7-million gallons a day with the expectation to expand to 9-million gallons per day when and if needed. The City also has access to another 2.14-million gallons a day as part of the TAP (Talent-Ashland-Phoenix) supply through the Medford Water Commission.