WINDHAM – Windham residents are invited to a public hearing next week to discuss the proposed sewer system for North Windham and Windham Center.

The hearing, which takes place during the Town Council’s meeting at Council Chambers starting at 7 p.m. Tuesday, Sept. 11, will allow residents to chime in on whether the town should move forward with the project, which would divert wastewater from businesses and residences in North Windham as well as the school complex in Windham Center.

The hearing will also help councilors prepare for a Sept. 18 meeting where it is expected to finalize the referendum question that would be presented to Windham voters at the Nov. 6 election. The proposed question, released at the Aug. 21 meeting, reads as follows: “To see if a sum of money not to exceed $37,800,000 be appropriated by the town to cover costs of design and construction of a public sewer including wastewater collection and treatment, to serve North Windham and Windham Center, said amount to be financed from federal and/or state grants, and/or by the issuance of general obligation bonds and/or notes in anticipation of such bonds of the Town hereby authorized in a total principal amount of up to $37,800,000.”

As reported at Tuesday night’s meeting, the sewer would be completed by May 1, 2016, at a projected cost of $37.8 million. That figure does not include debt service, which will bump the project’s actual cost to a projected $61.6 million if the town is able to secure a 3.5 percent loan at the time the construction bond is issued. Interest rates are at historic lows, but could rise by the time the project is in place, councilors warned.

With state and federal grants in limited supply, taxpayers and users who live along the sewer pipe route would pay the bulk of the sewer cost. The loan interest rate, therefore, is important since even slight fluctuations can mean significant cost savings or hikes over the life of a 30-year loan.

The interest rate has already been ratcheted upward from 2.5 percent to 3.5 percent. That slight increase, Town Manager Tony Plante said, affected the proposed mil rate that taxpayers would need to pay to cover the sewer project from 97 cents to $1.05 per $1,000 of property valuation. (To cover sewer payments, the owner of a $200,000 home in Windham would pay $210 per year at the 3.5 percent rate to cover the sewer payments, versus $194 at the 2.5 percent rate.)

Taxpayers won’t be the only ones covering the sewer payments. There are several other funding strategies proposed to help pay for the system.

Those living or doing business along the sewer route would pay about $696 per “equivalent dwelling unit” each year after they hook into the system. An equivalent dwelling unit was calculated by determining the average sewage outflow a typical home produces. Restaurants and businesses with heavy usage rates would pay more according to sewage outflow. One EDU is equal to 500 cubic feet per month of outflow.

Since meters would likely measure the sewage outflow of each property, those who use more than the typical 500 cubic feet would also pay $4.50 per month for each additional 100 cubic feet of sewage they produce.

Arriving at costs for the system has been difficult, as has the process of predicting how many people will connect to the system. The town is predicting 70 percent of residents and businesses along the route will hook in the first year. Those with properly functioning septic systems will likely take longer to comply. The town expects 3 percent to hook in every year thereafter with full compliance after 30 years. However, if every dwelling unit connects the first year, overall charges could be less since more users will be chipping in. Conversely, if fewer users refuse to hook up – preferring to use their septic systems – the remaining users would have to pay more or the town could place the burden on taxpayers.

To encourage compliance, the council proposes to charge a ready-to-serve fee of $285 per year per equivalent dwelling unit for those who choose not to hook into the new system.

Also, a one-time betterment fee of $12.30 per foot of frontage will be charged. (The owner of a property with 100 feet of frontage along the sewer route would pay a one-time fee of $1,230.) This amount was arrived at since councilors figure the new sewer would increase the value of properties served by the sewer.

Councilors on Tuesday exempted farms, at least two of which are located along the proposed sewer route, from the betterment fee and ready-to-serve fees. The exemption will save those farmers and property owners thousands in fees. However, the property would be subject to the fees if development were to occur.

Educated guess

The process of determining costs has been an inexact science since project designers don’t know precisely what the sewer system would cost. The presence of ledge in the ground, interest rates, the rate at which potential users hook up and other unknowns are all impacting factors. Therefore, the referendum question going to voters will limit the amount spent on the project to $37.8 million for principal alone.

“What we’re trying to do is we’re trying to articulate what the charges would be for the system. There are things we don’t know yet and we’re not going to know until we get closer,” Plante said.

Councilors, however, don’t want to move forward with the engineering phase of the project, which could cost about $500,000 alone, before letting residents weigh in on the proposal at what is likely to be a high turnout of Windham voters in November.

While they won’t know exact project costs when they enter the poll, voters will play an important role in whether sewer comes to town. The council has said it would abandon the project if the question is defeated. If the referendum passes, the council said it would move on to the next step in the process, which is to have the engineering firm of Woodard & Curran continue with the design process. After several months, the firm would come back to the council with project specifications that would allow contractors to knowledgeably bid on the project. The engineering would also narrow project cost estimates. If those costs come back higher than the voter-approved $37.8 million, the council would either need to go back to the voters for more money or scale back the project. If cost projections come in less than the $37.8 million, the council would have the authority to begin construction.

“Approval of the bond issue doesn’t mean that the town of Windham and the council is just going to go sign off on $37.8 million of debt and go build a sewer system,” said Council Chairman Scott Hayman. “We still have to have this thing designed at a cost of $400,000 to $600,000, roughly, to have it engineered, designed, which is the next step, and … that’s going to narrow that $37.8 million from a plus-30 (percent overall project cost estimate), minus-20 to a plus-10, minus-5. It’s going to give us an idea of what this is actually going to cost. It’s going to give us a set of prints and a spec book that we can send to contractors about what it’s going to cost to build this.

“If it comes out to be astronomically, crazily high, future councils or any council can say we’re not going to do it.”

But the project, Hayman said, is at a standstill until voters weigh in. “Without an approval or at least the idea that the Windham citizens are interested in further progress with a design and engineering, we need to be able to know that before we spend that kind of money on that,” he said.