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Posted March 10, 2014 | Leave a comment
Strasburg seeks loan for public works facility
By Alex Bridges
Strasburg plans to borrow up to $3.6 million to build a new public works headquarters to make room for an expanded sewage treatment plant.
Town Council will hold a public hearing March 31 on a proposed ordinance and resolution that, if approved, allows Strasburg to finance the cost of the new facility. Council can vote on the resolution the same night as the public hearing, Finance Director Dottie Mullins said Monday. The town has to file the resolution to the Virginia Resources Authority by April 3 to make the spring bond sale, Mullins explained.
But at the same time, council has yet to act on any measure that would allow the town to obtain the property for the project. Council has met in closed session on several occasions in the past few months to discuss the property for the building. Council plans to discuss and consider at its meeting Tuesday the signing of a letter of intent to buy the land needed for the facility.
The $3.6 million loan covers the contract cost to build the facility. This amount would not cover the cost to buy the land for it, Town Manager Judson Rex explained Monday.
"There are still costs associated with the project that the town has sort of accepted the responsibility for and we're just using our own funds, and one of those is property acquisition," Rex said.
As such, town officials can discuss the land as a separate matter from the loan and not face the same deadline.
"Even though council's going to vote on [the loan] in March, that's really just to meet the schedule of the VRA," Rex said.
Council likely won't close on the loan until May 21, Rex noted.
"We fully expect to have property acquired long before that closing date for the loan," Rex said.
The town manager acknowledged that the steps in the process appear out of order.
"In order to expedite it and make sure that one didn't hold the other up, we decided to sever the two and the town basically took on the responsibility of finding the site," Rex said.
At one point council considered more than a dozen pieces of property for the department facility, Rex said. Council and staff have looked at town-owned land but did not find suitable sites. Now council is considering privately owned land.
Rex has said Strasburg needs to acquire five acres of space for the department building. The "pre-engineered metal building" includes maintenance services, operations and administrative functions, housed either in contiguous structures or other facilities in the industrial park near Va. 55, the proposed resolution states.
The resolution limits the amount of the loan to $3.6 million and the annual interest rate to 5.5 percent. The town would need to pay the remaining cost of the department building project not covered by the loan.
Staff members and the town's bond counsel, Carolyn Perry, have recommended that council approve the resolution. The resolution allows the town to sell the general obligation bond to the Virginia Resources Authority. Virginia allows towns to issue general obligation bonds without putting the matter on the election ballot as a referendum to the voters. Towns must hold a public hearing on such debt.
The town needs to upgrade its wastewater treatment plant to increase capacity from 975,000 gallons per day to 2 million gallons per day. However, any upgrade requires the plant to expand into space occupied currently by the Department of Public Works.
Town Council awarded a contract in December to English Construction Company and Wendell Engineering to build the upgrades to the wastewater treatment plant and to construct the new Department of Public Works facility. The total contract price of $24.58 million includes $20.62 million for the plant upgrades and $3.96 million for the Public Works Department facility, plus other costs.
The town plans to cover the cost of the upgrades with a $4.5 million grant through the state's Water Quality Improvement Fund and $17.29 million from the Virginia Clean Water Revolving Loan Fund at zero percent interest for 25 years. The town would spend $1.5 million in local funds to cover the remaining costs of the Public Works Department building.
Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or firstname.lastname@example.org
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