Palm Coast City Council on Tuesday night approved an $8 million bank loan to continue major repairs to the city’s aging flood and stormwater control infrastructure. This is the sixth loan the city will now simultaneously fund through its stormwater budget.
The $532,000 annual financing of the latest loan — which will cost the City a total of $10.6 million per maturing — brings the annual cost of stormwater debt to $1.84 million. The loans are all secured by annual storm tax revenues that residents and businesses pay on their utility bills. These fees are gradually increasing: in 2018, the city council approved doubling the monthly fee for single-family residences from $11.5 to $24 by 2024. The fund was to receive $13.2 million in fees this year, compared to 11 million in 2020.
The escalating repairs – and costs – are the continued result of the council’s decision in 2018 to speed up repairs across the city to prevent failures in the system that keeps water flowing from streets to gullies to canals to watersheds like Graham Swamp, rather than backing into homes during severe thunderstorms.
The bank loan and improved stormwater will have a direct impact on residents, whose significantly higher stormwater fees year after year are intended to cover the cost of these repairs. But unlike an item earlier on the council’s agenda Tuesday night, when more than a dozen angry residents objected to the council’s quadrupling of its own wages, the stormwater loan did not elicited no public comment. The board approved the loan by a vote of 5-0. The city will receive the $8 million wired into its account on Thursday.
The loan will finance several projects. One, visible on Belle Terre Parkway near Pine Grove Drive, is an old weir – a water control structure that consists of a short dam that, rather than holding back water, intentionally lets through a certain amount of water. The project will include the dredging of the channel upstream of the spillway.
Another water control structure in need of repair is on Royal Palms Parkway, visible to the right of the driver as they head east toward Downtown Boulevard. Lehigh Trail users parallel this channel. The spillway handles approximately 50-60% of the city’s stormwater, directing it to Graham Swamp. The structure needs to be rebuilt to ensure flood control is more effective during major storms and hurricanes.
Other projects include rebuilding the Belle Terre Parkway pedestrian bridge and piping near Buddy Taylor Middle School, building drainage improvements in Section K and – accounting for $2 million of the $8 million dollars – the rehabilitation of many pipes by covering them with cement rather than replacing them. thereby extending their lifespan while minimizing construction.
Mark Galvin, managing director of Hilltop Securities, the city’s financial consultant, updated council on the history of the latest loan and the city’s other stormwater loans to date.
Besides the new loan, the city has two other outstanding bank loans, a $9 million note issued in 2008, with $1.7 million and two years remaining on its funding (at $870,000 per year), and a pair of loans combining for $5.3 million taken in 2019, with one to be repaid by 2029, the other by 2039, with the lot costing $402,000 a year to fund. The city also has three loans from a state revolving fund totaling $9.3 million, with maturities of 2026, 2030 and 2042.
Council members often say the town is debt free. This is only true with respect to the general fund. But when — as was the case on Tuesday night — a board member talks about board members managing a $250 million budget, that also includes significant debt.
The council directly manages only the general fund of $47 million, but has an indirect role in overseeing six other funds that operate as stand-alone enterprises within the city budget – the Stormwater Management Fund, which s amounted to $24.3 million this year, the city’s two utilities fund, which combined for $91 million, the garbage fund, at $9.4 million, the building permit fund, at $3.4 million, and the city’s computer fund, less than $1 million. Each of these funds is supported by revenue derived largely from user fees, with very little transfer from the general fund. As such, they do not affect the city’s property tax rate. Thus, municipal officials generally consider the debts incurred by these funds as if they were a separate history. But the combined debt of all funds is currently $191 million. Add the most recent loan and the total is closer to $200 million.
For the last loan, the town’s consultant prepared an RFP which was sent to most local banks and posted on the town’s website at a time when “the market was basically in disarray “, said Galvin, because of the war in Ukraine. “We received five responses taking into account the environment. We were very impressed with these. Interest rates quoted ranged from 2.59% to 3.05%.
The lowest bidder for a 20-year fixed-rate tax-exempt loan was SouthState Bank, formerly known as CenterState Bank, at 2.59%. “I want you to know that this rate is extremely aggressive,” he said. “You better jump on it.” The loan will cost the city approximately $532,000 per year. The loan is prepayable at any time without penalty.
Despite the many loans the city is currently taking out, one of those loans will be paid off in two years, ending the annual payment of $870,000. Essentially, overall debt repayments after that will be lower even with this new loan, although for two years the payments will be higher. “Now that doesn’t take into account any future funding you might need to do for stormwater,” Galvin said. This is essential, because in 2018 the council predicted that the city should complete another stormwater study this year and identified a number of projects that were in serious need of repair or replacement.
“I would just like to applaud our team and our long-term commitment to bringing the best value to our community and making those decisions very simple and having the opportunity to communicate that success as well,” City Manager Denise Bevan said.
The prescription and the loan package: