The city of Akron is taking out its first 45-year loan to spread the “unaffordability” of a $1.4 billion sewer project for generations to come.
Akron City Council’s budget and finance committee gave a favorable recommendation Monday for the plan, which will authorize Mayor Dan Horrigan’s staff to apply for a $10 million loan from the state’s Water Pollution Control Fund. The financing will help with the $21.9 million cost of installing a storage basin on the south side of Cuyahoga Street near N. Howard Street. The structure will hold up to 2.4 million gallons of waste and storm water from North Hill as the city works aims to contain every drop of effluent per a federal environmental lawsuit.
Steve Fricker, deputy finance director for Akron, said the benefits of cleaner water will be felt for a century. “It makes sense to spread the cost of this huge project over multiple generations,” he said.
But longer loans, though reducing annual payments, come at a higher interest rate. If repaid in 20 years at 2.3 percent interest, the $10 million loan would grow by $2.5 million. At 45 years, however, the interest rate climbs to 3 percent, adding $8.3 million to the bill.
With a goal of avoiding another sewer rate hike before 2020, the lengthier loan will shrink annual payments by $220,182 compared to the shorter 20-year payoff plan. “It’s quite a bit more affordable,” Fricker said.
Doug Livingston can be reached at 330-996-3792 or dlivingston@thebeaconjournal.com. Follow on Twitter: @ABJDoug .