PORT TOWNSEND — The city has secured a line of credit from Kitsap Bank to maintain its cash flow during the construction of a new water treatment facility.
The line of credit allows the city to borrow up to $3 million at a 1.5 percent interest rate.
The City Council unanimously approved the line of credit Monday with council members Amy Smith Howard, David Faber, Bob Gray, Deputy Mayor Catharine Robinson and Mayor Deborah Stinson voting in favor.
Councilwomen Pamela Adams and Michelle Sandoval were excused.
The city already has secured $26 million to cover the $24 million project but needs the credit limit to pay bills that come due before the city receives the promised reimbursements.
12 proposals
City Manager David Timmons said 12 banks submitted proposals.
He told the council the interest paid would be roughly equivalent to finance charges if the city was required to carry the debt to the next month.
Paying bills on the due date also helps the city’s financial standing, he said.
Once the project is finished, the credit line will be retired, Timmons said.
Funding for project
A substantial part of the construction funding comes through a low-interest loan from the state Department of Commerce, Timmons said.
The construction of the new facility is funded with a combination of grants and low-interest loans to be paid off within 20 years, along with a monthly user capital surcharge fee of $18 for those within city limits and $21 for those outside the city.
These fees will respectively increase to $24 and $28.80 in 2018.
The surcharge will continue until the loan is paid off.
The new water facility is slated for completion in late October and will be built in two phases: the main plant and a new storage reservoir to replace the current one, which is not earthquake-proof.
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Jefferson County Editor Charlie Bermant can be reached at 360-385-2335 or cbermant@peninsuladailynews.com.