The City of Turlock will repay the Turlock Irrigation District for completed design work for a now-shelved surface water treatment plant.

But the $2.77 million repayment authorized by the Turlock City Council Tuesday night is about $68,000 short of the $2.41 million requested by the district.

The debt dates back to October 2005, when the City of Turlock entered into an agreement with TID and the Cities of Hughson, Ceres, Modesto and Keyes to establish a plant to convert Tuolumne River water into drinking water for all five cities. In 2009, when the economy plummeted, the cities balked at the projected $180 million cost, which could result in water bills near $100 per month for the average household.

“The biggest difficulty of this is the costs, and the fact that no one is interested in increasing user fees,” said Turlock Municipal Services Director Dan Madden.

While City Manager Roy Wasden agreed that paying TID for work performed was a reasonable request, and said he wished to avoid arguments with the district, he took issue with a 4 percent interest fee charged to the City of Turlock since work on the project ceased in the third quarter of 2009. Wasden argued that Turlock should pay a rate closer to 1 percent, the fee charged by the Local Agency Investment Fund, for the time since work ceased.

While the contract signed in 2005 obligates Turlock to pay that 4 percent interest rate, the contract also states that Turlock will be billed once the project planning is complete. That planning is only about halfway done, though the project has stalled.

“This is TID saying, ‘We don’t see any forward progress, so we’re going to go ahead and bill you, even though we haven’t delivered a finished project,’” Wasden said.

Thus far, in negotiations, the district has not been amenable to altering the percentage paid in interest.

“In our conversation with the district, their response back to us was, ‘No, we’re not particularly interested in following that proposal,’” Madden said.

The City of Turlock will now continue negotiations with the TID to determine a final payment. The City Council could be forced to authorize further payment at a later date, to fulfill the terms of the contract.

To contact Alex Cantatore, e-mail acantatore@turlockjournal.com or call 634-9141 ext. 2005.