Apalachicola about to end DEP loan default
It’s been a long time coming, and it didn’t come easy, but it looks like Apalachicola is about to get out of default on its nearly $2.8 million debt over water and sewer loans to the Florida Department of Environmental Protection.
Mayor Kevin Begos announced the agreement at Tuesday evening’s regular meeting, although it won’t be for another week or two before all the paperwork is signed.
The agreement restructures the payment plan to semi-annual (that’s twice a year) payments of about $186,000. In doing so, the interest rate on the loan is reduced to zero, and the city’s troubling default status is removed, effective when the agreement is signed.
“The city will no longer have to make extra payments to pay down the default,” he said.
Begos said the deal, which requires the next $186,000 payment by Dec. 15, will save the city about $61,000 each year over the next six years. If all the terms are adhered to, the loan balance will be fully paid off by Dec. 15, 2027.
Don’t expect the savings will lead to the lowering of any water and sewer bills. The agreement stipulates that any and all savings will be used to maintain the water and sewer system and to make capital improvements.
“It’s a big step,” said the mayor. “We made so much progress in saving costs but we weren’t making capital spending so we fell behind. It’s much better to put the money into repairs than paying interest on the loan.
“Removing the default status from city finances will be a major step forward, and allow for many other low-interest grant and financing options,” he said.
He said the city’s commitment to maintaining and upgrading the system will be in accordance with detailed asset management plans developed by the Florida Rural Water Association.
“The DEP has been very generous,” he told commissioners. “But this is the end of the line of what their options are for helping us. It really is the end of the line.”
Begos said the deal will save about $170,000 in the next fiscal year because that budget called for an addition pay down of more than $100,000 to accelerate the effort to get out of default.
“We were working so hard and doing so much to pay it down and yet we still had a black mark,” he said.
The mayor noted that with the default gone, “this opens up the possibility of refinancing (other) high-interest loans. “We’ve had this stumbling block,” he said.
In addition to a hats off to DEP staff, Begos thanks State Rep Jason Shoaf for his work in striking the deal, as well as the efforts of new city manager Travis Wade.
In an allied DEP matter, the city has been given a six-month grace period regarding the terms of a consent order. “This raises the possibility within our budget framework that we could spend $95,000 to satisfy the consent order without donating any land,” Begos said.
He said the consent order credits any improvements to the fine the city has been levied.
In the event that City Hall or the nearby former fire department land is sold – a deal that doesn’t look promising at this point - then that money would go to satisfying financial obligations.
But beyond that, “they did make clear any other land we might sell it’s our deal. Nothing will be held up,” Begos said.
“Right now we’ve had no offers on City Hall or the fire station,” he said. “There are ongoing questions whether we should, or can, sell either of those properties.”