The Henderson City Council at its Jan. 11 meeting approved a request from the Kerr Lake Regional Water System to accept a revised project cost of $57 million for regional water system upgrades. This action, along with approval to purchase a new pump, is the latest in a years-long effort to supply water to the 15 municipalities in the region.

Construction costs have risen significantly from earlier estimates, and KLWRS advisory board chair Garry Daeke said Thursday that the council’s approval will allow for the project to continue, but if grants or other types of funding can’t be found to pay for the shortfall, customers could see a rise in water rates.

“If we can’t find anything (in grants or loans), we’d be talking rate increases,” Daeke said in an interview on Thursday. “We could see some rate increases, but we’re trying to stay away from that,” he said. “We’re all on board with it,” he said, referring to the other partners in the regional water system. “We’re just trying to figure out how to pay for it.”

The new pump will cost about $3 million, Daeke said, and it can still be used in the new construction project. The money will come from the KLWRS  fund balance, he said.

Originally, the project cost came in close to $40 million, but in the fall of 2020, the company undertaking the project reported that costs had risen and it would cost significantly more to complete the project.

After reviewing several options to lower the price tag, the KLWRS advisory board chose to reduce the amount of water the new system will be able to process, for the time being. “The 15 (million gallons a day) should be fine because we don’t have that demand yet,” Daeke said, adding that the regional water system needs to make sure it can meet increased demands in the future.

Henderson is the majority partner in the regional water system at 60 percent, with the cities of Oxford and Warren County rounding out the balance with 20 percent each. Oxford recently requested, and received approval for, a $6 million grant, which would reduce the overall shortfall to just more than $11 million.

All three partners are still in favor of the project, Daeke noted. “We want to do it, obviously,” he said of the construction upgrades, “but the longer we wait, the more it’s going to cost, I think.”

Preparing for future needs with infrastructure upgrades now can be challenging, he said.
“We don’t know what our customer base will be in the future, so it’s kind of unpredictable as to how much we want to go to,” Daeke said, of the water system’s capacity. We can draw 20 million (gallons a day), so we want to be able to process that much if we can,” he added.

The project will rehabilitate aging facilities, replace old equipment and expand facilities to bring the treatment capacity to, ultimately, a reliable 20 million gallons a day. The City Council must approve any additional requests for funding, in the event that loans or grants are not secured to cover the shortfall.