Historic City News readers may recall that, in 2003, and again, two years later, the City of St Augustine sold bonds to investors — a high priority debt, given to raise money that was needed for the system that delivers water and sewer service to city taxpayers and residents.
As collateral, the City guaranteed repayment of the bonds by pledging the revenues from operation of the water and sewer utility system.
At the regular business meeting of the St Augustine City Commission Monday night, staff has proposed a resolution be adopted that will pledge those revenues again — but, this time, it won’t be for the benefit of city taxpayers.
The City of St Augustine is borrowing nearly $2 million to extend sewer utility service to an unincorporated area of St Johns County that is located adjacent to the western boundaries of the City, specifically West Augustine.
They will enter into a loan agreement through the Florida Water Pollution Control Financing Corporation from the State Revolving Fund Loan Program “in an amount not to exceed $1,961,060.00”, according to the proposed resolution.
Two weeks ago, the City Manager, John Regan, signed the loan documents — on January 9th. The proposed resolution reaffirms his authority to have done that; relying on discussions held in the December 12, 2011 regular session.
During those discussions before the Christmas holiday break; there was not unanimity among commissioners on a number of critical points that remain at issue, according to some local businesspersons and city property owners who observed the meeting.
Before any expansion project requiring the borrowing of money was to be authorized, the City had to commit to a $300,000 “feasibility study” that some say could very well show that the project was not financially feasible.
“If the City already knew they were going to borrow the money to build the project, why did they spend an extra $300,000 for a study?” asked local entrepreneur Henry Whetstone; who is also a member of the board of directors of a local bank. “And, if they didn’t already know, why didn’t they wait for the results of the study to be made public?”
Also at issue, does the City of St Augustine have adequate lien authority outside of its jurisdiction to enforce collection of sewer hookup fees and other costs if they are not paid by the county property owner?
Another concern was raised by City Commissioner Errol Jones in the December meeting; when he expressed fear that St Johns County would make the City “the bad guys” if it became necessary to force the residents in the covered area to hookup.
Likely the most pertinent issue, according to those who expressed an opinion, was the observation that no one knows exactly how many residents in the proposed service area will be willing to voluntarily disconnect from their septic tanks in order to connect to the new City operated sewer system.
Historic City News editor, Michael Gold, said the only rationale for the city to go $2 million in debt is if they can produce a reasonable business plan — showing how and when that money, plus the accrued interest, can be repaid. “I haven’t seen anything like that yet,” Gold said.
Additionally, the City of St Augustine Water and Sewer System Revenue Bonds, Series 2003, and Water and Sewer System Refunding Revenue Bonds, Series 2005, have yet to be fully repaid.
If you are planning to attend — the regular St. Augustine City Commission meeting will begin at 5:00 p.m. Monday and will be held in the Alcazar Room; on the first floor of City Hall, located at 75 King Street in St. Augustine. It will be broadcast live on Comcast Government TV (Cable Channel 3) and is streamed over the Internet.
Photo credits: © 2012 Historic City News staff photographer