Oregon City Council recently approved an ordinance that retains the services of Sudsina & Associates, LLC as financial advisor to the city for $25,000 in connection with the issuance and sale of bonds.
“I think it’s good work what this consultant has done for us, basically saving us money on long-term interest rates,” said Councilman James Seaman.
Councilman Sandy Bihn asked Administrator Mike Beazley about the health of specific city funds to finance projects.
“We have sufficient revenue to build up a reserve over time,” said Beazley. “On balance, we have a pretty healthy budget compared to most governments like us. As we take care of our street projects or capital projects, we have some amount of flexibility in where we’re going. We don’t have to spell it out each year because our world changes each year as we look at our revenue. But we have flexibility to meet our service needs as we move forward.”
Bihn asked what type of debt the city is anticipating from current projects.
Public Service Director Paul Roman said the city will receive a $900,000 Ohio Public Works Commission (OPWC) grant and a $900,000 OPWC loan with zero percent interest for the Oregon Flood Relief and Erosion Control project. The city and BP Husky, a project partner, will share paying for the balance of the $5 million project.
“I think my bigger concerns are the unknowns with our wastewater treatment plant,” said Roman. The city is expanding its wastewater treatment plant. “That’s a big one. We still have to go through negotiations with the EPA (Environmental Protection Agency) and we’re still going through the studies that we have to submit to the EPA in terms of our cost, but we are looking at substantial costs.”
Roman added that he felt “very good” that the city is partnering with BP Husky for the Oregon Flood Relief and Erosion Control project.
“Those really are the next two biggest projects,” he said.
There is an upcoming ordinance for an EPA low interest loan for a sanitary sewer rehabilitation project, he added.
“That also comes out of the general income tax as well as our 340 fund. We’re trying to finance it at the lowest interest rate possible. Those are probably the three biggest projects,” said Roman.
Bihn noted that Oregon is able to offset costs of water and wastewater usage with income tax funds. “It’s a strange approach,” she said.
“It is a rare mix,” said Beazley. “For Oregon, it’s really a necessary way for us to be who we are. We’re 28 square miles. And the ratio of miles of water and sewer lines to the population really makes it necessary to use and set up the income tax that way so we have lower water and sewer rates. Because of the nature of our unique geography, it makes it practical. That’s the way Oregon has chosen to meet its service needs. It’s different, but it makes sense.”
Beazley said he is comfortable that the city has a responsible debt ratio.
“We worry that if we build a bridge, what can’t we do next year? Obviously, it’s not meaningless. There is something there. It’s money that we spent. We feel comfortable about the anticipated revenue in those funds and we can continue to meet our ongoing service needs,” said Beazley. “This council and this administration have to be very aware over the next couple of years that the EPA is going to be requiring cities like us to have more storage and more treatment. That comes with some benefits to the lake, but some costs to the community, and we’re going to have to work as a community. I feel good about where we are on it. But it’s a very significant project for the future of the community. We expect to significantly expand treatment and storage because that’s what communities like us are being told.”
Bihn asked how the city will fund other projects, like the possible reconstruction of Dustin Road.
“How will we finance those projects that the city sees a real need for?” she asked.
“Dustin Road - if the city moves forward with it - is something we would finance,” said Beazley. “We would look to present options for that as we go through next year’s budget cycle. That’s something we’re going to have to choose to finance over a period of years as the only practical way of doing it. Just the cost of that project alone exceeds about three or four years of streets money.”
Seaman asked if the city could reapply for grants to fund the reconstruction of Dustin Road.
“If the economic situation changes, it’s a possibility,” said Seaman. “We have to be optimistic.”
Beazley said the city may have to fund a bigger share of projects in the future.
“The state and federal government are changing their attitude toward funding local projects. We are very sensitive to the fact that in the future, we could have a higher local component than we traditionally had in our street construction projects,” he said. “We’re monitoring that as we move forward. But we all have to be aware that life can change for us, and we have to come up with other funds.”