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Commission hears first reading of ordinance to interim‑finance $2.67M USDA water loan
Summary
At first reading the commission reviewed Ordinance No. 773 to authorize interim financing (approx. $2,673,000) for a larger USDA‑backed water improvement package; the interim loan would be repaid from net water system revenues when USDA bonds close.
At the March 11 meeting the commission heard the introduction and first reading of Ordinance No. 773, authorizing interim financing through Bank of the Southwest for a $2,673,000 loan that will bridge construction until USDA permanent financing closes.
Chris Mirhood, representing the city’s finance team, said the overall USDA package totals about $9.9 million for water system improvements that include roughly 13,983 linear feet of replacement and upsized water mains, new meter installations and service lines. Of that $9.9 million, roughly $7.227 million is grant funding and the remaining $2.673 million is the loan component that the city will interim‑finance.
"This is a limited pledge to net water system revenues," Mirhood said, explaining that the interim loan and eventual USDA bonds would be repaid from the water system's net revenues rather than the city's general fund or other tax revenues. He described the interim financing as a three‑year line of credit at about 5% interest; interest accrues as draws are made and both principal and interest would be due at maturity when the USDA financing closes.
Mirhood said the item returns for adoption at the April commission meeting and would likely close in early May. Commissioners asked technical questions about bank ownership transition and lender readiness; Mirhood and city staff said Bank of the Southwest is prepared to proceed and that the loan would be assigned through the bank's transition as necessary.
The commission moved and seconded a motion to publish the ordinance for public notice. The hearing concluded with a short recess; no adoption vote was recorded at first reading.
Next steps: ordinance publication and a return to the commission for adoption (staff indicated adoption is planned for the April meeting), followed by closing the USDA financing and retiring the interim loan.
