Engineer: Crown Point loan interest to pay for water line improvements

A new state loan financing formula will help Crown Point replace the oldest of its water service lines around the city.

Engineer Al Stong told the Utilities Board at its July 9 meeting that the $19.3 million IFA loan, for which it’s applied from the State Revolving Fund for various water projects, will allow the city to use the interest generated by that loan to replace the service lines.

For example, if the city were to take out the loan at a 2.15 percent interest rate, about $4 million of interest would be generated. The State Revolving Fund would allow Crown Point to use that $4 million to replace the service lines in most need of repair, which would likely start downtown.

“Can you imagine getting interest back on your house to reinvest in it? You’d do it all day long,” Stong said.

If the city were to secure a zero percent interest rate on the $19.3 million, however — which is the goal — it would need to bond for an additional $4 million, also to be financed at zero percent, city financial consultant Greg Guerrettaz said. He added that the city would need to pay down $1 million from its cash on hand for a 2012 bond, which will help the city get the rate it needs. Guerrettaz said the city should pay off the bond no later than November.

Stong, meanwhile, said he’d like to have the $19.3 million loan signed by the beginning of December.

Michelle L. Quinn is a freelance reporter for the PostTribune.