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Commission authorizes SRF construction loan for water tower; loan net $4.3M after grant
Summary
The commission authorized execution of a State Revolving Fund construction loan agreement for a water tower; staff said the loan is $5.3 million with a $1 million grant (net loan $4.3 million) and an interest rate of 2.39%.
The commission authorized execution of a State Revolving Fund (SRF) construction loan agreement to finance design and construction of a water tower.
Staff presented the proposed financing and said the total loan amount is $5,300,000 but that the city received a $1,000,000 grant, reducing the loan principal to $4,300,000. The interest rate is 2.39% annually; staff estimated semiannual payments of about $142,000 (about $285,000 per year). Staff said the first payment will be due in August 2027 and that $74,000 of interest will be capitalized during the construction/loan draw period. Debt service is projected to be paid from development/impact fees collected when developers connect to the system; staff noted impact fee adjustments are typically reviewed every four years.
Commissioners questioned whether particular subdivisions (Tanglewood) would contribute development fees; staff answered that development fees and commercial buildout will contribute and that the tank serves a broader service area, not a single subdivision. The commission moved, seconded and approved authorization to execute the SRF loan agreement by voice vote.
