The main problem prompting the city to issue a revenue bond is the aging and potentially dangerous infrastructure at the headworks building, which has not been upgraded in more than 22 years.

If the bond election is successful, the schedule would call for construction bidding to go through the winter and construction on a new headworks facility to begin in May 2024.

Hailey’s wastewater treatment plant receives untreated influent through a 10-inch-wide pipeline beneath Woodside Boulevard called the “Woodside Trunk Sewer.” The pipeline receives influent directly from households and businesses on the east side of Hailey and indirectly from customers on north and west sides of the city—the latter group whose wastewater first enters a pressure line near Heagle Park and then is pumped under state Highway 75 to Woodside.

In the Woodside Trunk Sewer, the water moves south and east towards the treatment plant, where it flows into a final lift station and up a hill to a primitive metal-framed building resting on a concrete block. This is the headworks building, the first stop on a campus where preliminary treatment begins.

The headworks building has a grated floor under which raw sewage moves through two open channels, passing through a fine screen and corkscrew-like auger that removes large pieces of debris.

According to Wastewater Division Manager Bryson Ellsworth, toilet paper and improperly flushed items—like banana peels put down the garbage disposal—can evade capture by the auger, which only has a tolerance of one-eighth of an inch of debris. Today, the auger is handling well over a half an inch of debris, sending improperly flushed waste down the chain and damaging downstream equipment.

One such piece of downstream equipment that has been damaged is the grit separator, which separates wastewater from heavier waste such as coffee grounds and high-fiber grains. The machine is “very dated” with only about one year of life left, according to Ellsworth.

Also concerning to the city is the hydrogen sulfide gas produced by wastewater in the headworks building. The flammable, corrosive gas has eaten away much of the building’s concrete and metal over the years. It’s also deadly at 300 parts per million, meaning the building must have a powerful air handling system to feed fresh air in and out and prevent the gas from causing an explosion or killing any operators who may be inside. But, according to Ellsworth—and as evidenced by corroded pipes and heavily rusted railings and beams—the headworks building’s air handling system is failing, and so old that the city can’t order parts for it anymore.

If the bond passes, the city will replace the headworks auger system, expand the headworks building by adding two new, more efficient channels for influent, and build a positively pressurized electrical room to prevent hydrogen sulfide from entering the headworks. Altogether, these planned upgrades would ultimately help the facility produce cleaner effluent, save energy and increase workplace safety, according to the city.

Hailey’s treated wastewater has consistently tested below pollutant levels specified by the city’s EPA permit, Ellsworth said, but he and other staff have noticed suspended solids, ammonia and phosphorus levels slowly creeping up as the headworks facility continues to break down. The risk is that after a certain point, the city could violate its permit.

“We’re heavily limited on three things we can put in the river—suspended solids, ammonia and phosphorus,” Ellsworth said. “Ammonia can cause fish kills, while phosphorus can cause algal blooms.”

How would the facility upgrades be paid for?

Hailey’s plan for funding the projects calls for selling municipal revenue bonds to buyers and repaying those bonds with higher sewer fees paid by homeowners and businesses.

Revenue bonds are commonly used to generate income to fund major municipal projects, such as water and wastewater system upgrades. Though they are a form of debt, unlike general-obligation bonds, they are not paid for with tax income. Revenue from the facility at issue—in this case, sewer fees paid to the city—are used to make interest and principal payments to the purchasers of the bonds.

Eric Heringer, financial adviser with Piper Sandler & Co., said the city would end up paying $3.67 million to $4.84 million in interest over a 20-year period for a total cost of $9.67 million to $10.8 million.

Heringer said most utility systems that he works with throughout the Northwest typically finance water or sewer projects over 20- to 30-year horizons.

“Financing over the longer term minimizes the impact on ratepayers,” he said. “You could pay a bond off in five years, but in year six, whoever moves into town isn’t paying for that capital improvement that’s going to benefit the community long past the initial five-year period.”

The 20-year plan calls for bolstering wastewater fee income by at least $298,500 per year for the next 20 years in order to cover the cost. That boils down to approximately $25,000 in revenue per month for the city.

The city has a few ways to raise an extra $25,000 per month. It could increase the monthly base wastewater user fees—which are charged based on the amount of potable water used by a property between the months of November and March—by about $7.64 per household, or it could add a separate bond fee in residents’ monthly bills.

The city could also implement wastewater bill increases up to $1.66 per 1,000 gallons or $8.29 per 5,000 gallons. If the city decides on a $1.66/1,000 gallon rate increase, for example, a family of four that uses 4,000 gallons per month—Hailey’s average household use, according to Utlity Clerk Jennifer Pomerleau—would see their bill increase about $6.60/month, from $59.99 to $66.63.

If voters give the city permission to pursue the revenue-bond sale, the Hailey City Council will take public input during future hearings to decide whether the rate will be charged as a flat rate to users by month or charged based on gallons of water used.

Public Works Director Brian Yeager said adopting a “cost per thousand gallons” billing structure would be a major departure from the current base water user fees, and could have advantages for second-home owners.

“If we convert the entire thing to a per-gallon usage, and you choose to shut down your house for a year or bulldoze it and make the lot vacant, you have just exempted yourself from the bond payment,” Yeager said. “But these conversations are part of our rate structure, which is separate from our financing, and ahead of us.”