Colfax restructures $539,650 debt for lagoon bank stabilization project
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by LeAnn R. Ralph
COLFAX — The Colfax Village Board has approved restructuring debt of $539,650 to pay for the project to stabilize the Red Cedar River bank so that the village’s wastewater treatment lagoons do not wash out.
The village board approved the debt restructuring at the August 26 meeting.
The Red Cedar River bank project was not supposed to cost this much.
The initial estimate to stabilize the river bank was $1.6 million, with the U.S. Army Corps of Engineers paying 65 percent of the cost and the village paying 35 percent of the cost.
In 2019, Colfax was awarded $592,000 in Community Development Block Grant funds to cover the village’s 35 percent of the project.
The Colfax Village Board unanimously approved accepting the CDBG funds of $592,000 in August of 2019.
The money from the Army Corps of Engineers is considered to be matching funds, so with the award of the $592,000 as CDBG funds, the only cost to the village for the $1.6 million project was expected to be $35,000 to $40,000 to CBS Squared for the grant application, grant administration and project oversight.
But instead of the bids for for rip-rap, slope excavation, restoration seeding and an access road coming in at the initially-estimated $1.6 million, the bids came in at around $2.6 million, the Colfax Village Board learned in February of 2022.
The Colfax Village Board subsequently approved a resolution establishing that the village would borrow $600,000 to pay the additional cost of the Red Cedar River Bank stabilization project.
The Colfax Village Board also approved a resolution authorizing the administrator-clerk-treasurer or the village president to act as the representative for the Village of Colfax to file the application for a Clean Water Fund loan and any other necessary paperwork for financial assistance from the Wisconsin Environmental Improvement Fund.
Payments on a Clean Water Fund loan would be covered by the village’s sewer and water utility and would not come out of the property tax levy.
The Clean Water Fund has a grant fund available for “principal forgiveness” of a loan.
The village would not know until 2023 whether the loan would be forgiven or whether it would be a low interest loan, according to Jon Strand of CBS Squared, who spoke to the village board about a Clean Water Fund loan in January of 2022.
Disagreement
Unbeknownst to the Colfax Village Board until only recently, CBS Squared was never able to complete the application for the Clean Water Fund loan.
The U.S. Department of Housing and Urban Development, which handles the CDBG funds, and the United States Army Corps of Engineers, got into a disagreement, said Carrie Johnson, village administrator-clerk-treasurer.
Actually, Johnson described the disagreement between the two federal agencies as “a pissing match.”
The Army Corps of Engineers does have a reputation for being difficult to work with.
Because of their disagreements, which resulted in not getting information to CBS Squared in a timely manner, CBS Squared missed the application deadline for the Clean Water Fund, Johnson said.
The village borrowed money to cover the increased cost of the lagoon bank stabilization project in anticipation of being able to receive a Clean Water Fund loan or a grant, she said.
The way the loan is structured, Colfax owes the money on September 1, Johnson informed the village board.
The village can still apply for the Clean Water Fund loan, said Rand Bates, director of public works.
The village can continue fighting for the Clean Water Fund money, but in the meantime, the debt must be restructured, Johnson said.
The Colfax Village Board unanimously approved restructuring the $539,650 debt with Dairy State Bank.
The five-year interest rate will be 5.75 percent tax-exempt.
The loan would be mature in five years, but the payments can be amortized as long as 20 years.
The payments will amount to about $50,000 per year.
Currently, there is $24,880.41 in interest that must be paid by September 2, Johnson noted.
If Colfax had been able to apply for the Clean Water Fund and had been denied Clean Water Fund money this time around, the village could have applied for the money again in four years.
Since the village never actually did apply for the Clean Water Fund the first time around, presumably the village could apply for the money again right now.
Johnson also told the village board that the Army Corps is two years behind in reconciling their accounts and that it is possible the village could get some money back for the lagoon bank project.
Deadline
The deadline for closing out the project to install rip-rap to keep the Red Cedar River from washing out the wastewater treatment lagoons was extended from December 31, 2021, to December 31, 2022.
The project was delayed because of problems caused by the Covid-19 pandemic.
The Colfax Village Board approved the agreement to extend the deadline between the Wisconsin Department of Administration and the Village of Colfax in July of 2021.
Over the last several decades, the Red Cedar River has steadily eroded the river bank and has come much closer to the wastewater lagoons.
Estimates are that perhaps one hundred to two hundred feet of river bank have disappeared.
Although the Army Corp of Engineers came to Colfax to view the erosion problem in December of 2014 and wrote the report in 2016, the village noticed a problem with the river bank eroding away near the lagoons long before that.
In August of 2010, a thunderstorm that dumped up to eight inches of rain around the area in a couple of hours caused the bank to erode even more from stormwater run-off.
The wastewater treatment lagoons were built in 1982.
