Lancaster to secure $2.5 million grant for new water plant

October 05, 2011|By MANDY SIMPSON | msimpson@amnews.com

LANCASTER — This city may soon have new monetary support and rate information to consider when deciding how solve pending water plant capacity issues.

After officials complete some formalities this month, Lancaster will secure a $2.5 million Economic Development Administration grant to build a new water plant, City Attorney Leonard Smith said.
The EDA funds, which totaled about $34 million, were available to areas in Kentucky and Tennessee declared in states of disaster during May 2010 flooding. Lancaster is eligible because Garrard County was classified as one of these locations, Economic Development Director Nathan Mick said.

The grant is the first significant progress the City Council has made since passing a resolution in August expressing its desire to continue with plans to build a new $12-million water treatment and distribution plant. Alternatives include buying water from Danville or selling the water system to Kentucky American Water.

However, the city may soon have more accurate rate information with which to assess its three options.
Donna Powell, vice chairwoman of the Bluegrass Water Supply Commission and special assistant to Garrard Judge-Executive John Wilson, told the City Council on Monday the BWSC will work with the Kentucky Infrastructure Authority to fund an objective cost of service study for Lancaster, the Garrard County Water Association and Danville. The study would cost between $20,000 and $35,000 and explore potential rate increases for each scenario.

“The only thing we ask in that respect is, whatever the study comes up with … you give serious consideration before you make a very serious decision,” Powell told the council.

Bell Engineering has provided some numbers but cannot be considered an unbiased source of information because the city may hire it to design the new plant, Powell said. Instead, she proposed that Danville, Lancaster and the GCWA each appoint a representative to a committee to choose an objective firm to conduct the study.

“Whatever the outcome of it is, you would have some kind of material to validate your decision,” she said.

Powell hesitated to say how long the study would take but estimated no more than a few months.
The council agreed about the value of the study and decided to appoint a representative to the committee once the Danville City Commission gives an official go-ahead for the study.

Powell said the BWSC has approached Danville representatives, who seemed willing to take part in the cost-of-service study, and GCWA President Paul Reynolds said his organization also will partake.
“We are supportive of the study as long as it’s understood that the association only supports it as an investigation process,” he said.

The GCWA is currently one of the Lancaster water plant’s most valuable customers, purchasing water for up to about 2,500 customers depending on water demand, Reynolds said. But the GCWA also buys water from Danville and Berea, so maintaining it as customer is a high priority for Lancaster, Councilwoman Maggie Morris Mick said.

“Yes, we passed a resolution, but we cannot build a plant without enough customers to maintain the cost of it,” she said. Reynolds said the GCWA is keeping all options open until its suppliers can offer more accurate rate estimates.

The Danville City Commission already has approved raising water rates about $5 a month for those who use the average 4,000 gallons a month to help fund its new $27.5 million water plant.

The Bluegrass Area Development District predicted earlier this year that funding Lancaster’s new water plant would require about a 34 percent rise in rates. But that figure is very preliminary, and Councilman Brandon McGlone noted the council will consider factors besides cost.

“Autonomy and maintaing our water supply factor into that equation,” he said.

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