After several years of seeking financing for an estimated $7 million water system upgrade, Haines has acquired two crucial funding sources that will pay for more than half of the project.

Haines, population 416, was awarded a $1.9 million Community Development Block Grant (CDBG) last week and has also been approved for a $1.8 million partially forgivable loan from the Safe Drinking Water Revolving Loan Fund (SDWRLF) through the Oregon Health Authority and Business Oregon Infrastructure Finance Authority.

“It’s been a long struggle, said Valerie Russell, Haines city recorder.

A bonus to the city is that over half of the loan is forgivable. Russell said the city will have to pay back $750,000. The loan award was contingent on Haines also receiving the block grant.

The city’s quest for funding began several years ago after the Oregon Health Authority deemed the city’s aging water system — parts of which were built in 1910 — out of compliance.

Haines was awarded a block grant of $618,000 in 2013 to design the new water system.

Haines wasn’t eligible in 2015 to apply for a larger grant to help pay for construction, and its 2016 application was not successful.

But the third try proved to be the charm.

“We were beginning to think we were never going to get (funding),” Russell said. “It’s been a long, drawn out process.”

In 2015 Haines also applied, unsuccessfully, for a grant through the Oregon Water Resources Department.

Haines couldn’t apply for the block grant in 2015 because data from the American Community Survey (a yearly survey by the U.S. Census Bureau) indicated that less than 51 percent of the city’s households had low or moderate incomes.

“I knew that was wrong,” Russell said.

The problem with the survey was that it relied on a small sample size of Haines households — just 43 of 136 — said Nicholas Ducote, who at the time was working for the firm hired by the city — JUB Engineers –— to design the water improvement project.

Ducote’s work with JUB helped the city to clear some hurdles that led to state and federal agreement of a new survey conducted by Portland State University that showed that more than 51 percent of Haines households were at low or moderate incomes, as required for cities intending to apply for block grants.

Federal money paid for half of the costs of the survey with the city picking up the rest.

Ducote has continued working for the city through his firm, Ducote Consulting, as a technical and grant writer, as an advocate at a state and federal level for the project and to administer the grant funds including environmental work.

“When we didn’t get the awards (after the first application) it kind of turned into a project advocacy position making sure everybody knew how important this project was over in Salem,” he said.

Ducote said it’s exciting to see Haines receive the money it needs for the project.

OHA Compliance

Russel said the main issue with the city’s antiquated water system is a lack of pressure that could allow contaminants to enter the water supply.

“We haven’t had any problems yet,”she said.

The $3.7 million in grant and loan funding will pay to build a new storage tank, install water meters (which the city doesn’t have), and upgrade the electrical system for one of the city’s wells.

“This first phase will get them into compliance with the issues that they face,” Ducote said.

Another issue with the city’s water system is its lack of capacity.

Russell said the storage capacity is not large enough for the fire department to effectively fight a major fire.

“If they open up just three or four fire hydrants (the storage reservoir) is just emptied,” she said.

The next phase of the project calls for drilling a new well and replacing nearly all of the distribution lines.

“Pretty much the entire system is outside of its useful life,” Ducote said.

Russell said when the current project is done, Haines will likely apply for the same grants and loans to do the second phase. Due to limits on how much money a city can receive in a given time, it might take four to five years to finish the water system upgrades.

Water rates

One requirement of the state loan is that Haines raise its monthly water rate to about $49 a month at the end of the project to ensure the city can make the loan payments once the project is complete, Russell said.

Haines currently charges $41 per month, an increase of $10 from 2013.

(The city charges a flat rate rather than based on the amount of water used because it doesn’t have meters that measure water usage.)

Russell said the City Council started raising rates incrementally in 2014 to prepare for the improvement project.

Russell said the City Council will likely continue raising the water rates over the next two years to meet the $49 monthly water bill target.

Russell said that target might change before the loan paperwork is finalized.

“They might decide that the affordability rate is actually less or more,” she said.