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Commission gives first reading to $6.955 million KDHE loan to replace lead and galvanized service lines
Summary
The City of Coffeyville approved first reading of an ordinance authorizing a Kansas Public Water Supply Loan Fund loan to replace lead and galvanized service lines; the loan includes principal forgiveness for disadvantaged communities.
The Coffeyville City Commission on April 22 approved the first reading of Ordinance S-25-04, authorizing execution of a loan agreement with the Kansas Department of Health and Environment (KDHE) under the Kansas Public Water Supply Loan Fund to replace lead and galvanized service lines within the city.
Martin Cummings, director of finance, told the commission the city was approved for a $6,955,000 loan with $3,616,000 in principal forgiveness because Coffeyville qualifies as a disadvantaged community. "This forgiveness represents approximately 52% of the project principal," Cummings said, and staff estimated the net loan cost to the city at about $3,338,400 after forgiveness. The loan's interest rate is 2.53%; the first payment is scheduled for Aug. 1, 2027, but Cummings said that date is contingent on project completion.
Cummings said the engineering firm that prepared the project identified an initial priority list covering roughly 15% of the city's estimated lead service lines; the precise project map and construction schedule will be finalized with the engineer as design work proceeds. He said if the city does not use the full loan amount, final principal forgiveness will be adjusted downward and that if the loan amount is increased later by amendment, forgiveness will not automatically grow.
City manager Ben Brubaker told the commission the decision was prompted in part by federal and state emphasis on addressing lead service lines and that taking the loan now helps the city prepare ahead of any mandated timelines. "We applied for these funds really before we were forced to make some of these changes," he said, while cautioning that federal program rules could change.
The ordinance approval was a first reading; the motion to approve first reading passed without recorded opposition. Staff said they will meet with the engineering consultant to finalize priorities, map affected addresses and schedule public outreach and project phasing.
Key loan terms presented to the commission: total loan $6,955,000; principal forgiveness $3,616,000 (~52%); estimated net loan cost to the city $3,338,400; interest rate 2.53%; first payment due on or after Aug. 1, 2027 (contingent on project completion). Cummings said the loan will fund replacement of lead and galvanized service lines accounting for an estimated 15% of the city's lines in the initial project scope.
Next steps: staff will meet with the engineering consultant to finalize the priority list, prepare loan amendment paperwork if needed, confirm timelines and begin the public-notice process required for KDHE-funded construction projects.
