Editor's note: Due to a typo, the printed version of this article that appeared in the June 2 issue of The Record stated an incorrect interest rate on this financing. The correct information is …
Editor's note: Due to a typo, the printed version of this article that appeared in the June 2 issue of The Record stated an incorrect interest rate on this financing. The correct information is given below.
The city of Marthasville has approved a contract to borrow up to $1.8 million to help finance construction of a new well, water storage tank and water main currently under construction north of the city.
The Marthasville Board of Aldermen voted 4-0 on May 25 to approve a lease-purchase agreement with First State Community Bank to finance the construction. Under the terms of the agreement, Marthasville will repay the borrowing over a 15-year period, with a 3.55% interest rate.
The new well and 300,000-gallon ground storage tank, once constructed, will provide service for the entire city with room for significant growth into the future, project managers say.
Mayor David Lange explained that the initial expenses for the water system construction are being paid out of a city reserve fund that has been building up in preparation for this work.
“We’ll pay as much as we can until we get down to our safe surplus fund amount, and then we’ll start using borrowed money,” Lange said.
The mayor explained that the financing agreement with First State Community Bank has several helpful provisions for the city. Along with having a decent interest rate, Lange said the bank is allowing the city government to borrow money piecemeal for 12 months, only withdrawing what it needs and saving on interest. At the end of the first year, the city will be required to withdraw the full $1.8 million loan.
Aldermen gave their full support to the financing agreement.
“This is one of the largest projects we’ve ever undertaken. It’s nice to see it all working out,” commented Alderman Nick Lange.
Under the terms of the agreement, the city government will make twice-annual payments to repay its borrowing for the water project. City leaders have said those payments will be derived from water service fees.
The contract for the lease-purchase agreement was arranged through the assistance of financial firm Stifel Nicolaus.
No comments on this item Please log in to comment by clicking here