By Adam Swift
The city is getting a better deal than anticipated on a major infrastructure project at Park and Pearl streets.
In March, the city council authorized borrowing of water, sewer, and general obligation bonds, in combination with other anticipated grants and loans, to provide $16 million for a sewer separation and utility improvements project at Park Street and Pearl Street.
But the city looks to be getting a better deal on that borrowing thanks to the state.
“In April, we learned that the City has been approved for a $15,385,068 loan from the Massachusetts Clean Water Trust (the “Trust”) for this project under the Clean Water State Revolving Fund (“CWSRF”),” City Manager Fidel Maltez stated in a letter to the city council. “The loan offers a 1.5% interest rate and eligibility of 9.9% principal forgiveness at the completion of the project, which are much better terms than we would receive issuing local bonds and provides a cushion against construction industry cost escalation prior to starting the project in Spring 2027.”
At Monday night’s city council meeting, the council moved the request for the authorization of the borrowing from the state revolving fund to a second reading at its June 8 meeting. At that meeting, the council will be able to ask additional questions about the borrowing before taking a vote to authorize it.
“To remain eligible, the CWSRF requires that the City Council vote before June 30, 2026, to authorize borrowing from the Trust and recommends that municipalities vote to authorize the full approved amount to ensure that contractual obligation is met, regardless of the actual loan amount that will be requested at the start of the project,” Maltez stated.
In addition to the loan, Chelsea received a $5 million MassWorks grant specifically for the utility work at Park and Pearl streets.
“The sewer separation and enhancement is a critical project that will not only greatly reduce combined sewer overflow events but will set up our vital business district for future flood resilience,” Maltez stated. “The SRF program is very competitive and this award, along with the grant, provides a unique opportunity to execute a project of this scale in the current financial conditions.”
Maltez noted that the $5 million grant is the largest the city has received from MassWorks to date.
In addition, the city manager said becoming eligible for the competitive state revolving funds for the water and sewer project opens up a new frontier for the city to potentially fund future infrastructure projects.