Rising Sun gets bridge loan to help finance water line project
— A change by the U.S. Department of Agriculture in the way it makes low-interest loans available for infrastructure has caused town officials to get a loan to cover its loan.
Rising Sun is currently in the process of figuring out how to finance the estimated $10 million it will cost the town to bring water into town through Chester Water Authority.
“The USDA ... won’t approve interim financing until the permits and design are done,” Calvin Bonenberger, Rising Sun town administrator, explained to the mayor and commissioners last week.
Previously, such as when Rising Sun’s new wastewater treatment plant was being built, the federal agency approved the town’s plan to get a line of credit with PNC for the
$14 million project. Once construction was complete and the plant was online, USDA paid back that loan, giving the town low-interest, longterm USDA financing.
But now, USDA requires more to be accomplished before money is freed. Bonenberger estimates the town will expend $750,000 before a shovel breaks ground on the water line from CWA.
“Small communities don’t have a lot of money lying around so we had to get a bridge loan,” he explained.
That bridge loan, at 1.2 percent interest, comes through a program set up for towns like Rising Sun called CoBank. It’s a national cooperative bank for rural towns, based in Connecticut.
“When the bridge loan is paid off we may go back to them and get the interim loan,” he said. “They have incredible interest rates.”
However, these new regulations also bring a measure of financial responsibility, Bonenberger told the board.
“We cannot borrow any more money for the water project until the bridge loan is paid off,” he said. The elected body had concerns. “Is $750,000 enough to handle those costs?” Commissioner Augie Pierson asked. “(If) in the permitting process and the engineering we come across costs we weren’t expecting, we have the ability to get more?”
Pierson, who was a member of the board for three terms until 2012, reminded the board that unexpected expenses should be expected.
Bonenberger said this bridge loan, like a interim loan, amounts to a line of credit.
“But we’re also paying interest on this. We don’t want to pay more interest,” he added.
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