Town applying for $3,628,950 loan of which only $725,790 will have to be paid back

The process for the Sewer Rehabilitation System began in late 2012 and Early 2013 due to a major Rainfall problem with the Collection System. Not only were there issues in the Town’s collection system but also with the lift station.  A survey was made placing together construction plan of 40 plus pages.


The manholes require repairs and some pipes are good and some not good, requiring replacement and the roads to be rebuilt like Bridge Street.


The Town was approved for full construction funding in August, to build the town-wide sewer improvements.  The State Revolving Fund loan priority list designates Project 22904 as eligible for available construction phase funding totaling $3,628,950.  Eighty percent of the total will be funded by a grant and the remainder 20% or $725,790 will be funded through a low-interest loan through the Department of Environmental Protection.  It is hoped that the Town once the loan application is submitted by December 6th will receive a 1% interest charge but usually the interest is not higher than 2%.


This is a true revolving fund which is provided to certain disadvantaged communities or smaller communities.
Once the loan is approved and construction begins  The Rehabilitation Project will be completed one year later.   The rehabilitation should have a 50 year lifespan and Town will be entering into a 30 year loan.   There will be no penalty for prepayment.  The revenues pledged for the repayment of the loan are net sewer and water utility/solid waste revenues after payment of debt service on the Town’s Series 2001 A Water and Sewer Utility Revenue Bonds and the Series 2001 B Water and Sewer Utility Revenue Bonds.


There is a 15% charge if the loan is issued.  The loan payments anticipated are $24,700 annually plus 15% totals $28,405 annually based upon the 1% interest rate.


The Town will be borrowing the entire amount of the project cost of $3,628,950 but will only have to pay $725,790.


In order to receive the 1% interest rate under the loan, the Town of White Springs will have to show fiscal stability and be within the plan’s qualifications  If all loan information is provided by December 6th, we should know the terms of loan by Mid January.


Our Town Manager will also have to provide the debt obligations with prior debts the Town has incurred such as the SRF Loan.  So with the application there will need to be included Actual Revenues and Debt, the past few audits, a statement of what the financial outlook may look like to make future loans, and stable financials.  Currently White Springs in looking back seems to be stable and it is understood that operating expenses will increase but the rehabilitation should reduce some costs.  By 2021 there should be a reduction by $30,000 for operations and costs.  The Net Revenues increase in 2021 less expenses should be $5,000.  There will be a savings in energy costs and maintenance.  The Town will have to keep an eye on all these costs.  It’s tight and some money will have to be set aside.
The Clay pipes will be replaced; some of which have lasted 70 years plus.  Brand new PVC pipe will last 50 years or longer. In areas where the pipe will not be required to be placed, pipe liners will be put in having the same integrity as the new pipes collection system will have.


It is estimated after the loan is approved in Mid January that construction will start in April or May of 2019 and be completed in April or May of 2020.


Karin for the blog



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