Kanosh council approves $774,000 rural development loan increase for well project; officials estimate about $3 monthly per connection
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Summary
The Kanosh Town Council voted to increase its rural development loan authorization to $774,000 to cover remaining well and power-line costs. Officials said the additional $250,000 would add roughly $10,000 in annual debt service — about $3 per month per water connection — and staff will start the loan-closing process.
The Kanosh Town Council voted to increase its Rural Development loan authorization to a total of $774,000 to cover remaining costs on the town well project and associated power-line work. Council members approved the motion after hearing a construction update and a fiscal overview from staff.
An unidentified presenter explained that the existing loan carries an interest rate of about 2.375 percent and that increasing the loan by $250,000 would raise annual debt service by roughly $10,000. "If we divide that across all of the water connections, it's roughly a $3 per month revenue increase that will be needed to cover it," the presenter said during the discussion. Council members said the loan increase was intended to avoid another near-term rate increase and to allow work to proceed while grant funding is exhausted.
Councilors discussed alternatives including using savings to cover shortfalls and whether Rural Development allows early payoff or reductions after project completion. The presenter said Rural Development typically requires communities to use the amount they apply for and that loan proceeds cannot normally be returned. Staff noted the loan-closing process could take about 45 days and that monthly contractor pay requests could be large as work advances. Officials also said a small change order would be issued to replace a valve found to be defective during construction.
A motion to increase the approved loan amount was moved, refined to specify a total loan of $774,000, seconded, and carried by voice vote. After the vote, staff said they would begin paperwork to start the closing process with Rural Development.
What happens next: staff will initiate the loan-closing paperwork and monitor contractor pay requests; council members said they will track the water fund's monthly revenue during the next season to confirm the rate cushion works as expected.