KEENE — The Keene Town Council has scheduled two public hearings to discuss bonding more than $5 million for mandatory upgrades to both of its water districts.

The town council wants to buy a $5 million bond for water district two — roughly, the hamlet of Keene Valley — and a $300,000 bond for water district one, which includes the hamlet of Keene. Town Supervisor Joe Pete Wilson Jr. said on Friday that the upgrades to water district two are mandated by the state Department of Health.

A public hearing about the bond for water district two will be held at 5 p.m. Tuesday, Aug. 23, and the public hearing for the water district one bond will be held at 5 p.m. Tuesday, Sept. 6. Both hearings will be held at the Community Center pavilion.

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Water district two

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Wilson said the town drilled a new well in water district two in 2019 because the district only had one well at the time, and it wasn’t keeping up with the district’s demand or the state DOH’s requirements. Now DOH officials say that water district two needs a backup well, according to the supervisor.

Wilson said it could cost around $5 million to drill a new well in water district two, connect it to the district’s pumphouse and make necessary upgrades to the system that treats the water and monitors and controls the pumphouse’s functions. A project of that size could qualify for state grants and loans, but Wilson said the town first has to have the project underway, with bonding and engineering complete, to qualify.

“We can’t apply for those things until we’re actually doing the work,” Wilson said.

Just because the town plans to bond for $5 million doesn’t mean that would be the final cost incurred on members of water district two, which Wilson said has around 300 rate-paying members. The more grants the town can get for the project, the less money people in the district will have to pay in the long run. But until the town can bond for the project and start applying for grants, Wilson said there’s no way of knowing what the final cost will be for ratepayers.

Water district two is in the middle of paying off a 30-year loan, with the final payment coming in 2038. Wilson said the 2023 payment on that loan will be around $62,000, and the payment increases by about $1,000 each year. Because the upcoming project would be so big and costly, Wilson said the town would probably seek a second 30-year loan for it.

Wilson said some people in the town have asked him why the town doesn’t just refinance the current bond and roll it into the new one. First, he said, doing that would give the bond a higher interest rate. But he said the bigger, more strategic reason he doesn’t want to refinance and combine the bonds is that extending the current bond could prevent the town from borrowing money for water district two for another 30 years. He said if the town can stagger the two loans, the town’s current bond will be paid off in 16 years and could give the town an opportunity to borrow again and invest in the infrastructure of the water district.

To keep the district’s water plant current and operative, Wilson said, the town would ideally make capital improvements to its water district every 10 years instead of waiting for things to break down.

Town Councilor Bob Biesemeyer said at the council’s meeting last week that engineering firm AES Northeast outlined specifics for the upgrades to water district two. That report is available on the town’s website at https://tinyurl.com/ucyhyszj.

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Water district one

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Town officials want to bond $300,000 for water district one, which has around 230 users. Wilson said the district has needed upgrades to its controlling equipment — which he said is still on a dial-up phone — and chlorine-metering system for years. He said the town has had to shop for any replacement parts on eBay because they’re not in production anymore. The town had a plan to self-finance the upgrades over the course of three years, but when a flood hit the town on Halloween in 2019, those plans changed.

The Halloween flood scoured the bank of the AuSable River and left one of the town’s water mains that crosses the river exposed. That made the water main vulnerable to water and ice damage, and Wilson said that when winter came, the water main froze up a few times and kept the district from pumping water during those periods. The town made an emergency repair to the water main, and those repairs wiped out the funds saved for upgrades to water district one’s other equipment. The town filed a claim for the repairs with the Federal Emergency Management Agency (FEMA) since the flood qualified as a disaster.

“In the meantime, we still had to pay the bills and keep on fixing stuff,” Wilson said.

Wilson said the district has somewhere between $215,000 and $220,000 in debt from the repairs. A portion of the bond would go toward paying that back, he said — including some money that the town had to borrow from its general fund — and the rest of it would go toward finishing the repairs that were largely put on hold after the flood.

Water district one still hasn’t received any funds from FEMA — which could reimburse the town for up to 75% of the repairs it made to the water main — but Wilson said the FEMA claim has been progressing. He said it looks like the town will get some payback to defray the cost of the $300,000 bond, but until the town finds out how much FEMA will reimburse the town, Wilson said he doesn’t know how much Keene will need to borrow and what the final cost will be to ratepayers in the district. The more the FEMA claim is, the less the town will have to borrow and pay back.

Wilson said that because this project is smaller, it likely won’t qualify for state grants or funding. That’s why he said the district had planned to self-finance the loan. He said the town still plans to spread the cost of the loan over three years.