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November 12, 2019 - Work Session Minutes

Water-Sewer Revenue Bonding
Tuesday, November 12, 2019

A Special Meeting of the City Commission for the City of Buchanan was scheduled at City Hall, 302 N. Redbud Trail, Buchanan, Michigan Tuesday, November 12, 2019 at 6:30 p.m.  The Mayor called the meeting to order at 6:32 p.m. 

Members present: Mayor Moore, Commissioners Weedon, Denison, and Downey
Members absent:  Commissioner Toerne
Staff present:        City Manager Bill Marx, City Treasurer Juli O’Bryant, and City Clerk Brenda Hess
Guests/Visitors present:  Andy Campell, Baker-Tilly

Andy reviewed the history of the SAW grant and funding.  He noted that it was $11.8 million for sewer.  Andy is still hopeful that the amount from 2017 would fit in to USDA funding.  Noted water/sewer rates in Buchanan are increasing for residents and the USDA will consider that fact when considering giving City grant money. Grant money given is based on current average household income combined with current rate increases.  If the City wants to do the $11.8 million project the USDA is the best way to go.  The SRF is more highly driven towards plant improvements.  USDA likes to cover everything including the collection side of wastewater.  They also have the best interest rates.

Downey arrived at 6:37 p.m.  

Noted the City has to have a grant and loan combination and get offers.  Marx noted that Prein-Newhof is asking $10,000 per submission of applications for a total of $20,000 for both water and sewer.  The value of the application process was discussed.  Campbell noted Baker-Tilly works with many different engineering firms and he noted the applications are typically $25,000.  Noted these programs have lots of red tape to get projects approved.  The USDA will let the City know in advance if they will not qualify to save money by not having to complete applications.  

Engineering firms can call Campbell for coordination. Noted that the application cost is small in comparison to the overall cost and scope of the project.  Typical monthly sewer rates for homeowners are $57.00.  Typically, communities are approved for grant money when that amount approaches the $45.00 per month amount. Campbell noted grant money is plentiful right now.  He noted that a $25,000 cost to apply would be good considering the amount of potential grant money to be given.  Noted that applying now would hedge against changes and possible revocation of the USDA program.  Poverty level was discussed for Federal and State levels.  Poverty interest rate coupled with the grant amount would fully fund the project, if not, project would need to be reassessed.  

Toerne arrive at 6:48 p.m.

Campbell moved onto the water system.  Noted that it should still be on track. Stormwater/sewer part is still an unknown.  The Village of Vicksburg is doing this same project and have a sewer, water and general obligation loan.  Water and sewer rates can be adjusted but road and storm have no rates and the money must come from the general fund.  USDA needs to be convinced to cover more with water and sewer funding.  Try to keep from using general funds.  Noted Baker-Tilly will help along the way.  USDA has improved their process and requirements making it easier to apply and be accepted.

Campbell commented upon the DPW facility and possibility of getting money from a bank.  The good news is that Chemical Bank did reduce its interest rate from the initial estimate making it more in line with the market.  City would not need Baker-Tilly’s help getting that particular funding. 

In conclusion, Campbell encouraged group to reach out through Marx and O’Bryant with any questions.

Being no further discussion, The Mayor adjourned the meeting at 6:56 p.m. 

____________________________            ____________________________
Brenda J. Hess, City Clerk                          Patricia Moore, Mayor








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