Metro-East News

Marissa saddled with $1.7M loan for water, sewer project after Peabody bankruptcy

Village residents concerned about sewer rate increases

Residents of the village of Marissa have been saddled with a $1.7 million debt to the EPA for infrastructure that was supposed to serve a subdivision that was promised by Peabody Energy but never built.
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Residents of the village of Marissa have been saddled with a $1.7 million debt to the EPA for infrastructure that was supposed to serve a subdivision that was promised by Peabody Energy but never built.

People from the old coal mining town of Marissa know all too well what it means when a coal company goes bankrupt, says the mayor of the small village tucked in the southeastern corner of St. Clair County.

Customers hooked up to the village’s water and sewer system, roughly 818 of them, have been saddled with $1.7 million in debt left in the wake of Peabody Energy Company’s bankruptcy, Mayor Jerry Cross says. And the residents’ water and sewer fees need to be increased to pay off the debt, village leaders say.

The St. Louis-based coal company filed for bankruptcy in April 2016 after a coal slump some analysts described as the worst in decades.

Before the coal slump, the 2008 housing crisis and Peabody’s bankruptcy, the company and one of its subsidiaries planned to develop an upscale fishing and hunting multi-use community on land the company owned west of Marissa, according to the mayor.

Peabody formed a limited liability company called Islands of Waterside to develop the community. The company had two members — Peabody and another limited liability company called Praxis.

To serve such a development, the village needed to replace its aging water tower and construct new water and sewer lines.

The village, hoping to eventually reap tax dollars from the development, took out a loan in 2007 from the Illinois Environmental Protection Agency to pay for the infrastructure.

Under an agreement with Peabody, the village would foot 50 percent of the loan payments, while Peabody and Praxis would pay for the other half.

The village held up its end of the bargain, but the promised community was never built.

In a statement, a Peabody said the company made contributions to the village up until 2016.

“Peabody provided voluntary contributions to the village of Marissa beginning in 2011 as part of a community partnership. We were pleased to provide these contributions up until our filing for Chapter 11 protection in April 2016,” the company said in the statement.

On Monday, village leaders approved a plan to increase water and sewer rates to help offset the money lost when Peabody stopped making payments on the loan.

The land is described in a current real estate listing as a place with “excellent hunting and even better fishing.” Wooded landscape with plentiful lakes made it an ideal place for a new luxury community.

“It was going to be a city apart from a city, really,” Cross said.

It was going to be a city apart from a city, really.

Marissa Mayor Jerry Cross

The new water tower sits half-empty, not needed to serve the small rural community whose roads are dotted by modest but tidy homes. A discussion on who can use the community park’s baseball field was a serious point of contention at Monday’s village board meeting.

But the dominant topic of conversation was the monthly water and sewer rate increase residents will see starting in July if a proposed ordinance passes at the June 5 board meeting.

Most residents use more than 3,500 gallons of water a month, costing an average of $55.72 when coupled with the sewer bill, according to Trustee Chad Easton.

Under a plan approved by the board Monday, an average user will pay $66.93 under the first wave of the new plan. In three years, average users will see their bills jump up to $73.44 under yearly increases.

The area highlighted in dark red shows the property north of Risdon School Road in Marissa where a Peabody Energy Company subsidary had planned a luxury multi-use recreational community. St. Clair County GIS

While the annual increases are aimed at building up funds for long-term water-sewer projects, Easton said, the initial increase will be used to make two $55,000 payments annually on the village’s loan.

The village has been making full payments on the loan since Peabody quit paying, the mayor said, but the village can’t afford to continue making the payments — hence, the water and sewer rate increases. The village still owes $1,066,147.47 as of May, according to the village clerk.

One resident, Gene Triefenbach, told the board at Monday’s meeting that the village’s public officials should forfeit their stipends in order to pay the loan. He also suggested the city cut employees and department budgets.

“It seems like you came up with the plan that would hurt the families more than any other plan that you could possibly have come up with,” Triefenbach said. “There are families who are still going to have supper with six less bucks, but there are people who won’t.”

Triefenbach said the village could simply not pay until the village is able to strike a deal with the EPA, but the mayor said the EPA would force the community to raise its rates regardless.

“They will come in here and force us to raise our rates. We don’t have a choice,” Cross said. “The easiest thing to do would be to say we’re not paying. Everybody sitting here is worried about those same people. We went so long without doing anything, but I’m afraid if the EPA isn’t happy, nobody’s going to be happy.”

The village has a claim against Peabody, the mayor said, but he is unsure where it stands.

“They’ve shut us out,” Cross told trustees, adding that the claim’s return could possibly only amount to 50 percent of what Peabody owes.

“If we get a dime, we’ll be lucky,” Cross said.

Bryan Bingel, a County Board member for the district that includes Marissa, said he hopes any forfeited money from Peabody would go toward the debt.

The mayor said any money from Peabody could only be spent on repaying the loan.

“If we get any money, we’re going do two things — contact the EPA and say, ‘This is how much we have,’ and ask them to drop our loan payments,” Cross said. “Or we’ll ask if it’s better for us to take that money and pay in installments.”

The new rates are comparable to surrounding communities, said Trustee Patrick Miesner, though Trustee Paul Sinn said he thinks “it’s a ridiculous raised rate.”

“I’ve had people tell me they’re threatening to move out of town,” Sinn said.

I’ve had people tell me they’re threatening to move out of town.

Marissa Trustee Paul Sinn

Sinn was the only trustee to vote against the proposed increases.

The mayor acknowledges the choice to raise rates is “very disappointing.”

“It’s hard on everybody,” Cross said. “But this is an old coal mining town. People understood the consequences when Peabody went bankrupt.”

Peabody emerged from bankruptcy in April, Reuters reported, with an intention to reduce its billions of dollars in debt.