The Village undertook a project to update water lines on Montgomery, Livingston, Chestnut and Platt . Originally cast as an effort requiring $3.7M in funds, the final bill is now $5.9M – a 55+% increase in budget, largely financed by bonds.
This increase is significant, and merits close examination and explanation. While unanticipated issues do come up, we need to ask whether the original vision or original budget is more important, and assess our options with needs and priorities clearly laid out. Could different choices have been made? What was essential and what was nice-to-have? These hard questions need to be discussed openly and absent of ambiguity.
Last, you deserve to know in detail how this will affect your daily budget – through water usage charge, water distribution charge or property taxes.
Inclusive and Transparent management promotes Fiscal Responsibility. We bring it.
The Village originally applied to New York State to receive a grant to fund a portion of the project in 2017 but the application was rejected. A more comprehensive application was submitted and approved in 2018. The Village received a Grant from NYS Environmental Facilities Corporation (EFC) for $2,228,276 1. It is common for an applicant to contribute a small percentage when applying for a grant, the Village contributed $250,000 2. The Village also secured an EFC Loan for $1,256,724 3 which will be repaid over a 30-year term.
Combining the Grant, Loan and Village contribution the project budget was $3,750,000.
As the project moved forward, engineers were employed to design the project specifications and prepare bid documents. A public bid was held to identify a contractor to perform the work in July 2019. Unfortunately, no bids were received. Another public bid was held in September 2019 and a contract was awarded to the lowest bidder.
The project budget now increased to $5,511,282 11 which includes all costs for the contractor, engineer, etc. This resulted in the Village having to secure additional funds in the form of a Bond Anticipation Note (BAN) from New York State in the amount of $1,772,764 5. This BAN was combined with the original EFC Loan2. As a result, the Village has taken on $3,029,488 in debt to be repaid over 30 years.
In addition, the Village approved additional drainage and paving work to be performed. The budget for this additional work was $450,000 6. An additional BAN has been secured for $450,000 7 which has been converted to an EFC Loan to be repaid over a 15-year term.
COST & FUNDING SUMMARY
EVALUATION
The principal and interest on the total debt incurred – of $3,479,488 – will be repaid in the Water Department budget. Will metered water sales (from residential and commercial customers) be sufficient to cover this new obligation? If not, what are the potential options:
- Raise water rates.
- Transfer money from the General Fund.
- Use money from the Water Fund.
Above taken from Treasurer’s End of Year Report for year ended May 31, 2020.
EFC Grants: https://www.efc.ny.gov/grant-programs
EFC Loans: https://www.efc.ny.gov/loan-programs
Notes:
- EFC Grant: cell E12 per treasurer (Water Main Project)
- Village Seed: cell E16 per treasurer (Water Main Project)
- EFC Loan: cell E13 per treasurer (Water Main Project)
- Total Cost: cell E17 per treasurer (Water Main Project)
- BAN (30y): cell F48 per treasurer (Water Main Project)
- Street Upgrade: cell F91 per treasurer (Water Main Project)
- BAN (15y): cell G15 per treasurer (Water Main Project)
- Street Upgrade: cell M87 per treasures (Water Main Project)
- Grant St Const: cell E114 per treasurer (Water Main Project)
- Orrick – Counsel: cell E115 per treasurer (Water Main Project)
- Sum of Village Seed Money 2 , EFC Grant 1, EFC Loan 3 and BAN(30y) 4
- Nov. 2019 – Construction Contract signed $4.6 million
- May 2020 – Street Upgrade/Paving Starts $380 thousand
- July 2020 – Change Orders increase Contract to $5.1 million