Fayetteville City Council
January 13, 2014
What Happened: The City Council discussed lowering the 8% interst rate for sewer assessments to Public Works Commission customers who are required to pay for sewer installation due to annexation. Steve Blanchard (PWC CEO) and Mike Lallier (PWC Commission Chairman) answered questions regarding the 3 interest rate scenarios (listed below). A motion was made to set the new interest rate at 5.25%. The motion PASSED with Councilmembers Wright, Mohn, Colvin and Crisp voting in opposition.
Sidebar: The new interest rate begins immediately and will be revisited on July 1, 2014.
Background: Homeowners are assessed $5,000 after sewer construction. The City of Fayetteville and PWC pays the remainder.
Interest rates that were considered: current 8% interest rate, 6% interest rate, prime (5.25%) +2%
What Was Said:
Mike Lallier (PWC Chairman) – “These projects are cash flow sensitive. 1.9 million has not been paid.”
Councilman Wright – “Is PWC in the business to make money?”
Lallier – “It will cost 240 million for phase 5 with 8,000 properties. 90 million spent by the city, 90 million by PWC, 40 million by residents and 20 million interest income. This is not a for profit project.”
Steve Blanchard (PWC Chairman) – “No PWC taxpayer money is contributed to that.”
Councilman Crisp – “Of the 500 homes serviced, 38% paid in the first 30 days…that means 60% financed and 2% defaulted. We are looking at a program that garnered 20 million dollars from people who can’t afford it. I’m getting calls saying I don’t have the money to pay the interest. If you change the rate that still doesn’t help. Why can’t interest rate change to 1% or 2%? Or a very small fee and figure out a way for the shortfall?”