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Surf City approves up to $5.2 million loan to finish public utilities complex
Summary
After a public hearing, Surf City council authorized an installment financing agreement of up to $5.2 million to complete phase 2 of a public utilities facility, directing staff to seek Local Government Commission approval; town officials said the loan will be repaid from water and sewer rates, not property taxes.
Surf City’s town council approved an installment financing agreement on March 3 authorizing up to $5.2 million to fund Phase 2 of the town’s public utilities complex and related facilities near 1220 NC Highway 210 East in Hampstead.
The council opened a required public hearing on the loan under North Carolina law and heard residents’ questions about whether recent property tax increases would pay for the project. Kyle Brewer, the town manager, said repayment will come from the utilities’ enterprise fund and is built into existing water and sewer rates. "The repayment of that loan is built into existing water and sewer rates," Brewer said, describing the loan structure and noting that the project is not funded through ad valorem property tax revenue.
Finance staff said the town received favorable loan proposals, with an indicated rate of about 3.74 percent over a 15-year repayment schedule, and that repayment is secured by a security interest in project property. During the hearing, resident David Batts asked whether the recent tax increase would be used to pay the loan; staff reiterated that property taxes do not fund enterprise capital projects. "So your property taxes do not pay for any sort of enterprise expenditures," Melissa, the town’s finance director, said.
After closing the hearing, the council voted to approve the financing agreement as presented and later authorized staff to prepare and submit the loan application to the North Carolina Local Government Commission (LGC). The council also approved a reimbursement resolution allowing the town to claim or reimburse itself for project costs incurred before loan closing if the loan is approved.
Why it matters: the public utilities expansion supports storage, equipment, office and maintenance needs the town says are necessary as Surf City grows. Officials said the project is already reflected in the utility rate model and that the LGC application will be scheduled in April; if approved, clearing and grading could begin this summer with a staged construction timeline that depends on permitting and contractor schedules.
What’s next: staff will prepare the LGC loan package and pursue final approvals. A public application meeting with the LGC is expected in April; town officials cautioned that construction timing depends on permitting and contractor availability.
