Tuolumne City Sanitary District sewer plant improvements were formally completed last month, about four years after the project was initially started.

The district's Board of Directors put its stamp-of-approval on the completed work Wednesday night during a regular meeting at the district office. The approved "notice of completion" must be submitted to the U.S. Department of Agriculture, which provided the nearly $5 million loan to fund the project.

The district will pay off the loan over 40 years at 2 percent interest.

Past directors have called the plant improvements one of the last "major hurdles" facing TCSD, which has weathered lawsuits, financial disputes and talks of dissolution in recent years.

In May, the board awarded an approximately $2.38 million contract to GSE Construction for the final phase of the sewer plant project. The Livermore-based contractor completed the work on July 31, which included the construction of a "sludge handling facility" and multi-use building.

The district has until Sept. 29 to use $200,000 left over from the USDA loan, according to District Engineer Chad Coleman.

Following the meeting, Board President John Feriani said the district already has plans for spending the extra money, including projects to improve the flow in the district's outfall system and improvements to eliminate inflow and infiltration in the sewer collection system.

Acquiring the USDA loan was necessary for the district to complete the final work on the sewer plant, constructed for roughly $6 million in 2008. The plant was designed, in part, to serve the Tuolumne Band of Me-Wuk Indians' Black Oak Casino.

Part of the district's financial troubles stemmed from a 2009 settlement with the Tuolumne Band of Me-Wuk Indians that eliminated a disputed $2.9 million bill for sewer connections.

Work stalled that year due to lack of funding and the contractor at the time sued the district over unpaid work worth about $750,000.

Part of the USDA loan was used to pay back the debt, Feriani said.

In 2011, the Tuolumne County Civil Grand Jury recommended the district and the tribe's Tuolumne Economic Development Authority return to the negotiating table and work out a new deal, which TEDA swiftly dismissed in a response to the report.

However, the relationship between the tribe and district has healed in recent years, Feriani said.

"The relationship got better once TEDA saw everything was getting more efficient (at the district)," he said. "They have been very helpful."

The district has also mulled a possible merger with Tuolumne Utilities District since 2011. Feriani said the idea was placed on the backburner in May after talks with TUD revealed that TCSD customers would likely see their rates increase under a merger.

Feriani said the district wanted to avoid that because customers have already seen some significant rate increases due to mismanagement from previous TCSD boards.

Monthly rates started rising in 2006 after decades of hovering around $15, Feriani said. Rates rose from $40 to $52.75 per month in 2011, which Feriani said helped the district secure the USDA loan.

Feriani said the increases have been necessary to keep the district financially solvent while accommodating for growth.

"Keeping rates artificially low to stay elected is stupid," he said.

Since being appointed to the TCSD board in 2010, Feriani also has worked on getting the district "back on track." His goal is to see all of the township's special districts - which include the sewer district, plus fire, park and cemetery districts - consolidate into one community services district.

Feriani said oversight is one problem with multiple districts in a community the size of Tuolumne, because it can be difficult filling each board with five qualified members. For example, TCSD is currently operating with only four directors.

"Almost all of the districts have had issues because there weren't enough people involved and not enough transparency," Feriani said.

Director Bill Waters praised Feriani, who regularly attends the board meetings of every special district in Tuolumne as well as TUD, for his efforts at TCSD.

"This man is giving many hours of his life to this community every day of the week," Waters said. "He not only oversees this district but has the knowledge to do so."

The district serves about 900 residential and commercial customers in the Tuolumne area. It also serves Black Oak Casino Resort, which has an equivalent of roughly 700 connections.

In 2012, operating revenues for the district were about $1 million. Its net assets were valued at roughly $6.3 million that same year.

According to a recent report from the Tuolumne County Local Agency Formation Commission, the district's average annual wastewater flow was 160,000 gallons per day with peak flows exceeding 1 million.