Budget nearing resolution
Published 4:58 pm Wednesday, November 23, 2011
The Demopolis City Council met last night with a representative from the U.S. Department of Agriculture (USDA) to discuss the possibility of the organization extending a loan to the city for fire station renovations.
Renovations of Fire Station No. 2 have been a significant hurdle in approving the budget for this fiscal year, a process which has dragged on for more than two months.
Nivory Gordon presented the council with two plans; both for $750,000 for periods of 30 and 40 years.
Email newsletter signup
The 40 year note – the plan that found the most favor with the council – would require the city pay an annual note of $36,495. An additional $5,474 would be required to be set aside, which could be used for capital improvements.
The total interest on the note, which would bear a fixed 3.75 percent interest, would be $709,763.46.
Gordon told the council, if they took immediate action in applying for the loan, the city should know by late winter if it has been accepted by the USDA.
As part of the loan application, Gordon added, the USDA would seek additional grant funding that could be applied to the loan on the city’s behalf. Gordon estimates that could be anywhere from 10 to 35 percent of the loan.
“Worst case scenario,” Mayor Mike Grayson postulated, “We don’t get a grant at all and we get this loan at a great interest rate and save a lot of money to get this done.”
The only item under consideration in the potential USDA loan is the renovation of Fire Station No. 2.
Other projects – which include an aggressive paving schedule, the paving of Sunset Road and a water project on Lem Wilson Road – would have to be funded by other means or eliminated from the budget.
Councilman Thomas Moore, who has been the most ardent supporter of the fire station renovation, spoke favorably of the presentation.
“I think it gets what we need done,” he said.
Grayson and the council are still charged with issuing a bond in some respects in the coming weeks to meet an existing debt. However, that bond is not likely to include anything other than what is needed to cover the payment, which is approximately $4.5 million.
The council will meet next month in regular session where it is expected to formally charge the mayor with applying for the USDA loan.
Another item for discussion will be the passing of the city’s budget with some form of amendments.