Lake Oswego begins taking out debt for wastewater treatment plant project

The city of Lake Oswego will take out $16.5 million in debt to pay for an initial phase of a project to replace its wastewater treatment plant.

At a Lake Oswego City Council meeting Tuesday, March 5, finance director Sean Cross said that the first phase of financing will pay for the acquisition of three properties in the Foothills area where the plant will go, as well as design work. Some of the work will also be paid for via sewer fund reserves and system development charges. The city will pay an annual debt service of $1.1 million for the next 25 years. Cross said interest rates would be higher if the city paid the debt over a short timeframe. At the Tuesday meeting, the council voted to allow the city to issue the debt.

The project, which is a collaboration with the city of Portland, is needed to meet environmental standards and the city determined building a new plant would be cheaper than updating the current facility. The city of Portland manages the current plant, but Lake Oswego would take over upon completion of the new plant. Both cities are helping pay for the new plant.

The city approved a debt limit of $250 million in 2014 and previously estimated that public financing for the water treatment plant would bring its debt to $370 million. Therefore, the city likely will need to increase its debt limit at some point.

The city opted last month not to proceed with a public-private partnership with EPCOR for the treatment plant project and initiated a bid process for the completion of designs.