Public Works Board will extend Eastside Sewer loan

OKANOGAN – Okanogan County will get some relief from the state Public Works Board in paying back the loan they took to construct the Eastlake Sewer Project.

“It looks like the board agreed to the option that extends the loan, but doesn’t defer anything, according to what (city clerk) Kathy Jones reported at the staff meeting this morning,” said Chris Branch, Oroville’s director of economic and community development last Tuesday.

The sewer system, which serves residences located on the east side of Osoyoos Lake runs from Oroville to as far north as Veranda Beach Resort. It was constructed with anticipation of a much higher expected build out which would have paid back a low-interest Public Works Trust Fund loan using connection fees. However, after a construction boom in the area, especially in vacation homes and developments, the boom like most of the nation turned to bust. As a result, the number of connections has not been enough to service the debt.

The Okanogan County Commissioners asked the PWB for relief or alteration to the repayment schedule for its two PWTF loans.

Representatives of the PWTF Construction Loan Program came up with three options regarding the commissioners’ request and sent them to the Public Works Board. In Option 1, no changes would be made. In Option 2, there would be a 35-year Term for Construction Loan PW-06-692-032 and a four-year deferral with no changes to pre-construction Loan PW-04-691-PRE-127.

“Under this option there will be no principal and interest payments for four years beginning 2012 through 2015,” write the PWTF representatives. “This option gives the county loan payments relief for four years. This option extends the construction loan term from 20 to 25 years.

Option 3, which Branch believes has been chosen, is a 30-year Term for Construction Loan PW-06-692-032 with no deferral and no changes to pre-construction Loan PW-04-691-PRE-127.

“This option extends the loan term from 20 to 30 years,” they said.

Under “issue,” the PWTF representatives, write, “The sewer system has a unique situation, where the county owns the extended trunk line, but the City of Oroville operates and manages the entire sewer system, including rates and fees collected. The county does not have any control over or share of the rate revenue collected from the system. The only revenue source available to the county in the sewer system is the connection fees collected from new developments in the area where the sewer line extents. The total PWTF repayment debt is split 30 percent from the city and 70 percent from the county.”

Although the county took the loan to construct the sewer system that serves the Eastlake area, Oroville borrowed some of the money to make improvements to its system in order to better handle the additional wastewater moving through its pipes in town and at its treatment facility.

“The county has been diverting other non-utility county resources to pay the PWTF debt services, but those revenues will not be available in sufficient amount to continue to meet the loan obligations,” according to the document. “However, the county is encouraged by the recent economic sign and a number of pending developments in the next five years. They expect this request will buy them needed time.”