Canyon City has put together a package of loans and grants totaling almost $4 million to fix the city’s ailing water system. Local water bills will go up starting April 1, 2023, to pay off the loans.

CANYON CITY — Canyon City residents will see their water rates rise on April 1, and it is no April Fool’s joke.

The city has put together just under $4 million in grants, loans and forgivable loans to improve its ailing water system.

To pay back the loans, Canyon City’s water rates will increase from a base rate of $31 a month to $46 a month.

The lion’s share of the funds will come in the form of a tax-exempt loan through the Safe Drinking Water Revolving Loan Fund totaling $2,231,750. Another loan from the same source, totaling $680,000, can be forgiven provided the city meets certain conditions.

A tax-exempt loan of $525,000 through the Water/Wastewater Financing Program is the last of the loans the city received for the project. The final $525,000 in funding comes via a tax-exempt grant through the same program.

The Safe Drinking Water Revolving Loan Fund is a partnership program between Business Oregon and the Oregon Health Authority, funded by the U.S. Environmental Protection Agency. The program helps fund planning, design and construction of drinking water facility improvements.

The Water/Wastewater Financing Program, administered by Business Oregon, funds the design and construction of public infrastructure needed to ensure compliance with the Safe Drinking Water Act or the Clean Water Act.

The Safe Drinking Water Revolving Loan Fund loans have an interest rate of 1% over 30 years. The Water/Wastewater Financing Program loan has a slightly higher interest rate of 1.51% with the same 30-year term as the other two city loans.

The funds will cover four high-priority upgrades to the city’s water delivery system. The first is to install a filtration system for the municipal water source at Byram Gulch Springs. The Oregon Health Authority ordered the city to filter the water after the discovery that the springs were under the influence of surface water.

The second will be to replace a pair of reservoirs that are leaking. One of the two reservoirs is leaking so severely that it has been taken offline, living the city’s storage capacity below the levels needed for domestic use and fire protection.

The next priority is to replace the existing steel supply line from Byram Gulch Springs. The line has failures and is difficult to access along with being susceptible to falling trees and landslides following the Canyon Creek Complex Fire in 2015.

The final priority in fixing Canyon City’s water delivery system involves repairing and upgrading the city’s well and booster station while providing backup power and replacing aging service meters.

Canyon City Recorder Tami Kowing said the funds were awarded to the city in December. She noted that the city’s water rates haven’t gone up since 2016 and stressed that the April 1 increase is a necessary step.

“In order to qualify for these loans, Business Oregon has the standard of what our rates need to be in order to pay back the loans,” she said.

Kowing said the Canyon City water system has needed an upgrade for many years.

“The city’s water system is — I can’t even remember how old it is,” she said. “It’s almost 80 years old, I think.”

Another contributor to the problem was the Canyon Creek Complex Fire. Kowing said the massive 2015 wildfire damaged some of the city’s infrastructure up the canyon.