DALLAS – Tempe, Ariz., has allocated $40.8 million to build the nation’s largest steel dam on Town Lake, three years after the original rubber dam collapsed and released nearly a billion gallons of water downstream.

Funding for the project comes from assessments on property owners in the Rio Salado Community Facilities District, also known as Tempe District 175.

Tempe issued $6.3 million of bonds for the district shortly after its creation in 1999.

Tempe voters last year approved $10.5 million of bonds for improvement to the park surrounding the lake on the dry Salt River bed but not for the dam itself.   However, the vote did authorize the city to proceed with plans to replace the dam.

At a meeting last week, the Tempe City Council approved the addition of $2.6 million from city funds to cover a funding gap due to rising costs.

The city expects to begin pouring foundation for the concrete next fall and by January 2015, installing the dam gates, which are expected to be completed by December 2015.

The rubber dam showed signs of stress before it collapsed on July 20, 2010. Efforts to replace the dam were already in the works before it failed. The water, purchased to fill the lake, flowed down the dry Salt River bed.

The once scenic lake became a muddy bog that attracted flies and other pests. The city rented a temporary replacement for the failed dam and refilled the lake.

City officials considered purchasing another rubber dam but decided to spend more money on the hydraulically-operated steel-gate dam.

Town Lake is seen as an asset for the city, attracting developers of business parks, residential buildings, restaurants and other tax-producing properties.

Tempe has $435.8 million of general obligation bonds outstanding, with ratings of AAA from Standard & Poor’s and Fitch Ratings and Aa1 from Moody’s Investors Service, all with stable outlooks.

An East Valley suburb of Phoenix, Tempe is home to 165,000 people and the main campus of Arizona State University.

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