(April 13, 2017) While not unanimous, the Pocomoke City Council approved the next steps to secure financing for an approximately $2.5 million rehabilitation of the Clarke Avenue pumping station at its meeting on Monday.
City Manager/City Attorney Ernie Crofoot provided a breakdown on the project funding.
“The projected cost for the Clarke Avenue main pumping station rehabilitation is just a hair under $2.5 million dollars,” he said. “Part of that money is going to be paid by a grant from the Maryland Department of the Environment.”
Crofoot estimated the state grant would provide about $1 million of the cost, with the remaining $1.5 million sourced from a USDA loan.
By a vote of 4-1, with Councilwoman Diane Downing opposed, the council approved on second reading a resolution to reimburse expenditures incurred with the project.
“The IRS requires us to have one of these if we want to get back any of the money we’ve spent,” he said. “If the amount exceeds what we were entitled to borrow then some of it we won’t get paid back.”
The process for acquiring loans from the USDA typically involves extensive engineering and environmental studies prior to financial approval, Crofoot said.
“It doesn’t create any specific cost to us, but it will create the inability to be reimbursed on the money if we don’t have one,” he said. “It doesn’t borrow money, it doesn’t spend money, [and] it enables us to recover money.”
The other item the council approved by a vote of 3-2, with Downing and Esther Troast opposed, was a bank solicitation letter soliciting interim financing.
“We will need to issue a bond anticipation note to a bank that will fund the payments on the project until the project is completed at which time the grant and the USDA loan is disbursed,” he said.
“The interim construction financing, we will be paying interest to carry that when the principal is disbursed from the grant and the loan. The interim bank gets paid and we start the service payments on the USDA loan.”
Mayor Bruce Morrison inquired about Pocomoke’s bond rating, which Crofoot explained isn’t applicable.
“We don’t have a bond rating,” he said. “We don’t have the kind of general obligation debt that a lot of jurisdictions have. If we had one it would be in peril.”
Crofoot also cautioned that the final cost could fluctuate depending on the project bids received.
“Right now the drawings are at the 100 percent level, meaning we’ve gotten the comments back from USDA and should have the MDE comments … within the next couple of weeks then we go out to bid,” he said. “If all things go well we should be put to bid by the end of April.”
City Manager/City Attorney Ernie Crofoot provided a breakdown on the project funding.
“The projected cost for the Clarke Avenue main pumping station rehabilitation is just a hair under $2.5 million dollars,” he said. “Part of that money is going to be paid by a grant from the Maryland Department of the Environment.”
Crofoot estimated the state grant would provide about $1 million of the cost, with the remaining $1.5 million sourced from a USDA loan.
By a vote of 4-1, with Councilwoman Diane Downing opposed, the council approved on second reading a resolution to reimburse expenditures incurred with the project.
“The IRS requires us to have one of these if we want to get back any of the money we’ve spent,” he said. “If the amount exceeds what we were entitled to borrow then some of it we won’t get paid back.”
The process for acquiring loans from the USDA typically involves extensive engineering and environmental studies prior to financial approval, Crofoot said.
“It doesn’t create any specific cost to us, but it will create the inability to be reimbursed on the money if we don’t have one,” he said. “It doesn’t borrow money, it doesn’t spend money, [and] it enables us to recover money.”
The other item the council approved by a vote of 3-2, with Downing and Esther Troast opposed, was a bank solicitation letter soliciting interim financing.
“We will need to issue a bond anticipation note to a bank that will fund the payments on the project until the project is completed at which time the grant and the USDA loan is disbursed,” he said.
“The interim construction financing, we will be paying interest to carry that when the principal is disbursed from the grant and the loan. The interim bank gets paid and we start the service payments on the USDA loan.”
Mayor Bruce Morrison inquired about Pocomoke’s bond rating, which Crofoot explained isn’t applicable.
“We don’t have a bond rating,” he said. “We don’t have the kind of general obligation debt that a lot of jurisdictions have. If we had one it would be in peril.”
Crofoot also cautioned that the final cost could fluctuate depending on the project bids received.
“Right now the drawings are at the 100 percent level, meaning we’ve gotten the comments back from USDA and should have the MDE comments … within the next couple of weeks then we go out to bid,” he said. “If all things go well we should be put to bid by the end of April.”