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Tremonton is set to move forward with the next phase of building out its citywide secondary water system after securing the necessary financing and awarding a construction bid to a local contractor.

The city finalized a deal earlier this month with JPMorgan Chase & Co. to borrow $4.4 million to pay for the project, with plans to repay the bond using revenue from residential and commercial water customers. Earlier this year, the city raised its base rate for culinary water service from $13 to $18.90 per month, and also increased the rates it charges for different “tiers” of usage, in anticipating the need for more revenue to pay for secondary water expansion.

The city took advantage of historically low interest rates, securing a 2.242% rate that amounts to just under $850,000 in interest over the 15-year life of the bond for a total cost of nearly $5.25 million, or about $350,000 annually.

Officials were able to get a better interest rate by going with a “non-call” bond, which means the city cannot pay it off early. City Councilmember Lyle Vance, who retired last week following a 35-year career in banking, said it was the best option as the lowest rate for a bond that could be paid off early would have cost the city tens of thousands more in interest payments, and it’s not safe to assume the city would have the funds to pay off the loan ahead of schedule anyway.

“We considered all the alternatives, being able to prepay and the cost to have that ability,” Vance said. “It was like $38,000 just to have the right to pay it off quick, so that’s why we went with the bond that we did.”

Tremonton officials have been working to expand the city’s secondary water system as quickly as possible, as growth in recent years has pushed the capacity for culinary water to its limit and long-term drought continues to plague the area. Having secondary water available for outdoor watering, which accounts for a majority of residential water use during warmer months, greatly reduces pressure on the culinary system.

With bond financing in hand, the Tremonton City Council last week voted to award the bid for construction of the next phase to Tremonton-based Rupp Trucking & Excavating. Rupp’s bid of just under $3.8 million was the lowest among six bidders, and nearly $800,000 below the second-lowest bid.

The new financing will be used for secondary water system work in three sections of the city this year and early next year, including expansion of the system in the Archibald Estates area, completing work in the area north of Main Street and east of the railroad tracks, and putting in secondary pipes in the south part of town west of Tremont Street where a significant amount of new home construction has been happening recently.

Tremonton Public Works Director Paul Fulgham said excavation work for the next phase will begin around May 1, and the contractor has until May of next year to finish putting the new pipes in the ground.

“By next June that system will be up and running once we get the bugs worked out,” Fulgham said.

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