NEW LONDON -- A $3.4 million street and utility project was approved Wednesday by the New London City Council. Construction will begin this spring.
A 23 percent rate increase for water and sewer rates -- which will go into effect retroactively to Jan. 1 -- was also approved.
About a dozen people attended public hearings on both issues.
Considering the condition of the current economy, Cynthia Clark asked why the council was proposing a large construction pr-oject, funded with $835,000 in assessments of property owners, at this time.
"Why now when the economy is so bad?" she asked. "It's going to hurt people."
While sympathetic, the council said the street and utility work has been discussed, but put on the city's back burner for years. The streets need to be repaired and water and sewer lines are old, cracked and leaking.
"We knew this was coming even before the Great Recession," said Councilman John Mack.
Mack said the economy may actually work in the city's favor when the project is put out for bids early this spring.
Contractors hungry for work could mean getting work done at a lower cost. This may be the "least bad time" to make this kind of financial investment, he said.
The city is also eligible to receive a low-interest loan from the Public Facilities Authority that will cover a majority of the construction costs.
The city expects to have an interest rate of 2 to 2½ percent on a $3 million loan.
Assessments will pay for 25 percent of the project. That low rate will be extended to residents' assessments, City Administrator Trudie Guptill said. Usually assessments carry a 7 percent interest rate.
There's also hope that the construction project will save the city some money in the long run on sewer charges.
The project includes replacing or repairing old sanitary sewer lines. Ground water is seeping into cracked lines and is being processed at the Green Lake Sanitary Sewer and Water District sewer plant. Because the city is charged for sewage that's pumped out of the city, taxpayers are paying to treat clean water.
Last year the city paid $125,000 just to treat clean groundwater that had infiltrated the sewer lines.
"That alone should be reason to do it," said Sally Packer, a resident speaking in favor of the project.
To help cover some of the utility construction costs as well as increasing usage rates, the council voted to increase utility fees by $3.30 per 1,000 gallons for a new rate of $17.25 per 1,000 gallons. For the average New London resident who uses 4,000 gallons, the increase will mean an additional monthly utility fee of $13.20.
With all the base fees and new usage rates, the average customer will pay $103 for water and sewer. They currently pay $89.80.
Bruce Nelson, who works for GlenOaks Senior Living Campus, asked that the council consider large commercial water users when setting the higher utility fees. Nelson said the higher rate could mean an annual increase of $8,000 for the facility.
Mack said the council didn't raise city taxes this year because they knew this project and utility rates would be coming.
During a debate about whether the city would've been better off maintaining their own sewer treatment facility rather than purchase services through the GLSSWD, Councilman John Bergman said the cost of building and operating municipal plants is skyrocketing.
He said the GLSSWD's utility rates used to be some of the highest in the state, but that's no longer the case as new expensive systems come on line in other towns.
The council made no promises that rates wouldn't continue to increase, but said hopefully the bump won't be as big next year.