Palmerton has agreed to borrow $10 million to recondition its antiquated wastewater treatment plant.

Borough council on a 6-0 vote Thursday agreed to adopt an ordinance that will enable it to borrow the money. Councilman Richard Nothstein was absent.

Council agreed to take out a three-year general obligation note through First Niagara Bank at a fixed interest rate of 2.85 percent.

That decision came after council heard from attorney Jens Damgaard, who serves as the borough's bond counsel.

Damgaard told council its decision to seek short-term funding will still enable it to pursue PENNVEST funding as a means of permanent financing.

Last month, council on a 5-0 vote agreed to advertise for the first reading of the ordinance for the borough to utilize interim financing over two years.

Borough manager Rodger Danielson said at that time the interim financing would address additional costs for engineering services, construction contingencies and change orders.

Danielson also said at that time the borough would continue to pursue its financing options, such as the Pennsylvania Rural Water Association, an H2O grant, and PENNVEST funding.

Also at that time, council, by the same vote, agreed to the intent to award the wastewater treatment plant upgrade project to KC Construction Company of Ivyland, Bucks County.

That decision came after David Schlott, of ARRO Consulting Engineers, recommended that council award the contract to KC Construction, pending the approval of financing for the project and review of the contractor's bonds and insurance.

Schlott said the company was the apparent low bidder for the project based on pre-cast post tensioned concrete construction as its bid included a deduction in cost of $250,000 for the alternative, for a total bid of $8,350,000.

The project was bid as one general contract with all other trades being subcontractors to the general contract, Schlott said. The bidding included an alternate that was for the construction of the new sequencing batch reactor tanks using the pre-cast post tensioned method of construction, he said.

The three SBR tanks will be constructed using the precast concrete method and are the main treatment units in the project, Schlott said. The SBR tanks measure 42 feet by 122 feet, and are the largest tanks in the treatment plant, he said.

Afterward, council agreed by the same vote to hire ARRO for construction of engineering services for the project at a cost of $532,565.

Danielson said council last year approved ARRO for the design of the project at a cost of $337,000, which means it will pay the firm about $870,000 from start to finish.

Council agreed in June to apply for an H2O grant in the amount of $8,164,530.

That decision came after council in April authorized Danielson and borough solicitor Michael Ozalas to prepare a $10 million bond issue after it learned the project would cost more than expected.

However, Danielson informed council that the borough will no longer pursue funding from the U.S. Department of Agriculture after it inquired whether it could receive $10 million of the proposed $34 million the department was told it will receive.

Danielson said the borough's current water user rate is $33.50 per month. He added the rate could increase to $50 a month when the payment of the interim financing is due.

In October, council authorized the signing of a wastewater treatment plant consent order after it learned it owed the state Department of Environmental Protection $30,500 for the borough's deficient plant.

Danielson said at that time the consent order was necessitated by the borough's current wastewater treatment plant, which has been cited by DEP for several deficiencies over the past two years.

He said the borough would utilize money from its sewer fund to pay the consent order, and added that the action could actually work in the borough's favor as it relates to a potential grant through PENNVEST since one of the stipulations to qualify for the grant is to be under a consent order.

In August, council approved the acceptance of Carbon County bond financing after county commissioners approved an interest reduction loan that will issue economic development bonds.

That loan will result in about a $400,000 savings to the borough over the course of a 30-year bond issue, Danielson previously said.

The bonds are available through federal stimulus money, also known as the American Reinvestment and Recovery Act.