TONOPAH -- Nye County will put $500,000 received from the Department of Energy for Yucca Mountain as its portion of funding for a $1.8 million town of Manhattan water project.

The county is under a mandate to construct improvements to the town water supply after existing wells failed to meet tougher new standards for arsenic.

A one-paragraph summary of the funding proposal approved by commissioners Wednesday states an original plan to apply for state funding under the Safe Drinking Water Act is no longer an option because the funds dried up.

The U.S. Department of Agriculture is providing a $965,000 grant, another $299,000 will be in the form of a low-interest loan. The loan will be repaid with the rates charged for the 97 hookups in Manhattan, of which 45 are active accounts.

Those rates will increase to at least $38 per month, engineer Dean Day said.

Day said there wasn't an option to wait for more state funding under the Safe Drinking Water Act program, Assembly Bill 198.

"We're under a mandate to solve this thing by the end of this year. We don't have a lot of choice to sit around and wait to see what happens. The AB 198 program has run low on funding before and they rebounded it, but the state was in better shape when they did that," Day said.

He said the county probably wouldn't be able to obtain $500,000 from the Safe Drinking Water Act program, though a project summary form filled out in October mentioned the possibility of a $1 million state grant under AB 198.

"We're kind of backed up into a corner in both directions. The funding got cut and they're in a mandate to get it done in a hurry. USDA stepped up to the plate, and I was a little surprised it was as good as it was," Day said.

County officials, to be eligible for the grants, had to put their funding match up front first, Commissioner Butch Borasky said.

"The worst case is we're up to a half a million. We've got to do it anyway, and the more we delay it, the more its going to cost us in the long run," he said.

The $500,000 county match is paid for out of the Payment Equal to Taxes, which Nye County receives from the DOE for the land value of Yucca Mountain. The county received $11.25 million in PETT funding this year.

Commissioners made a motion and second to approve the funding without discussion. County Manager Ron Williams said the $500,000 would be the maximum the county would have to match for the grant.

Commissioner Joni Eastley remarked that the loan should be a long-term note, a reference to the rates. (Assistant County Manager Pam Webster, who applied for the financing, was out sick.)

Eastley made reference to the lack of loan documentation for the vote.

Dante Pistone, a public information officer for the Nevada Division of Environmental Protection, said NDEP is reviewing a Nye County grant application for the AB 198 program, which could be approved later.

"The treasurer's office has issued a decision that may free up some additional bonding authority to cover previously approved projects, so there may be some matching funds," Pistone said.

NDEP doesn't expect any extensions will be granted for the town water system to come into compliance however, Pistone said.

The county is under a Jan. 23, 2009, deadline to have the water system improvements completed.

The plan is to sink a new well on Pipe Springs Road in the town limits, which will meet arsenic levels. Some pressure-reducing valves would have to be constructed, Dean said.

A new, larger water tank would also be built on a high point in town as the existing, 67,000-gallon tank is seen as inadequate.

Nye County is under an obligation to serve the people of Manhattan, Day said. The residents are required to hook up to a municipal water system, he said.