Columbus applies for $1.165 million loan for water/sewer projects

Published 10:11 pm Wednesday, April 27, 2016

By Leah Justice

The Town of Columbus signed a letter of conditions last week to apply for a USDA (United States Department of Agriculture) loan for more than $2 million worth of water and sewer projects.

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Columbus Town Council met Thursday, April 21 and heard from Josh Carswell with the USDA, who presented the town’s funding opportunities.

The town has been discussing over the past year the need for a new 500,000-gallon water storage tank, a new water supply line from the tank to the town’s water lines and rerouting the sewer line downtown that currently flows underneath some buildings.

The funding from the USDA would include a $1,165,000 loan for 40 years at a 2.25 percent interest rate. Funding is also coming in the form of grants, including $300,000 from the ARC (Appalachian Regional Commission) and $505,000 from the USDA. The town plans to contribute $98,000 for the projects as well as paying back the loan.

The 2.25 percent interest rate is the lowest rate the USDA has offered in a long time, according to town manager Tim Barth.

Carswell detailed the town’s funding opportunities and said a 24-month clock begins once the town signs the letter, which it did last week. Carswell also said the grants are on a first come first serve basis and if the town did not secure the funding, the town could lose the grant money to other projects.

Carswell said the project has 10 percent built into contingency for unforeseen issues. He also said the grant money will be spent last, meaning if the town gets to the end of the project and there is money left over, the grant money will go back, not the loan.

The annual payment the town will make on the loan is estimated at $44,480 over 40 years.

Carswell said every five years he is required to come to the town to do a compliance review. Carswell also said the loan payment is based on the number of customers and the rates the customers pay. He said if the town were for some reason to lose a bunch of customers, the town would have to increase its rates to ensure the loan is paid back.

The town will go out for bids on the project with a minimum of three bids required.

Councilman Mark Phillips asked about the age of the town’s system. Barth said the water tank is at least 60 years old. Columbus Mayor Eric McIntyre said some of the businesses where the sewer line runs underneath have been there at least 60 years.