Palmerton plans to borrow $10 million to afford a project to rehab its aged wastewater treatment plant.

Borough council on a 5-0 vote Thursday agreed to advertise for the first reading of an ordinance that will enable the borough to utilize interim financing over two years. Councilmen Randolph Gursky and Richard Nothstein were absent.

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

"Our goal tonight is to lock this in and get the money as soon as we possibly can," Danielson said. "We can possibly have this started by the end of March."

Danielson told council the borough "continues to pursue all kinds of financing," such as the Pennsylvania Rural Water Association, an H2O grant, and PENNVEST funding.

In June, the borough applied 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.

"Because our (water) user rates aren't high enough, we've been disqualified," he said. "We will drop pursuing the Department of Agriculture grant."

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.

"There's still a lot of work, a lot of time, a lot of resources to apply for these grants," he said. "These are not easy."

Danielson said the ordinance to borrow the money will be listed for adoption when council meets at 7 p.m. Feb. 10.

In a related matter, 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.

Council's decision came after David Schlott, of ARRO Consulting Engineers, recommended that it 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.

Councilman Chris Olivia asked whether there was room for a fourth tank if needed.

"There's an additional plant we have located on the plan if needed," Schlott said. "It's an upgrade to the existing plant. It's all in that tank."

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

Before that vote, Olivia questioned if the move represented an additional cost, to which Danielson said it did.

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.

Olivia said he had no problem with ARRO.

"They've always done a good job," Olivia said.

Schlott told council the firm is ready to get the project started.

"We're looking forward to getting this project under way," Schlott said. "This is a very exciting project."

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.

The 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.