Ocean View talks water

A central water system for Ocean View took another giant leap forward this week, as U.S. Department of Agriculture (USDA) representatives talked financing at the April 5 town council meeting.

USDA’s Denise MacLeish and Lisa Fitzgerald summarized all the conditions and provisos as succinctly as possible, but there were many.

In brief, prices have gone up for the $3.8 million water system that went to public (non-binding) referendum in February 2004.

Cost estimates for the project now stand at $4.9 million.

However, the USDA has agreed to throw in a grant to make up the difference ($1,130,000). In addition, the 2004 referendum suggested a 4.625 percent interest rate on the 40-year loan — on April 5, MacLeish and Fitzgerald offered $3.8 million at 4.25 percent.

• The above figures were based on 660-odd lots slated for improvement. Fitzgerald said the town would need to report to her whenever that number changed.

• The mandatory use ordinance of questionable popularity is alive and well. As MacLeish reiterated, it was a USDA requirement because the loan/grant were predicated on the town’s ability to repay.

• The town must prove they have operations and maintenance (O&M) monies set aside in sufficient quantity, and that O&M is undertaken in an “efficient and economic manner.”

• The town must base water bills on water meters, read quarterly, and in turn pay the USDA quarterly. Fitzgerald described an electronic debit-type system they would set up with Town Manager Kathy Roth.

• Before acquiring any additional debt (related to building the system), the town has to clear it with the USDA.

• The town is encouraged, required even, to pursue cheaper financing if such ever becomes available — there will be no prepayment penalties.

• The USDA wants quarterly financial statements and a copy of the annual audit. The town must prove revenues are continually being set aside to repay the debt service.

• The town must sign a general obligation bond (once the project has been completed), and a fidelity bond to cover all persons who have access to the USDA funds.

• Various proofs of insurance, the Town Solicitor’s check-off regarding rights-of-way and easements, bidding and procurement guidelines, etc., etc.

The USDA will monitor and approve the drawdown of funds at monthly progress meetings (public), and dole out construction funds portion by portion.

Finally, after they check off on the final inspection, “we move into closing the loan, closing up the project — and for the next 40 years, we’re best friends,” MacLeish said.

If the project ends up costing less than $4.9 million, the surplus will come back out of the grant, and return to federal coffers to help the next community.

“Can we have the grant money first,” asked Council Member Norm.

According to MacLeish, Ocean View wasn’t eligible for any grant money at all, last year.

However, because of an adjustment to the median household income, the town slid in under the wire this year.

“We could have done 4.375 percent all loan, but we held off,” she said.

There were various of questions from the audience.

Gene Brendel asked if the town would be equipped to handle something like a broken main and his wife, Kathy, asked who would provide plumbers and meter readers.

Council Member Eric Magill said Tidewater Utilities would provide the equipment and manpower under the O&M subcontract.

Dean Mitchell asked whether there was some way a homeowner could object to mandatory hookup, or beg hardship, but MacLeish once again stated, “Mandatory hookup means mandatory hookup.”

Using well water for lawns, washing the car, etc. will be permissible, as long as the homeowner completely disconnects the outside water from the house (to forestall any possible cross-contamination with the town water system).

George Walter asked about putting up the hookups (from the water main to the house) into the contract, but MacLeish said that wasn’t part of the deal.

She did say the USDA had a program to help defray costs for elderly residents, and Magill suggested Community Development Block Grant (CDBG) funding might be available to help certain people as well.

Walter asked about getting everyone together for a better base rate, but Town Solicitor Dennis Schrader advised against it.

Engineer Chuck Hauser (Davis, Bowen & Friedel) seconded that. He said they’d tried that once, but half the residents wound up feeling they’d paid more than their share, and angry with the other half.

“This has been a really tricky deal, and there are still some steps we have to take,” said Magill. “If this project falls apart, we’re not obligated to borrow the money, are we?”

According to MacLeish, there’s no obligation until the town signs the general obligation bond — again, once the project is complete.

Magill moved to (1) sign the letter signaling the town’s intent to meet the USDA’s conditions and (2) approve the USDA’s advancement toward obligating the federal funds for the Ocean View central water project.

Council approved both motions unanimously.