The Valparaiso City Council is considering a $10 million bond issue for three new water wells on the city’s east side.
The project would also use up to $4 million of Valparaiso City Utilities’ cash reserves, avoiding a rate increase.
Meanwhile, the city is negotiating with Indiana American Water on possibly switching to Lake Michigan water from groundwater, Utilities Director Matt Zurbriggen told the council.
That would be a long-term solution, he said. The new wells are needed to ensure the city is able to supply adequate water for the foreseeable future.
“As you may know, wells do not last forever. Typically 30 years, or 40 years if we get lucky,” Zurbriggen said.
Currently, the city has 26 wells, three water towers and one booster station.
The city is split into two zones, Flint Lake to the north and Porter County Regional Airport to the south. Water can be transferred between them via the Billing Street booster station.
In the past 10 years, the city has invested $33 million into its water system, not including “pay as you go” routine investments.
“In my opinion, you can never have too much water,” Zurbriggen said. “A few catastrophic failures can impact your system if you’re not prepared.”
The existing wells meet current demand, but key wells at the Valparaiso Country Club and near the Flint Lake water plant are aging, Zurbriggen said.
The city’s average daily use is about 4.8 million gallons but is projected to increase to 6 million by 2040. The peak day is projected to increase from 6.8 million to 8.9 million. That’s near the 8.6 million “firm” capacity that factors in removing the largest two wells from production, a what-if scenario that factors in potential failure.
More Top Picks Best Professional Cpr Training Mannequin Kits
Adding the new wells increases those numbers slightly, to 9.1 million “firm” capacity.
Wells on the east side property, where a youth sports complex was proposed but later abandoned, would have a capacity of 2 million gallons per day to improve redundancy and support long-term reliability.
The bond issue would support three new wells and 11,200 linear feet – about two miles – of transmission line to send the water to the Flint Lake water treatment plant.
The total estimated project cost is just under $13.4 million.
Eric Walsh, of Baker Tilly Municipal Advisors, said his calculations include a 7% maximum interest rate but estimates the actual rate to be in the high threes or low fours. “Macroeconomically, there’s a lot of things going on that are affecting interest rates,” he said.
VCU has plenty of cash reserves now – about $13 million – but that wasn’t always the case.
“It would have been unheard of 15 years ago” to tap reserves for the project because VCU had only a few hundred thousand dollars on hand.
Interest earnings are $250,000 above what a rate study a few years ago predicted.
Growth in the customer base, not the rate increase two years ago, is driving revenues above projections, Walsh said.
The council will consider the proposed bond issue again on June 8, when a public hearing will be held. The project’s estimated start date is Aug. 1.
Doug Ross is a freelance reporter for the Post-Tribune.