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The city was poised to seek more funds for its water utility through a bond issue until a majority of officials balked at the notion of acquiring more municipal debt.

The vote occurred during the Monday, Feb. 12, meeting of the Salem Common Council.

The money was for the city’s ongoing waterline replacement project along Main Street, to help pay for rising operational costs, and to provide the utility with a mandated cash reserve.

The shortest proposed term of the bond was 20 years at 2 percent, which would have resulted in a total interest cost of $740,000. The bond proposal included a water rate increase that would have been implemented in three rate increases beginning this year and ending in 2026.

Councilman Roger Pennington said he understood that the water utility isn’t always in the black, but he was concerned about the city taking on additional debt when there’s no known development set to occur in the city that would help generate more revenue.

Councilman Dylan Moore agreed the water utility needs more revenue, but he was concerned about the interest and other costs the city would have to pay because of the bond issue.

The bond proposal indicates that $2.4 million would be for the waterline replacement project including construction contingencies. The remaining funds, about $925,000, would be needed for non-construction expenses related to the project, including engineering, design, and legal expenses.

When it came to a vote, Dan Libka and Steve Crane voted in favor of the bond issue. Randy Lee, Pennington, and Moore voted against it.

Moore then made a motion for a revised rate study that would show the water rate increases needed to adequately fund the water utility and its projects without the bond.

The first reading of the ordinance required for the bond issue occurred during a special called meeting on Monday, Jan. 22. During the meeting, bids for the second and third phases of the waterline replacement project were opened.

Those phases will replace waterlines from the south gate of the square to the city limits.

The bids ranged from $1.8 million to $2.7 million. No winning bid has been named yet.

On Jan. 22, when a vote was held to approve the first reading of the bond ordinance, Libka, Crane, Lee, and Pennington voted in favor of it: Moore voted against it.

When asked how the opposition to the bond issue will affect the ongoing waterline project – as well as the rate increase that will be required to support the water utility – Mayor Justin Green said more discussion will be needed as well as the revised water rate study.

By: Becky Killian, Staff Writer
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