SALISBURY — While waiting on the outcome of a $60 million lawsuit against the private contractor for the construction of a failed wastewater treatment plant, Salisbury officials this week said the city might have to fund the replacement on the backs of its citizens through increased sewer fees and possibly even a significant bond sale.
A few years back, Salisbury was faced with funding a major replacement for its failing wastewater treatment plant under orders by the state to reduce its flow of nitrogen and other pollutants into the rivers and creeks that lead to the Chesapeake Bay. The city contracted a private sector engineering company, O’Brien and Gere, to design and build the new treatment plant with a contract price of $60 million.
The new treatment plant was completed on schedule by the end of 2008, but when it went into service, it was discovered the new state-of-the-art plant did not work as designed and failed to meet Maryland Department of Environment (MDE) standards. Salisbury has since sued the engineering firm and the construction manager, seeking reimbursement of a large portion of the $84 million project cost.
The case originated in Baltimore City Circuit Court, but last month was remanded to Wicomico County. In the meantime, Salisbury has a failing wastewater treatment plant that does not meet environmental standards and is now faced with building a new wastewater treatment plant on a site adjacent to the failed plant.
Mayor James Ireton, Jr. explained during his monthly roundtable discussion with Salisbury community leaders this week financing the new wastewater treatment plant could come in the form of an increase in the so-called “flush tax” already paid by city residents for water and sewer projects.
“We can’t start the new project until we have an identified funding source,” he said. “With the $60 million from the first project tied up in the lawsuit, we’re probably going to have to ask the residents of the city to help finance the second upgrade with an increase in their water and sewer bills.”
That increase could come in at the tune of an 18.9 percent hike in the water and sewer rates for city residents. Another alternative is raising Salisbury’s debt limit, which is considered a measure of last resort. Salisbury recently lowered its debt limit when the amount of money the town owed crept past its comfort level, but with a mandated $84 million wastewater treatment plant replacement on the table, city officials might have to raise the ceiling.
“In addition to the proposed increase in the flush tax, we’re going to have to have a tough discussion about raising the debt limit again,” said Ireton. “I’ve gone through a lot of mental anguish over that situation, but there might be no other way.”
The failed first upgrade cost the city $82 million, $42 million of which was paid by the city with the other $40 million coming from the state. Salisbury now finds itself in the position of funding a second major upgrade, said City Attorney Paul Wilbur.
“The town spent multi-millions on the first upgrade and we now have to spend multi-millions on the second upgrade because the first one didn’t work,” he said. “The second upgrade is a tried and true system and we’re very optimistic it’s going to work this time, but in the meantime, our sewer rates are going up because we have a very large financial problem to swallow.”
Community leaders seemed willing to accept the increase if the rates went back down when the project was paid for, or the pending lawsuit had a good outcome for the city.
“That has always been part of the plan,” he said. “Those rates have to come back down.”