ALTUS -- The city is taking advantage of a low rate permanent loan package from the state water board for refinancing of the new reverse osmosis water treatment plant.
On Tuesday night the Altus City Council approved the adoption of two resolutions to authorize the city administrator to submit the application for permanent financing.
Following a presentation by Public Works Director Robert Stephenson, in which he recounted the recent tour of the 17,000 square foot facility by a group of business and civic leaders from the city of Altus, Kiwanis Club, the Altus Chamber of Commerce and Altus Air Force Base, City Administrator Mike Nettles explained the "attractive financing" offered by the Oklahoma Water Resources Board which must be completed by Sept. 15, when the current construction financing matures.
In 1999 the water board granted the city a $10.615 million revolving fund loan for construction of the plant, and in the fall of 2001, Altus citizens voted to keep the 1-cent sales tax, which was originally set in motion to fund the highway bypass, in place for another seven years to fund the plant.
The board, Nettles said, has extended the city two separate permanent loans -- a 60 percent interest bearing loan of $7,175,000 and a 40 percent loan of $4,246,000 with a one half percent administrative fee.
The reason that the total package exceeds the original $10.615, Nettles said, is that, "one, we don't know what the final completion dollar amount is going to be, so the water board, to make sure they covered the bases, included also a debt service reserve account on top of the total of 10.6 million dollars, but notice that it says 'not to exceed.'"
By the last regular meeting of the city council on Aug. 2, Nettles said, the city had expended about $9.9 million, leaving some $700,000 from the original total.
"I don't know that we're going to use it all," Nettles said, "but since we have to go ahead and have the documentation prepared, we put in there 'not to exceed' to cover the outside chance that we would spend all of that plus have to establish a debt service reserve account."
These types of accounts, he explained, are written into financing documents to provide some insurance or payment coverage in case the borrower is not able to make payments.
When the loan was first secured in 1999, it was not set up with a debt service reserve account, he said.
Nettles said the overall permanent loans, with a half percent administrative fee for the 40 percent loan and a variable rate of 3.55 or 3.65 for the 60 percent loan, is expected to be around $11,436,000.
When asked by Councilman Jerry Don Henry if he still expected the overall cost for the plant to be $10.6 million, Nettles said that personally he could not see that the $700,000 remaining would be eaten up in contractor change orders. However, he said, "We've been trying to get final figures from both contractors as well as our engineers on what is actually left to be completed."
Stephenson had explained that Wilco Construction Inc. of Altus, the company responsible for yard piping, site work and construction of the building, was still doing ground maintenance and cleanup, and that Indeck Power Equipment Co. of Wheeling, Ill., responsible for design, fabrication and installation of treatment equipment, was still in the process of programming.
Stephenson said that the level of Total Organic Carbons in the city's water has dropped dramatically since the plant has been producing water. The Oklahoma Department of Environmental Quality requires that at least 25 percent of TOCs be removed from the water supply he said, adding that the most recent tests show that Altus has removed 56 percent.
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