BRENHAM CITY COUNCIL APPROVES INTERFUND LOAN TO REPAY LINE OF CREDIT FOR LAKE SOMERVILLE WATER LINE REPAIR

  

The Brenham City Council approved an interfund loan to help repay a local bank for a water line repair project at Lake Somerville at a brief meeting today (Thursday).

The interfund loan is between the city’s sanitation fund and water fund, and will be used to repay an advancing line of credit with Bank of Brenham for the raw water intake structure repair project at the lake.

Chief Financial Officer Carolyn Miller said the city is still waiting on reimbursement from FEMA, so it will instead repay the line of credit with cash reserves.

 

Last July, the council approved a $5 million advancing line of credit from the bank at an interest rate of 2.6 percent to provide interim financing for the repair project, which will be reimbursed by FEMA at a 75-25 percent share.

City Manager James Fisher said the project was initially estimated to cost around $1.5 million $1,178,100, but ended up bidding out in February 2020 at $4,999,991 to Lindsey Construction.  He said while FEMA has allocated the amount of the initial cost, the city is still waiting to receive the difference up to the amount of the bid award.  Update @ 6:30 p.m.: Following the council meeting, Fisher clarified to KWHI that FEMA has authorized reimbursement of 75 percent of $1,178,100, or about $883,575.  The city pays the other 25 percent, plus other costs that are not allowed by FEMA.

The current balance of the line of credit is $1,351,075, plus accrued interest.  The interfund loan for $1 million will be repaid over 10 years with an annual interest rate of 2 percent.  The remaining $351,075 and accrued interest will be paid from water fund cash reserves.  Once the city receives FEMA reimbursement for the project, the water fund will repay the interfund borrowing from the sanitation fund.

In the only other item on the agenda, the council moved to appoint Adonna Saunders to serve on the Board of Directors for the Brenham Community Projects Fund, Inc.  The non-profit foundation provides funding for quality of life enrichment for recreation, literacy and community philanthropy and development.  Saunders will fill the Treasurer position of former councilmember Susan Cantey.

Other officers for the foundation are Mayor Milton Tate as President, Mayor Pro Tem Clint Kolby as Vice President, and Fisher as Secretary.