As the City of Moline finalizes its plans for a nearly $20 million expansion of its water plant over the next few months, the city will also put the finishing touches on an application for a low-interest state loan that could have a major impact on the utility's ability to maintain its aging system.

The city plans to apply for $19.5 million from the Illinois Environmental Protection Agency Water Supply Loan Program sometime next month. A public hearing last week - at which nobody from the general population spoke - was the final step of the "pre-application" process.

A response from the agency could come as soon as late May. Officials are planning a late-summer or early-fall groundbreaking for the expansion.

The loan is important to the city because the plant project would cost between $7 million and $9 million more in interest if Moline doesn't get the loan and is forced to issue higher-interest bonds.

According to city water officials, not getting the loan might force the utility to cut back on modernization and maintenance programs. "We have only one way to get money, and that's the water rate," said Greg Swanson, Moline's water-plant manager. The water utility is not supported by the city's general fund.

Moline increased its water rates in April 1999 and has two more hikes planned to pay for the plant expansion - in April 2001 and 2002. No matter what happens with the state loan, the city does not plan to ask for another rate hike in the near future, said Joe Cowan, Moline's water general manager.

Before the rate increases, customers who used 80,000 gallons of water per year paid $224 annually in water user fees. Following the 2002 increase, that amount will be $330. (Those rate increases, in addition to paying for the water plant, also include the cost of replacing about 15 miles of water mains each year.)

Water-main replacement and a $150,000-a-year meter-modernization program could be trimmed if the loan is not approved, Cowan said.

The city would pay about the same amount on debt service each year - approximately $1.7 million - with or without the loan, Swanson said. But the state loan would be paid off within 15 years, while bonds would take 20. The loan would have about $4.9 million in interest over its life, while bonds at the current rate would have a price tag of $13.4 million in interest.

Neither Swanson nor Cowan would speculate on Moline's chances for the state loan. On the one hand, it works in the city's favor that its designs are about 90 percent completed and that it will be securing a construction permit in the coming months. But Moline's continued compliance with drinking-water-quality standards means that communities with a greater need might take precedence. "If we weren't making safe drinking water, [we'd] move to the top of the list," Swanson said.

Water quality has not suffered because of old equipment and facilities, Swanson said. Moline has actually improved water quality "by squeezing every bit of life we can out of the plant and the aged equipment," he said. "We cannot continue to do that. ... Either the water won't come out of the faucet, or another system will fail."

Moline's current water plant was opened in 1932, and much of the equipment dates to the 1960s. But the city isn't replacing equipment simply because it's old. "Just because something's old doesn't make it bad," Swanson said. "We're keeping the same pumps from the 1950s" because they're better than those produced today. Some equipment, though, is worn out, while other components of the system are out-of-date.

Citizens "are getting an insurance policy" that their water supply will be reliable, Cowan said. Basic water-processing technology hasn't actually progressed much from the 1930s, Swanson said. But regulations - particularly the Safe Drinking water Act of 1974 - require the technology to be fine-tuned. "We need tighter control, finer control," he said.

The expansion project will have three major components: the rehabilitation of existing facilities, including the electrical and heating systems, the roof, and windows; construction of a new clarifier building for water-processing; and construction of a new operations building, which would enable better monitoring and record-keeping. And although the plant is currently rated at a 12-million-gallon-per-day capacity, Cowen said the utility sometimes - during cold weather especially - has difficulty maintaining its 5.6-million-gallon-per-day average output. The upgrade will allow Moline to actually reach its rated capacity.

The increased actual capacity ensures that the plant can produce enough water for Moline - now and in the future - but it also gives the city some revenue-generating options. Many utilities are facing the same issues as Moline - aging equipment struggling to meet tougher regulations - and it's not cost-effective for smaller communities to upgrade their plants.

Cowan envisions a more regional approach to water supply, one in which Moline provides water to the Rock Island Arsenal and communities such as East Moline and Silvis.

This makes sense for Moline, he said, but it also could be a good deal for those towns. While Moline cannot get grants to upgrade its water plant, smaller communities can get assistance for similar projects, and that might include tapping into Moline's water supply. Cowan added that Moline's upcoming expansion makes future growth easy and relatively inexpensive; the city could add 6 million gallons per day of capacity for $6 million, he said.

"I think it is the future," Cowan said.

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