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Necessary improvements to rural water systems are difficult to make without funding from the Arkansas Natural Resources Commission, a mayor of a small mountain town told members Wednesday.
More than 8,400 feet of asbestos cement water lines in Marshall need to be replaced, and the Department of Agriculture’s Natural Resources Commission on Wednesday approved funding for the project as part of $204 million in allocations to water system improvements around the state.
Marshall will receive a $1.9 million loan with principal forgiveness and a $640,000 loan to be repaid.
“The principal forgiveness is huge in the rural areas,” Mayor Kevin Elliott said. “…I’m sure the city is really going to be looking in because they need these lines replaced, but when they see they’re another $600,000 in debt — we’re going to have to do a rate increase to cover that.”
Elliott said his town is similar to a lot of other rural communities that have a large senior population who live on a fixed income. Elliott said he receives complaints daily about the price of water, and he thinks there will come a point when the older adults in Marshall won’t be able to afford the cost.
As a former water superintendent, Elliott said, “I’ve seen people that walk in that office and I would grab their bill and I would pay it, because I know their lifestyles. When you’ve got 1,355 people, you know everybody by first name basis, just about.”
Rate increases for upgrades aren’t the only reason cities will be pushed to charge more for water.
Act 605 of 2021 implemented standards for how water providers in Arkansas regulate their systems. Per the law, a rate study case must be done every five years or before any major development project. Failure to complete a rate study or implement a required rate increase will “result in a determination that the water provider is in fiscal distress,” according to the state’s Department of Agriculture website.
Many of Arkansas’ water systems are using aging infrastructure that is in disrepair. Elliott said he hoped replacing Marshall’s water lines would help lower the amount of water lost. During a previous project, Elliott said the system had a 65% water loss and seven leaks were releasing water straight into the ground.
The $204 million in funding is the latest in a string of allocations the state has dedicated to improve water systems over the last few years. Using a mix of state and federal funds, more than $2.5 billion has been allocated in Arkansas’ 75 counties.
Gov. Sarah Huckabee Sanders has frequently highlighted the funding allocations. In a press release Wednesday, she said she was “proud to work with our local communities and the Department of Agriculture to ensure every Arkansan has access to safe drinking water.”
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Secretary of Agriculture Wes Ward thanked Sanders for her leadership and said, “Reliable water and wastewater infrastructure is essential for the sustainability of communities and industries throughout our state as well as the quality of life for every Arkansan.”
Wednesday’s funding allocations will affect more than 198,000 residents in 28 counties. Some of the funded projects include high loan amounts for a low number of affected people.
Elkins, a town of about 3,800 in Washington County, was approved for the highest loan amount Wednesday at $32.6 million. The commission also approved the town for a $2.3 million loan with principal forgiveness.
Mayor Troy Reed was unavailable for an interview Wednesday. Debby Dickson, water development section manager, assured commissioners that staff alerted city officials about the amount.
“We called and spoke to them before we made the recommendation, and they said they were aware it was going to be a big loan and they were prepared for it,” Dickson said.
Wabbaseka, a small town in Jefferson County, will receive a $7.9 million loan with principal forgiveness and a $1.9 million loan to be repaid. The project will serve a current customer base of 180 residents, and it will regionalize the water system with the nearby Grand Prairie Regional Water Distribution District.
“We struggle with the water most of all,” Mayor Andrew Goodloe told commissioners on Wednesday. “That’s the biggest problem, an age-old problem in these small communities. You just can’t afford to operate with such a small [number] of people.”
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Goodloe extended his gratitude to the commission for approving the town’s funding request and said the area needs forgiveness loans.
“It’s going to be tough either way, but we definitely appreciate it,” he said. “There’s one hurdle, and it’s a big hurdle because we were in bad shape.”
Principal forgiveness is considered using what Dickson said is a “rate burden factor calculation.” At the Department Agriculture, water project funding requests are analyzed as if the requester received 100% of the funds it asked for.
“Depending on their specifics, but in general, if [the water rate is] 1.5% of their median household income or higher, then they’re eligible to receive principal forgiveness,” Dickson said.
After the principal forgiveness is calculated, a project priority list is then referenced to determine if principal forgiveness will be offered, she said.
Ethan Barnes, mayor of Hardy in northern Arkansas, commended commissioners’ approval of Hardy Water Works’ funding request. Serving a customer base of about 750 people, Hardy officials were approved for a $334,000 loan with principal forgiveness and a $1 million loan to be repaid.
The funding is expected to be used to upgrade the wastewater treatment facility.
Barnes also challenged commissioners to revise the ratio being used to calculate principal forgiveness to help rural communities.
“Maybe some of these small towns wouldn’t have to take on the debts and raise the water prices for these elderly folks,” Barnes said of a reconsidered ratio. “I’ve got 65% elderly folks in my city, and they can’t afford it.”