DEQ awards $2.5M loan to Bottle Bay district

SAGLE — The Idaho Department of Environmental Quality is awarding the Bottle Bay Recreational Water & Sewer District a $2.5 million low-interest loan to upgrade and expand its system.

The funding will be used for constructing an additional storage lagoon, replacing an existing irrigation pumping system, acquiring property for expanding land application and upgrading the collection system.

DEQ is authorized by state law to make loans to assist in the construction of public wastewater systems. Since the annual cost of wastewater service for residential customers exceeds 1 1/2 percent of the median household income, the sewer district qualified for a disadvantaged loan which carries favorable repayment terms.

The loan from DEQ revolving loan fund, which is capitalized annually by grants from the U.S. Environmental Protection Agency, carries a simple 3-percent interest rate, is payable over 30 years and has a $77,354 principal forgiveness. The loan terms represent about a $933,000 savings to the community when compared to average costs for municipal general obligation debt issuance, according to DEQ.

A comprehensive wastewater facilities analysis conducted in 2013 identified deficiencies in the system’s ability to treat sewage in accord with Idaho DEQ regulations, according to a petition for judicial review filed by the district last year.

The petition sought permission for the long-term financing on the basis that the upgrades were ordinary and necessary.

The analysis also drew into question the district’s ability to keep pace with future system demands.

The study concluded that the system’s land-application site and storage lagoons were too small. Moreover, other components of the system are aging, including 30 deteriorating septic tanks.