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MINUTES OF THE REGULAR ORONO CITY COUNCIL <br />MEETING HELD ON SEPTEMBER 8, 1997 <br />• ( #8 Navarre Water Plant Rehabilitation - Continued) <br />Kelley asked what the amortization period would be for the internal loan and at what <br />rate. The $276.800 loan would be over a 10 vear period at a 6% interest rate. Kellev <br />said he would like to accelerate the rate of pay back. Moorse noted that the $263,200 <br />assessment at $350 for each of the 752 properties would be payable over a five year time <br />period. Kelley questioned pledging collateral over a 10 year time period when <br />assessments are paid over a five year time period. <br />Jabbour viewed it as two issues; one being the assessment time and two being taking <br />monev out of the fund without being in it. Since it can't be paid back, it would be a <br />matter of realigning the budget columns. <br />Kelley said the money would be retrieved when the fund was in a positive balance. He <br />noted if all were assessed, the City would not have to make a loan. He questioned how <br />much participation would occur between the City and residents. He also questioned how <br />long it would be before there was a positive cash flow in the water fund. <br />Moorse responded that at 2.95% a year fee, a positive cash flow would be generated in <br />10 vears. The fee would have to be increased to reduce that time frame. <br />Jabbour noted if no City participation occurred, the money would be recouped through <br />• fees with interest. <br />ID <br />Kelley questioned whether the interest rate would be adjusted to market changes and <br />whether this could occur. Moorse said the City would have the opportunity to do so. <br />Jabbour suggested a bond be taken if that scenario was to occur in order to protect the <br />interest of the citizens and at a fixed rate. <br />Gappa indicated that the small loan amount affects the interest rate. <br />Kelley said he would like to ensure that the City is paid back at a faster rate than 10 years <br />in order to free up the capital. <br />Moorse reported if more revenue can be generated in the water fund, it can be paid back <br />quicker or be used for other projects. <br />Flint questioned the disruption caused by the sewer projects. He wondered whether City <br />water could be provided at the same time as sewer. Jabbour noted the cost difference <br />between wells and providing City water. Moorse also indicated that water lines would <br />have to be run. <br />11 <br />