Replacing the town’s underwater wastewater pipeline is not optional. But the town is seeking a low-interest loan for the project, which must be approved by town voters.
In March, town voters will see the referendum on the ballot to either approve or deny the town’s request to pursue a loan of up to $33 million through the Clean Water State Revolving Fund.
“This is not an optional project. We need to do it. It’s good for the utility system, it’s good for the health of the bay,” Town Manager Howard Tipton said. “The question for the voters is: How do we want to pay for it?”
The 2.8-mile subaqueous force main — simply put, an underwater wastewater pipe — transports the town’s wastewater across to the mainland, where it is then processed in Manatee County.
The current force main is about 50 years old. In 2020, there was a small leak that resulted in the mainland portion of the pipe being replaced and pushed the town toward a necessary replacement of the underwater portion.
Photograph of the pipe lying on its side at the Town of Longboat Key’s Public Works Department. The breach was in the bottom invert of the pipe.
The mainland portion of the pipeline was replaced in 2023 and cost $2.6 million.
This existing pipeline is made of 20-inch ductile iron and would be replaced with a state-of-the-art 24-inch high-density polyethylene pipeline — a type of thick plastic.
The project is important for the health of Sarasota Bay, under which the pipeline is installed.
“Wastewater is probably the single largest risk to the health of Sarasota Bay,” Tipton said. “Nobody wants to see anything that would cause any damage (to the bay).”
The State Revolving Fund (SRF) loan presents the town with the lowest-cost option compared to the other options, which would be revenue bonds.
But the SRF loan requires a secondary pledge. For example, if the town’s primary method of paying the loan back — in this case, utility rate revenues — would not work out, the town would need to use other funds like tax revenue.
“We have no plans to do it, but it’s just a requirement of the state that there’s a backup pledge and that’s what triggers the referendum,” Tipton said.
This puts the loan in the voters’ hands.
The town can’t advocate a position for or against the referendum, but Tipton said it’s a fact with the SRF loan, the town and its residents pay less over time.
“What we have said, and it’s a factual statement: ‘If you vote less, you pay less,’” Tipton said.
The town also received a $3 million state appropriation for the project with the help of Congressman Vern Buchanan, with another $1.5 million being requested in the upcoming legislative session.
This shows the town’s activeness in seeking other funds, Tipton said, which is also good to show the loan granters.
If the referendum fails, though, it could mean the residents pay more on utility rates.
Without the SRF loan, the town would need to pursue revenue bonds, either at a 20-year or 30-year term. Either way, the revenue bonds carry higher interest and do not require a referendum.
In September 2024, the town commission approved an updated utility rate schedule that considers the SRF loan payments.
If the revenue bonds are the only option, then the town would have to re-evaluate those rates and likely increase them due to the bonds being higher-cost options.
| Finance Option | Term | Interest Rate | Total Cost | Annual Payment |
|---|---|---|---|---|
| State Revolving Fund Loan | 20 years | 2.89% | $37.6 million | $1.9 million |
| Revenue Bond A | 30 years | 5.51% | $58.5 million | $1.9 million |
| Revenue Bond B | 20 years | 5% | $45.9 million | $2.2 million |
