PORT TOWNSEND — The city is seeking to establish a $3 million line of credit to manage its cash flow during the construction of a new water treatment plant.
“Having a line of credit will allow us to maintain a positive cash flow,” said Nora Mitchell, the city’s finance director.
“We expect to have several invoices ranging from a few hundred thousand [dollars] to $3 million, and this will let us pay the bills in a timely fashion.”
The City Council unanimously approved seeking a line of credit at its meeting Monday.
A second reading of the measure is scheduled for 6:30 p.m. Jan. 19 in council chambers at historic City Hall, 540 Water St.
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, according to City Manager David Timmons.
Many of these sources are managed as reimbursements, where 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 is about equal to the potential late fees, he said, adding that failing to pay bills in a timely manner can decrease the city’s financial standing.
Once the project is finished, the credit line will be shut down, Timmons said.
Mitchell said terms and interest will be determined when the line of credit is approved in an agreement between the city and the lender.
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 now publicly accessible for security reasons, city officials have said.
Public tours will be offered after it is completed.
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 capital surcharge fee.
The monthly fee assesses each customer within city limits $18 and each outside the city $21.60.
These rates will respectively increase to $24 and $28.80 in 2018.
The fees will remain in place until the loan is paid off, Timmons said.
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Jefferson County Editor Charlie Bermant can be reached at 360-385-2335 or cbermant@peninsuladailynews.com.
