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The Gypsum Town Council on Tuesday took the first step in issuing nearly $90 million in bonds to pay for a new wastewater treatment plant, approving on first reading an ordinance approving the bond sale.
The project has required big increases in wastewater fees — eventually topping out at $107 per month in 2026. The bond issue will include roughly $84 million in construction costs and another $4 to $5 million in engineering and other costs.
The bonds will be repaid over 30 years. According to the bond contract, only two entities can receive free sewer service: the town and the Gypsum Fire Protection District.
According to bond counsel Robyn Moore, the new plant will be able to handle a town population of up to 20,000 people. But, she added, that isn’t likely to happen.
Planning for the new plant began when the current facility hit 80% capacity. However, planning for the new facility was complicated by new state regulations regarding the temperature of discharge into the Eagle River.
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While the town earlier this year received a grant of nearly $1 million for the project, that, and the town’s existing $5 million sewer fund, provided little to the overall project.
The good news, sort of, is that an initial estimate for the project came in at roughly $120 million. That amount was nearly double a 2018 estimate.
As of August of 2023, the project came in at an estimated $75 to $77 million, but costs continue to escalate.
Bond underwriter Robyn Moore Tuesday told council members a bit of good news: Interest rates have declined slightly since work on the bond issue began in 2023. If the bonds were issued this week, the interest rate would be roughly 4.4%. A year ago the rate would have been roughly 5%. That would put the annual payment at about $5.5 million, compared to an annual payment of $5.7 million if the bonds were issued in 2023.
In other good news for the town, Gypsum’s credit rating from Standard & Poors is A+.
Council member Scott Green noted that the town’s wastewater system is classified as an “enterprise fund.” That means it has to pay for itself without help from the town’s general fund. That classification also means the fund can issue revenue bonds without voter approval.
“Staff and consultants have been working on this for two years,” Green said. “The more time goes by, the more it continues to increase.”
Noting the need to comply with state regulations, Green noted that the project has to be built, and on a timeline, to satisfy both state regulations and bondholders.
“We’re going to continue to work very hard” to get the costs down, if only marginally, Green added. But, he added, “This is very specialized work,” so the town has little choice but to move ahead.
The council has to approve a second reading of the bond sale ordinance. If that happens, the bond sale is set for Sept. 24, and the sale will close Oct. 15.