The Palm Coast City Council Tuesday evening approved an $8 million bank loan to continue major repairs to the city’s aging flood-control and stormwater infrastructure. It is the sixth loan the city will now be financing concurrently through its stormwater budget.
The $532,000 annual financing of the latest loan–which will cost the city a total of $10.6 million by maturation–brings annual stormwater debt costs to $1.84 million. The loans are secured by the annual revenue from the stormwarter fee that residents and businesses pay on their utility bills. That fee is gradually increasing: In 2018 the city council approved doubling the monthly fee for single-family residential homes from $11.5 to $24 by 2024. The fund was budgeted to take in $13.2 million in fees this year, up from 11 million in 2020.
The stepped up repairs–and costs–are the continuing results of the council’s decision in 2018 to accelerate repairs across the city to prevent failures in the system that keeps water flowing from streets to swales to canals to watersheds like Graham Swamp, rather than back up into homes during severe storm events.
The bank loan and stormwater improvements will have direct consequences on residents, whose significantly higher stormwater fees year after year are intended to defray the cost of those repairs. But in contrast with an item earlier on the council’s agenda Tuesday evening, when more than a dozen angry residents opposed the council’s quadrupling of its own salaries, the stormwater loan drew not a single comment from the public. The council approved the loan in a 5-0 vote. The city will get the $8 million wired to its account on Thursday.
The loan will finance several projects. One of them, visible on Belle Terre Parkway near Pine Grove Drive, is an old weir–a water control structure that consists of a short dam that, rather than hold the water back, intentionally allows a certain amount of water to fall through. The project will include dredging the canal upstream from the weir.
Another water-control structure to be repaired is on Royal Palms Parkway, visible to driver’s right as they are heading east toward Town center Boulevard. Users of the Lehigh Trail parallel that canal. The weir there handles about 50 to 60 percent of the city’s stormwater, channeling it to Graham Swamp. The structure needs to be rebuilt to ensure that flood control is more effective in major storm and hurricane events.
Other projects include the rebuilding of the Belle Terre Parkway pedestrian bridge and piping, near Buddy Taylor Middle School, build drainage improvements in the K Section and–accounting for $2 million of the $8 million–rehabilitating numerous pipes by lining them with cement rather than replacing them, thus extending their life while minimizing construction.
Mark Galvin, managing director with Hilltop Securities, the city’s finance consultant, briefed the council on the latest loan’s history and the city’s other stormwater loans as of today.
Aside from the new loan, the city has two other outstanding bank loan, a $9 million note issued in 2008, with $1.7 million and two years left on its financing (at $870,000 a year), and a pair of loans combining for $5.3 million taken out in 2019, one of them to be paid back by 2029, the other by 2039, the lot costing $402,000 a year to finance. The city also has three loans from a state revolving fund totaling $9.3 million, with maturity dates of 2026, 2030 and 2042.
Council members often speak of the city being debt-free. That is accurate only regarding the general fund. But when–as was the case Tuesday evening–a council member speaks of council members managing a $250 million budget, that also includes substantial debt.
The council directly manages only the $47 million general fund, but has an indirect hand in overseeing six other funds that operate like self-supporting businesses within the city’s budget–the stormwater management fund, which is at $24.3 million this year, the city utility’s two funds, which combine for $91 million, the garbage fund, at $9.4 million, the building permit fund, at $3.4 million, and the city’s IT fund, at less than $1 million. Each of these funds are supported by revenue drawn overwhelmingly from user fees, with very little crossover from the general fund. As such, they do not affect the city’s property tax rate. So city officials typically consider the debts incurred by those funds as if they were a separate story. But the combined debt of all the funds is currently $191 million. Add the newest loan, and the total is closer to $200 million.
For the latest loan, the city’s consultant prepared a request for proposal that went out to most of the local banks and was posted on the city’s website around the time when “the market was basically in disarray,” Galvin said, due to the war in Ukraine. “We received five responses considering the environment. We were very impressed with those.” The interest rates quoted ranged from 2.59 percent to 3.05 percent.
The low bidder for a 20-year fixed rate tax exempt loan was SouthState Bank, formerly known as CenterState Bank, at 2.59 percent. “I want to let you know that that rate is extremely aggressive,” he said. ” You’d better jump on this.” The loan will cost the city about $532,000 a year. The loan is payable early at any time without penalty.
Despite the numerous loans the city is carrying now, one of those loans will be paid off in two years, ending the annual $870,000 payment. In essence, overall debt payments after that will be lower even with this new loan, though for two years the payments will be steeper. “Now that doesn’t take into account any future financing that you might need to do for stormwater,” Galvin said. That’s key, because in 2018 the council did project that the city would need to do another stormwater study this year, and listed a number of projects that were in serious need of repair or replacement.
“I’d just like to applaud our team and long term commitment of bringing the best value to our community and to make these decisions very straightforward and have the opportunity to communicate that success as well,” City Manager Denise Bevan said.
Percy's mother says
So basically higher “fees” for Palm Coast residents.
AND the city is NOT debt-free as the Palm Coast City Council continues to claim . . . Even last night when they were in the midst of voting themselves an almost 370 percent raise all the while denying city of Palm Coast employees a 3 percent raise.
In light of higher and higher “fees” for Palm Coast residents, Danko’s campaign lie comes to mind again, “I’d rather drink antifreeze than raise taxes”.
Remember all this at the polls . . Danko’s best buddy Alan LOWE is running for city council. Are you gonna be dumb enough to vote for Danko’s best buddy? Gonna believe MORE lies?
Alonzo says
Welcome to the real world Repub, rule. Who would vote for a Repub, that deny employee raises but the Repub. Voted to give themselves a huge raise. More money for something else. The storm drain. Hiw much will it cost. Can anybody see how crooked these people are. They will not get my vote.
MANUELA Rodriguez says
To many loans,is going to cost the taxpayers a lot at the end. They should try better to look around the city,& check what it’s need it,A new hospital,it’s a great idea,roads,light signal in many residential streets ( driving back home,we can’t even see our homes, very dark at night ,a new library? Do we really need one? Spending so much money,millions, it’s really outrageous! we need a few more parks ,for the people where they can take their kids to play around,more stores,business around Matanzas parkway( we only have ,Dollar General ,also,it’s time for the city,to check all the residential neighborhoods,where the rain it’s getting close to their doorstep,every time that rains,other thing,very important for seniors & not seniors: transportation! Many people in Palm Coast ,doesn’t drive it,they depend of relatives or friends,to move around,St Augustine, has a 🚌 buss service,yes,people pay for that,but it less that calling for an Uber,or a taxi to pick you up,this is a reality,not getting so many loans,that is not so necessary!.
Terry John melton says
Lies, lies, lies. Extortion followed by rate increases of garbage, water, sewerage, & storm water management which apparently needs millions in repairs so our homes don’t flood. This is not management! Then they voted themselves $46K @ year. Hutzpah! These guys are dopes. Palm Coast should be outed for it’s inept corrupt mismanagement.
HayRide says
why not build a ped bridge to no where on lets says Rt.100 for $5.9Million that ought to help things.
seems there’s deep pockets and no one is watching the store.