Chesterton Tribune

$5.1M 15-year bond issue to finance Porter sewer fix

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How much and how long.

The Porter Redevelopment Commission answered that question Tuesday by unanimous consensus authorizing a $5.1 million bond sale with a repayment period of 15 years to finance badly needed sanitary-sewer upgrades.

Town financial advisor Karl Cender said a bond resolution to be prepared for commission consideration June 22 is only preliminary and can be amended later in what is expected to be a 90-day sale process.

The sale will be issued in two series: $4.1 million that will be repaid by the commission using tax-increment financing or TIF funds from property taxes, and $1 million repaid by the Town Council using revenue from the Porter County economic development income tax or CEDIT.

Cender estimated the commission would pay about $1.8 million in interest on the $4.1 million loan over the full 15 years, and about $1 million in interest over 10 years.

Commission president Bruce Snyder and member Micheal Genger favored choosing the longer-term repayment to maintain cash flexibility by not making the annual debt payment too high. Member Al Raffin said the interest saved on a 10-year financing package is attractive.

Cender has said a 15-year bond could be structured for early repayment after 10 years with no penalty.

Upgrade pricetag still out

Only about $4.1 million in actual sewer work would be done; the balance of the bond money needed is for project contingencies, consultant/issuance costs and to create a debt reserve fund in the event property-tax collections are delayed.

Town director of engineering Matt Keiser said consultants are looking at the likely pricetag for the sewer work. “I don’t believe (the cost) would go down (and) there’s a million ways it could go up.”

Town Council member Dave Babcock said the town is looking at the best and cheapest way to satisfy the terms of an agreed order with the Indiana Department of Environmental Management mandating the sewer modernization.

Everyone agreed the potential for cost overruns --- like the $20,000 on the recent yet much smaller Oak Hill Road sewer replacement --- is an unknown factor.

The commission has agreed to pay for some immediate sewer work on lift stations now under design with the understanding expended funds will be repaid when the bonds are sold.

Money the commission ties up for sewers is money it can’t spend on other projects.

Raffin said he doesn’t have a good feel of what’s expected of the commission regarding its planned $30 million development of the Indiana 49/U.S. 20 corridor as an iconic gateway for the Indiana Dunes, and there’s no final decisions how the commission will develop the Brickyard property it bought for $350,000 last year.

The commission also has three hike/bike trails planned but unbuilt, and Babcock said a new fire station on the Brickyard parcel is needed to relieve crowding at the shared Fire/Public Works complex now.

Snyder said the commission, which received among others a $1.8 million grant to begin the gateway improvements, has the potential to secure more grants down the road, and as development occurs in the designated TIF districts in town the commission’s revenue will increase annually.

Keiser said the commission needs to keep money in reserve to provide the local match that will help Porter win more and bigger grants for additional projects.

He also noted an argument can be made that major sewer projects with a life expectancy of 50-70 years should have 20-year bond repayments or more because if future generations will use the upgrades, they should help pay for it.

Raffin said the Town Council, which oversees the Sewer Department, needs to find money to maintain the sewers so future councils don’t find themselves in the situation the current one faces. The council plans to hike Porter sewer rates by an undetermined amount later this year.

Cender said the commission later in the bonding process will have to conduct a public hearing on appropriating the sale proceeds. Member Jon Granat asked, “What’s the purpose of having a public hearing since we’re making all the decisions now? If someone comes up with a better idea we’re too far down the road?”

Cender said the commission meetings are public and the bonding procedure can accomodate changes.

On another matter, the commission set a closed executive session for June 29 at 6 p.m. at the town hall to discuss land acquisition.

Commission replacement chosen

Snyder announced member Trevin Fowler has resigned. At the Town Council meeting Tuesday president Michele Bollinger said it was for a medical emergency that will require a 12-week recovery and for other obligations that will keep Fowler away from meetings.

Bollinger has attended nearly all commission and committee meetings related to the sewer upgrades; she suggested she be named as Fowler’s replacement for a seamless transition.

Genger so moved and Councilman Todd Martin seconded and Bollinger called for a vote when Granat, also a councilman, asked for discussion and nominated Babcock, who has construction expertise and has been working on the sewer project from the beginning.

Bollinger, Genger and Martin voted for her clinching the appointment for the balance of 2010. Fowler wants to return to the commission in 2011, said Bollinger.

Granat and Babcock had voted for him.



Posted 8/9/2010