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It appears a merger between the Tuolumne City Sanitary District and Tuolumne Utilities District is becoming less likely as time passes. During a meeting Wednesday of the TCSD Board of Directors, board President John Feriani said it’s “still a possibility” the district could dissolve and turn over its assets to TUD. But as of right now, Feriani said, the TCSD board plans to operate with that idea on the backburner.
“At this point, we’re moving forward like we’re not going to merge with them,” he said. The two districts have been in talks for months over a possible merger. Under such an agreement, TCSD would dismantle and hand over operations of its sewage treatment plant, and the district’s contracts, debts and assets, to TUD. However, Feriani said one of the deal breakers was that the sanitary district’s customers would likely see their rates increase. Feriani said discussions with TUD representatives revealed a rate increase would likely occur after dissolution. Representatives with TUD have also said they would not agree to a merger unless it would not affect current TUD customers. TCSD customers already have seen increases in recent years because of mismanagement from previous boards, and customers already have higher sewer rates than TUD customers The district plans instead to pursue consolidating the sewer, recreation, cemetery and other special districts in Tuolumne and forming a single community service district. “At this point, we don’t want to take the chance of increasing the rates,” Feriani said. However, TCSD and TUD are still working together. The two districts recently struck a temporary agreement that involves TUD in some operations and improvements at the TCSD sewage treatment plant. “They’ve been fantastic,” Feriani said. TCSD has faced a number of financial strains in recent years, including a face-off with the Tuolumne Band of Me-Wuk Indians over a disputed $2.9 million bill for sewer connections. Work on the $6 million sewage plant also stalled when the contractor sued the district for nonpayment. TCSD is in the process of securing a $5 million loan from the U.S. Department of Agriculture to finance improvements at the plant that are needed to meet regulations. The district Board of Directors approved a handful of resolutions on Wednesday to move forward on obtaining the loan, which the district would pay off over 40 years at 2 percent interest. One of those resolutions was to authorize using some of the USDA loan to pay off some $116,000 of outstanding debt for a bond dating back to 1979. Feriani said they have tentative approval from the USDA to use a portion of the funds to pay down the debt. However, during Wednesday’s meeting, district board members learned some bad news about the USDA loan. District Secretary Brenda Bonillo, who has worked closely with the USDA on securing the loan, said it’s unlikely they will receive grant funds right now. Bonillo and TUD staff members have been in contact with the California Water Association on finding grant money. However, she said on Wednesday that they’ve been informed that the sewer project is not as competitive as others. “They’re only interested in new projects,” she said. Bonillo said the district will continue to try and find grant funds, even with the news.
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