(Aug. 3, 2017) The Pocomoke City Council received some much-needed assurances last Wednesday, ahead of advancing a more than $2 million project to repair the Clarke Avenue pumping station.
In addition to a Maryland Department of the Environment (MDE) grant for approximately $1 million, the city anticipates sourcing the remaining funding from a U.S. Department of Agriculture (USDA) loan.
Although the council voted 3-2 to pursue both funding sources during a meeting on April 10, councilwomen Diane Downing and Esther Troast withheld their approval.
On hand last week to assuage potential concerns was Denise MacLeish, USDA-Rural Development community program director, who reviewed time frames for utilizing the loan.
“This money is good for five years so … by 2021 we’d like to have the money spent,” she said. “Once we set aside the money [it] is sitting in the treasury waiting for the town to use it.”
With interest rates at a historic low last year, MacLeish said the USDA was able to provide Pocomoke with loan terms set at a locked rate of 1.375 percent for a four-year term.
“We had the opportunity to obligate, or set aside, this money last December [and] at that point our interest rate was at the lowest it’s ever been,” she said. “I doubt it’s going lower than that.”
MacLeish said rates have climbed steadily since the beginning of 2017, which was the primary motivation behind the funding approval in December.
“We didn’t have a lot of time to decide on it, but the rate was going up the first of January,” she said. “They’re currently at 2 percent.”
MacLeish said that if the town opted at this time to not accept the USDA loan of roughly $966,000 the advantageous loan rate would be lost.
“I didn’t want to de-obligate or take the money back,” she said. “Then you’d come back and today my rates 2 percent. It depends on where our money is and what’s available.”
Scott Getchell, director of operational services with architectural & engineering design firm George, Miles & Buhr, said the state has mandated improvements at the Clarke Avenue pumping station.
“Over the last two or three inspections from MDE they had called out some deficiencies that need to be corrected,” he said. “Some of those were corrected along the way, but there’s still some pieces of it that we kind of held onto because the thought was during our upgrade that we’d take care of that.”
Although additional corrective actions may be sufficient to satisfy state inspectors, Getchell said the pumping station, which was constructed in the late 1960’s, will continue to have age-related issues.
“I think it’s a matter of time before you’re going to have significant issues,” he said. “I would say from a capital improvement perspective that station needs to be upgraded.”
Pumping stations generally begin requiring repairs after roughly a quarter century, MacLeish said.
“The key is if the station ultimately fails you’re going to have to replace it [but] at what cost,” she said. “If were looking at a rehab of the existing plant at $2.3 million, what would a new pumping station cost?”
Mayor Bruce Morrison sided with the assessment from both experts.
“The bottom dollar is if we don’t do it now, if we wait another year, it could be $3.6 million,” he said.
Peter Bozick, GMB executive vice president, said a proactive approach is advisable.
“What I want us to put into perspective, not just that it’s 50 years old, this is the main pumping station for the entire town,” he said. “Everything goes through there to get to the treatment plant. If that goes down the entire town goes down.”
Bozick noted project plans have already been completed and the town has received a construction permit from MDE.
“We can advertise this in a matter of one week,” he said.
With just under $2 million in designated funding currently available, Getchell said the most recent estimates have already eclipsed that amount.
“The latest estimate when we did the final design increased by $400,000 to about $2.4 million,” he said.
Morrison wondered if the city could still reverse course if price estimates continue to climb.
“If it comes back and its $3 million we’re not obligated to do anything right?” he asked.
MacLeish cautioned that approach would involve re-sourcing funding, while simultaneously noting the difficulty in conjecturing actual costs until project bids are received.
“If we’re $400,000 short I might call MDE and say, ‘hey if I can up with $200 can you do $200?” she said. “There’s a coordination, a working relationship with USDA and MDE that has been [established] over the years.”
After digesting the perspective provided by MacLeish, Getchell and Bozick, the council agreed to proceed forward with what Morrison deemed “a very important” project.
“We’re a small town and right now financially we’re not in the best of shape,” he said. “It’s like every other small town, it’s struggling, but this is something that’s got to be done. If we put it off any longer the price is going to be up to $3-4 million.”
In addition to a Maryland Department of the Environment (MDE) grant for approximately $1 million, the city anticipates sourcing the remaining funding from a U.S. Department of Agriculture (USDA) loan.
Although the council voted 3-2 to pursue both funding sources during a meeting on April 10, councilwomen Diane Downing and Esther Troast withheld their approval.
On hand last week to assuage potential concerns was Denise MacLeish, USDA-Rural Development community program director, who reviewed time frames for utilizing the loan.
“This money is good for five years so … by 2021 we’d like to have the money spent,” she said. “Once we set aside the money [it] is sitting in the treasury waiting for the town to use it.”
With interest rates at a historic low last year, MacLeish said the USDA was able to provide Pocomoke with loan terms set at a locked rate of 1.375 percent for a four-year term.
“We had the opportunity to obligate, or set aside, this money last December [and] at that point our interest rate was at the lowest it’s ever been,” she said. “I doubt it’s going lower than that.”
MacLeish said rates have climbed steadily since the beginning of 2017, which was the primary motivation behind the funding approval in December.
“We didn’t have a lot of time to decide on it, but the rate was going up the first of January,” she said. “They’re currently at 2 percent.”
MacLeish said that if the town opted at this time to not accept the USDA loan of roughly $966,000 the advantageous loan rate would be lost.
“I didn’t want to de-obligate or take the money back,” she said. “Then you’d come back and today my rates 2 percent. It depends on where our money is and what’s available.”
Scott Getchell, director of operational services with architectural & engineering design firm George, Miles & Buhr, said the state has mandated improvements at the Clarke Avenue pumping station.
“Over the last two or three inspections from MDE they had called out some deficiencies that need to be corrected,” he said. “Some of those were corrected along the way, but there’s still some pieces of it that we kind of held onto because the thought was during our upgrade that we’d take care of that.”
Although additional corrective actions may be sufficient to satisfy state inspectors, Getchell said the pumping station, which was constructed in the late 1960’s, will continue to have age-related issues.
“I think it’s a matter of time before you’re going to have significant issues,” he said. “I would say from a capital improvement perspective that station needs to be upgraded.”
Pumping stations generally begin requiring repairs after roughly a quarter century, MacLeish said.
“The key is if the station ultimately fails you’re going to have to replace it [but] at what cost,” she said. “If were looking at a rehab of the existing plant at $2.3 million, what would a new pumping station cost?”
Mayor Bruce Morrison sided with the assessment from both experts.
“The bottom dollar is if we don’t do it now, if we wait another year, it could be $3.6 million,” he said.
Peter Bozick, GMB executive vice president, said a proactive approach is advisable.
“What I want us to put into perspective, not just that it’s 50 years old, this is the main pumping station for the entire town,” he said. “Everything goes through there to get to the treatment plant. If that goes down the entire town goes down.”
Bozick noted project plans have already been completed and the town has received a construction permit from MDE.
“We can advertise this in a matter of one week,” he said.
With just under $2 million in designated funding currently available, Getchell said the most recent estimates have already eclipsed that amount.
“The latest estimate when we did the final design increased by $400,000 to about $2.4 million,” he said.
Morrison wondered if the city could still reverse course if price estimates continue to climb.
“If it comes back and its $3 million we’re not obligated to do anything right?” he asked.
MacLeish cautioned that approach would involve re-sourcing funding, while simultaneously noting the difficulty in conjecturing actual costs until project bids are received.
“If we’re $400,000 short I might call MDE and say, ‘hey if I can up with $200 can you do $200?” she said. “There’s a coordination, a working relationship with USDA and MDE that has been [established] over the years.”
After digesting the perspective provided by MacLeish, Getchell and Bozick, the council agreed to proceed forward with what Morrison deemed “a very important” project.
“We’re a small town and right now financially we’re not in the best of shape,” he said. “It’s like every other small town, it’s struggling, but this is something that’s got to be done. If we put it off any longer the price is going to be up to $3-4 million.”