TodayCouncil approves $5M sewer loan
|
Print
Share
Email to a friend
Add This
Feeds
Local News
Article RatingCarlisle Borough Council approved a $5 million loan Thursday from Orrstown Bank to partially finance a $28 million sewer plant upgrade required by the Chesapeake Bay Compliance Plan.
No sewer rate hike is proposed for residents because the debt service payments have already been included in the 2009 Sewer Fund budget, Borough Manager Stephen Hietsch said.
Even if council approves further financing in 2009, there would be no rate increase next year, because payments on the new debt would not be due until 2010, he explained.
The borough needs to modify its entire wastewater treatment process to remove nitrogen from its outflow into the Chesapeake Bay watershed, Hietsch said.
The current estimate for the plant upgrade is $28 million, he added, 42 percent of which would be reimbursed by South Middleton, North Middleton and Middlesex townships, which use the plant.
There are two unknowns going forward, Hietsch said, one being the construction costs. The goal is to bid the project next spring and start construction next summer.
“The second unknown is how much money the borough may get from the state and federal government,” Hietsch said.
Council went with a $5 million loan figuring that would be the minimum amount needed.
Public Financial Management, Inc., helped the borough secure the 12-year loan at 3.99 percent interest. Brad Remig, a managing director with the firm, said that in the midst of a stressed market and credit crunch, PFM found better financing through a bank loan than municipal bonds.
Under the loan terms, the borough will pay interest only when money is drawn out. Going with a loan instead of bonds saved Carlisle $75,000 to $80,000 in financing costs, Remig said.
“Sometimes in the midst of adversity, there is opportunity,” Hietsch said. “We are euphoric. We got an excellent rate -- far better than what we anticipate from a bond issue.”
Pennsylvania voters recently approved a referendum authorizing state government to borrow $400 million in bonds for water and wastewater improvements. Another $800 million is included in the 2008 state budget for water and water improvements, Hietsch said.
He added the $5 million loan could be used as “seed money” to fund the local match of state and federal grants for sewer plant upgrades.
