Kingston USDA water loan still active, engineering on hold
by Jason Lowrey
Nov 09, 2013 | 920 views | 0 0 comments | 18 18 recommendations | email to a friend | print
The loan Kingston has with the U.S. Department of Agriculture to repair portions of its water system is still active, and will be for the new few years, according to a USDA representative.

Tammy Decker, the department’s area representative, said the USDA loan would be held for two to three years as Kingston works through its current financial difficulties. In contrast, the interim financing through the Georgia Environmental Finance Authority has fallen through.

During the Kingston City Council’s Monday meeting, City Clerk Michele Jones said the “loan is dead” and Mayor Ron Casey said the city would have to reapply to GEFA. The interim financing would pay for the construction and repairs performed on the water system. Once the project is complete, the USDA will pay GEFA back and Kingston will pay the USDA for the loan.

“The rate that GEFA was offering, as I understand it, they could only hold for a certain period of time and Kingston was not going to be able to meet that timeline,” Decker said. “So they were going to wait and reapply for interim financing later. But our loan and grant with them is still active.

“I am aware they are doing some auditing of the city’s records and trying to get a better grasp on their financial situation. We’re trying to give them some time to do that, but it is still active and kind of in their court. There’s some thing that they need to be getting to us as soon as they got a better handle on moving forward.”

The USDA will hold the loan for Kingston so long as the city moves foward in the process. Decker said she had heard of loans being held up to four or five years depending on the circumstances.

“It would take a lot for them to lose it completely. What we typically do is we if we run into a situation where a city is [bogged] down, we try to meet with them at least every three to six months to see if they’re moving forward and to see what the status is,” she said. “If we were sitting here in three or four more years and we’re still at this exact same spot, we would probably be telling them that we were going to be canceling the loan and grant. For one reason, at that point, the costs that they used to estimate the cost of this would just ... they’d be so outdated it wouldn’t be feasible.”

Since the council approved the loan in December 2012 in a 3-to-1 vote, council members have been concerned about how much the city would have to pay every month to service the debt. Decker said the city’s payment would not exceed $4,679 per month.

During Monday’s meeting Casey alluded to the city’s engineer, Sweitzer Engineering, saying the engineering costs for the water repairs would cost approximately $100,000 and would need to be paid from Special Purpose Local Option Sales Tax funds. Casey said he was opposed to paying the fees out of that account since the city had so little money and the council had not approved Sweitzer working on the plans.

John Sweitzer, president of Sweitzer Engineering, said no engineering work has been done.

“We’re ready to proceed with the engineering and USDA is kind of waiting on them to move forward. But I told them if they were ready to move forward, the next step is to authorize the engineering. I mean, we already authorized it, the fact that we have a contract. But, obviously, I’m not going to move forward until they say go,” he said. “I’ve said that the interim financing that they have arranged would not pay, would not give money for the upfront engineering, that they would have to come up with that locally and then it would be reimbursed by the USDA and the interim GEFA loan.”

Sweitzer said he recommended the city use SPLOST funds for the engineering work since it was the only adequate source of funding Kingston has available and the SPLOST money is designated for work on the water system. It seemed like a legitimate use of the funds, he added. The engineering work will cost an estimated $90,000 to $100,000.

“The city is not ready at this point. It’s just on hold. USDA will continue to hold, but that can’t go on forever. ... I told them, I can’t — Sweitzer Engineering — can’t finance $100,0000 ... Before we get under construction, we’ve got to do things like get railroad permits, highway permit, get the erosion control approved, get the plans approved, get them designed and approved. A round figure was going to be $90,000 to $100,000,” Sweitzer said. “They don’t have it, except in SPLOST, and they don’t want to risk that SPLOST money right now because of their dire financial straits. They may need that money for something more immediate. I agree with that.”

With Wanda Penson elected mayor Nov. 5 and Mike Abernathy elected to the city council, Decker said the USDA would give the city some time to adjust to the new officials, as well as sort out its finances.

“We work with them as much as we can to give them time to get their situation straightened out, especially when you start with one administration and move into another one,” she said.