Wading through the sewer.. of financing, that is
Big Sky County Water and Sewer District 363 releases bid proposal and figures out funding
Conjecture and contingency plans were at the forefront of a recent Big Sky County Water and Sewer District 363 (BSCWSD) board meeting. Board members seek to navigate the complications of financing a sizable district project amidst the challenges of COVID-19.
Big Sky’s water treatment facility will be going from standard to state of the art with a complete technology overhaul and also an expansion. This move will open up creative water disposal options and further protect the Gallatin River. The bid proposal for Big Sky’s projected $41 million Water Resources Recovery Facility (WRRF) upgrade and expansion was released via unanimous BSCWSD board approval. It is an atypical move to release a bid proposal before financing is fully ironed out, but timing is essential, particularly with large, complicated projects, Scott Buecker, project manager with AE2S said.
If all goes as planned, the project is set to be completed by the Fall of 2022.
Now in the late stages of figuring out financing, financial officer Terry Smith said they initially believed State Revolving Fund, which provides communities with low-cost financing for water quality infrastructure projects, was going to completely finance the project.
“What we have learned in the last month is that’s not the case. As a result, we are going to need more time,” he told the board. The basic financing part can be done in 30 days, but the more tedious bond work to be completed by the district’s bond council as well Glacier Bank’s council will likely take 90 days, he explained.
“As a result, we are going to need to use the district’s funds for the first part of the project,” he said.
Based on the engineer’s analysis, $5.5 million will be needed by June 30, 2021.
“Today, we have $3.3 million in plant investment money available and approximately $8 million in sewer reserves. So, the district does have the financing…to fund the project based on the engineer’s schedule through June 30 without having our bond money available,” he said.
Smith expects to get all the financing puzzle pieces in place by the end of March by working with Glacier Bank and with SRF “which puts us in a good position in financing this project.”
Board chair Tom Reeves inquired about what would happen if the bond funds were delayed past June 30.
“We would run into problems after June 30, 2021. I’m comfortable saying we can finance it through June 30, 2021 but no further than that,” Smith said. At that point, the district would have to look to short-term lending mechanisms.
Also helping fund the project is the voter approved 1% resort tax for infrastructure to total $27 million. Resort tax is dependent on tourism, so the board wanted assurances that the funds would be there. Smith noted a conversation with Big Sky Resort Area District Executive Director Daniel Bierschwale in which Bierschwale noted that all resort tax projections have been conservative.
“We do have the financial wherewithal at this point with resort tax revenue,” Smith said.
He recommended extending the cashflow out to a 12-year plan as “the best and safest way to manage the cash flow from that 1% and have the money available for the canyon project that the district is tasked with doing as well as the MBR plant.”
The canyon project he refers to is the new canyon district being formed which will pave the way for centralized treatment and eliminate an assortment of septic systems that treat to a lesser degree. The 1% from resort tax was contingent upon the district helping bring higher quality water treatment to a portion of the canyon.
In all the talk of potential stopgaps for financing if the bond funds are delayed or if the resort has to shut down due to COVID-19 and the 1% resort tax funds prove lacking, board member Dick Fast suggested that some of the bigger stakeholders in the community who stand to benefit substantially from the WRRF upgrade might kick toward the project. That suggestion was initially met with a few beats of silence.
“If we can’t deliver the funds, we may have to stop, slow down. I don’t think the development community would like that,” board member William Shropshire said.
Board member Mike DuCuennois also said it was a worthwhile suggestion and “another arrow in our contingency plan.” He suggested that Smith might begin compiling a list.
“Covid is not going to be here forever, the resort is not going to be shut down for five years,” DuCuennois said, and noted the board just needs to consider short-term bridges.