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Big Sky’s water and sewer district is finalizing its financing for a wastewater treatment plant upgrade and expansion intended to accommodate growth, with total costs projected to reach around $52 million.

Ron Edwards, general manager of the Big Sky County Water and Sewer District, said Thursday that project costs have been locked in at approximately $47.5 million since bids from contractors opened in January.

However, that total doesn’t include $3 million in contingency expenses, around $1.5 million in a debt service reserve fund and $300,000 in costs of issuance. With these expenses included, the total is a little over $52 million, he said.

The district initially estimated the upgrade and expansion would cost $35 million, but that estimate later increased to $43 million in large part because of unexpected hikes in concrete prices.

Edwards said the costs associated with the expansion have become more clear over time, but the financing process has been strung out.

Big Sky is updating and expanding its wastewater resource recovery facility in response to increasing development in the resort town. The district’s average daily treatment capacity is expected to go from about 650,000 gallons to around 1.3 million, Edwards said.

Depending on demand, the district’s current wastewater treatment plant should have enough capacity to handle the volume of requests for new hookups until the new plant is built, Edwards said. He anticipated construction would finish by the summer of 2023.

The district initially planned to use a State Revolving Fund loan to finance the project, but officials learned in November that the program didn’t have sufficient funds.

The loan program hadn’t been adding enough money to the pool to keep up with the costs of infrastructure projects in general, and these costs have increased tremendously, according to Edwards.

“We had to shift and find financing solutions,” he said.

The district is close to securing funds for the new plant through a private lender. It plans to finalize the financing documents and get authorization to sign a bond purchase agreement during a board meeting scheduled for Tuesday.

Edwards said he anticipates construction on the new plant will start in May.

First Security Bank financing is expected to cover approximately $43 million, according to district documents. Available district funds will cover another $6 million, a State Revolving Fund loan will cover around $1 million and a SRF grant will cover $350,000.

Up to $27 million in project funding is expected to come from a voter-approved increase in area sales taxes. The 1% tax hike will expire once the project is paid for.

Edwards said officials are in the process of creating a debt schedule for the bond purchase agreement.

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Helena Dore can be reached at hdore@dailychronicle.com or at 582-2628.

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