PORT TOWNSEND — The city will seek a line of credit to improve its cash flow during the construction of a new water facility.
The city is currently examining proposals from two banks to provide the credit line, which is not to exceed $3 million.
“This is a way for us to get cash for these projects that will be reimbursed by the state,” Public Works Director Ken Clow said at a City Council meeting Tuesday.
At a previous meeting, Finance Director Nora Mitchell said the city expects to receive several invoices for the work ranging from a few hundred thousand dollars to $3 million, and the credit line “will let us pay the bills in a timely fashion.”
The seven-member council unanimously approved the measure authorizing the credit line, with no council discussion or public comment.
Mitchell, Clow said, is currently examining the two proposals.
“Once we have gone through the process, we will determine which bank offers the best terms,” Clow said.
The total cost of the project, which includes a filtration plant and a new reservoir, is estimated at $24 million, and the city has secured $25.5 million in funding sources, City Manager David Timmons has said.
Many of these sources are managed as reimbursements, in which the city must provide proof of payment before the money is released.
This can cause a gap of several weeks, which can result in late fees or interest fees, Timmons said.
The interest for the line of credit should be about equal to the potential late fees, he said, adding that failing to pay bills in a timely manner could decrease the city’s financial standing.
Once the project is finished, the credit line will be shut down, Timmons said.
The construction of the new facility is funded with a combination of grants and low-interest loans to be paid off within 20 years, along with a monthly user capital surcharge fee of $18 ($21 for those outside the city limits).
These rates will respectively increase to $24 and $28.80 in 2018.
They will be end when the loan is paid off.
The new water facility is slated for completion in late October.
It will be built in two phases: the main plant and a new storage reservoir to replace the current one, which is not earthquake-proof.
The facility at 2087 20th St. is not currently publicly accessible for security reasons, city officials have said.
Public tours will be offered after it is completed.
________
Jefferson County Editor Charlie Bermant can be reached at 360-385-2335 or cbermant@peninsuladailynews.com.
