Salem's sewer plant financing: a $9 million state loan and a $45 million bond ceiling

Salem, Utah, is lining up two kinds of borrowing for its wastewater treatment plant: a $9 million loan authorized by a state board and a city authorization of up to $45 million in water and sewer bonds. Neither is a record that money has been borrowed or received. ^[1][3]

City officials have said they expect developers to pay a large share of the plant's next phase in advance. ^[2][5]

The state loan

At its Oct. 22, 2025 meeting, the Utah Water Quality Board considered a motion to lend Salem $9 million from the Utah Wastewater Loan Fund at 2.8% interest. That motion received four votes in favor and three against, and the board then voted unanimously to withdraw it. ^[1]

The board then voted unanimously to authorize a $9,000,000 loan from the fund at 2.4% interest, for a term of up to 30 years, for treatment plant upgrades, subject to staff-recommended special conditions. ^[1]

Minutes of a Salem council work session on Dec. 10, 2025 note a $30 million developer funding requirement for Phase 3 of the sewer plant and say the state Division of Water Quality will release funding once it receives developer commitments. ^[2]

The bond authorization

On April 15, 2026, the council voted 4-0, with Councilperson Delys Snyder excused, to approve a resolution authorizing not more than $45 million in water and sewer revenue and refunding bonds. A Zions Bank representative said the maximum would cover refunding and new projects, according to the minutes, which put the estimated issuance at about $25 million. ^[3]

The city's notice says the bonds may mature in no more than 35 years, carry a fixed rate of no more than 6.5% or a variable rate of no more than 15%, and be sold for no less than 98% of principal. They are payable from the net revenues of the water and sewer system. ^[4]

The notice says it is anticipated that $16,538,000 of outstanding sewer bonds will be refunded, together with $25,000,000 of new bonds for the project, "for an estimated total outstanding par of $41,538,000." It estimates the total debt service on the bonds, if held to maturity, at $48,147,114.35. ^[4]

The city's fiscal 2025 audit lists a 2018 sewer revenue bond with $17,132,000 outstanding at June 30, 2025, with $594,000 due within a year. ^[6]

Phase costs and developer money

At a May 20, 2026 public hearing required by the Division of Water Quality, City Manager Matt Marziale said, "Phase 2, which included approximately $7.6 million in retrofit improvements, is nearly complete," and that "Phase 3 is estimated at approximately $55 million." The council took no action at the hearing. ^[5]

Marziale said "developers are expected to prepay approximately $30–35 million toward the project prior to bond or loan funding," according to the minutes. In the work session, he said about $25 million would be raised through bond funds, state loans or both. ^[5]

The minutes also say: "No sewer rate increase is currently required for Phase 3, with staff aiming to maintain current rates if projections hold." ^[5]

What the books show so far

At June 30, 2025, Salem's sewer fund reported $9,425,973 in unearned revenue, money received for services or obligations not yet performed. Its cash flow statement for fiscal 2025 shows $10,379,105 in net cash from operating activities, including that $9,425,973 increase. The fund held $16,653,986 in restricted cash and cash equivalents. The audit does not say who paid the unearned revenue. ^[6]

The fiscal 2027 budget includes sewer fund lines labeled "2018 Bond 2026A Bond Payment" at $601,000, interest at $190,187 and a "2026 B Bond Sinking Fund" at $132,000. Those are budget entries; they do not show that new bonds have closed. ^[7]