A much-hoped-for funding source for a proposed sewer system in Carlsborg is one step closer to reality.

The state House of Representatives included a $10 million loan in its proposed state construction budget.

The loan, from the Public Works Trust Fund, has an interest rate of 0.5 percent with a five-year deferment and 30 years to pay it off, Clallam County Senior Planner Carol Creasey said.

County planning staff applied for the loan last summer and it was one of 74 projects to compete for $390 million total available through the trust fund.

Rep. Steve Tharinger, D-Sequim, also a Clallam County commissioner, said if the loan also is approved by the state Senate it will help reduce the cost of the sewer project to property owners.

The proposed sewer system has been a contentious issue since Carlsborg was found to be noncompliant with the Growth Management Act in 2008, because there weren’t plans or funding for sewer facilities to support the mixed uses of an urban growth area. Though the ruling — which halted development in Carlsborg through the resulting interim controls — still is in the appeals process in court, county officials also are establishing plans and looking for funding for a wastewater treatment and water reuse project.

“It (the loan) really does lower the cost to the individual within the improvement district,” Tharinger said.

“It’s a big deal. It definitely will bring us closer to a cost that I think will be acceptable to the community.”

A number of Carlsborg residents from both inside and outside the UGA have come forward against the project in recent months, stating they don’t need and can’t afford a sewer system.

On March 8, the Clallam County commissioners and the Clallam County Public Utility District entered an agreement to move forward in determining the cost and re-examining the facilities plan for a proposed sewer system in Carlsborg.

Creasey said a parcel-by-parcel benefit study and preliminary assessment will be starting soon.

Reach Amanda Winters at awinters@sequimgazette.com.