The Federal Emergency Management Agency announced Thursday that it plans to reimburse the city of Berkeley Lake nearly $3.6 million for repairs to its flood-battered dam.

The payment will settle an appeal Berkeley Lake filed with FEMA last August following a dispute over the extent of damage caused to the dam by storms in Sept. 2009. The dam showed two cracks after the historic storm passed through the area.

FEMA agreed to look at the dam again after initially estimating repairs at $1.7 million and offering to pay $1.3 million. However, city estimates put the repair costs at closer to $4 million.

Berkeley Lake Mayor Lois Salter said FEMA will support up to 75 percent of the dam's repairs. She added that the Georgia Emergency Management Agency has also agreed to chip in 10 percent "and possibly even more."

"We are so grateful," Salter said Thursday night. "This has been a tremendous burden on taxpayers in a very small city."

Leaders in this Gwinnett municipality of 2,000 had prepared to pay off the repairs without help from FEMA. City officials raised the property tax rate by 33 percent in June 2010 and residents approved a March referendum to issue $2.8 million in general obligation bonds.

Now, Salter said, the city will be able to pay off those bonds more quickly. The mayor said the city also expects to lower the millage rate. "That's going to make a big difference to our homeowners," she said.

City officials have already made plans to start repairs no later than early November. Berkeley Lake will begin lowering water levels in the 88-acre lake next Thursday and contractor bids for the project are due Sept. 29.

Once repairs are underway, city engineer Rich Edinger expects the lake will be closed for about nine months.

"We're pretty excited," Edinger said. "And we're glad that FEMA agrees with us."

Salter said the city was also looking into contacting a local food co-op or charity that would be interested in taking some of the fish in the lake once it is drained for repairs.

Built in 1947, the dam is 85 feet high and 900 feet long and holds back about 2,000 acre-feet of water. An acre-foot is equivalent to 326,000 gallons. It is one of the state's largest earthen dams.