Financing options explained by consultant
July 28, 2016 at 4:25 p.m.
MILFORD - To get the wastewater treatment plant improvement project funding going, the Milford Town Council and a representative of Umbaugh & Associates discussed the town's options Monday.
Steve Carter, representing H.J. Umbaugh & Associates, Plymouth, said the corporation conducted a rate study for the town in 1998. As part of the study, they contemplated the town borrowing a million dollars and took that into consideration during the rate study. Since then, the town has also slightly increased rates, which, Carter said, will help the town get funding for the project.
As far as timing, Carter said, next summer sounds like the earliest the contruction of the project could begin. The actual financing of the project, he said, will take only 60 to 75 days. There are three financing options for the town.
The first is Open Market Financing. Carter said that is the most flexible financing and is through banks.
The State Revolving Fund option is not time consuming but adds restrictions on the engineering side of the project. The interest rate would be slightly lower. However, with SRF financing, Carter said, the town will lose some control.
The last option is Rural Development financing. He said this route is not very viable for the town. It's a grant and loan package but the town has to meet specific criteria to qualify.
Whichever financing option the town chooses, Carter said, interest rates are now on the rise.
"It's a pretty quick process and can go concurrently with the design side," Carter said of the financing.
If the town goes with the Open Market Financing option, town councilman Douglas Ruch asked if they can pay off the bonds in 20 years.
Carter said they would start with 20 years and wouldn't go beyond that. He also said they can lock in a rate at this point if they so desire but since the town is not even in the design phase, they should make sure they know how much they want to borrow.
"There are some pitfalls to that but it could work," Carter said. He said if the town does borrow the money sooner than later, it will be better to borrow too much than not enough. "Two bond issues cost more than one" if the town doesn't borrow enough money the first time.
Ruch recommended to the other town council members that they retain H.J. Umbaugh & Associates as the town's financial consultants on the project.
Carter said an agreement between the town and the corporation will be prepared and presented to the town council by the next meeting. [[In-content Ad]]
MILFORD - To get the wastewater treatment plant improvement project funding going, the Milford Town Council and a representative of Umbaugh & Associates discussed the town's options Monday.
Steve Carter, representing H.J. Umbaugh & Associates, Plymouth, said the corporation conducted a rate study for the town in 1998. As part of the study, they contemplated the town borrowing a million dollars and took that into consideration during the rate study. Since then, the town has also slightly increased rates, which, Carter said, will help the town get funding for the project.
As far as timing, Carter said, next summer sounds like the earliest the contruction of the project could begin. The actual financing of the project, he said, will take only 60 to 75 days. There are three financing options for the town.
The first is Open Market Financing. Carter said that is the most flexible financing and is through banks.
The State Revolving Fund option is not time consuming but adds restrictions on the engineering side of the project. The interest rate would be slightly lower. However, with SRF financing, Carter said, the town will lose some control.
The last option is Rural Development financing. He said this route is not very viable for the town. It's a grant and loan package but the town has to meet specific criteria to qualify.
Whichever financing option the town chooses, Carter said, interest rates are now on the rise.
"It's a pretty quick process and can go concurrently with the design side," Carter said of the financing.
If the town goes with the Open Market Financing option, town councilman Douglas Ruch asked if they can pay off the bonds in 20 years.
Carter said they would start with 20 years and wouldn't go beyond that. He also said they can lock in a rate at this point if they so desire but since the town is not even in the design phase, they should make sure they know how much they want to borrow.
"There are some pitfalls to that but it could work," Carter said. He said if the town does borrow the money sooner than later, it will be better to borrow too much than not enough. "Two bond issues cost more than one" if the town doesn't borrow enough money the first time.
Ruch recommended to the other town council members that they retain H.J. Umbaugh & Associates as the town's financial consultants on the project.
Carter said an agreement between the town and the corporation will be prepared and presented to the town council by the next meeting. [[In-content Ad]]