The Town of Purcellville will not take advantage of the market’s low interest rates by borrowing millions of dollars to finance multiple necessary projects. Instead, the town will look elsewhere for the funds and may opt to deplete its reserves.
The Town Council voted unanimously Wednesday night against authorizing the town staff to take out a $3 million line of credit from the Bank of Charles Town with a 1.81-percent interest rate to finance a list of capital improvements to the utility systems. According to a staff report, the town has multiple pressing water projects totaling $15.5 million, with the top eight critical projects totaling $6.3 million and needing attention before June 2024.
By the end of Fiscal Year 2024, the town’s utility funds will have a cumulative shortfall of $8.5 million, which will be $4.4 million below the minimum allowed under the town’s fiscal policy. To compensate for that reduction, the town may transfer $8.5 million from its $12.4 million water and sewer fund cash reserve accounts, leaving only $3.9 million in those reserves.
For weeks, Town Manager David Mekarski has been pressing the Town Council to authorize the line of credit so the town can take advantage of the historically low interest rates.
After the COVID-19 pandemic hit America in March, the Federal Reserve slashed interest rates to a range of 0-0.25%. The fed continues to hold interest rates at those levels.
Councilman Tip Stinnette said that instead of incurring the additional debt, the Town Council and staff should work together to propel projects that will generate revenue for the town, such as applying for more grants, setting up a nutrient credit bank or installing a solar field on the Aberdeen property, finding a firm to construct a new cell tower so the town can lease spots to cellular carriers, selling reclaimed water, and pursuing options to bring online a new, large utility user to provide the town with added revenue.
“I think we’ve got some maneuver space,” Stinnette said.
The town could consider JK Moving Founder, President and CEO Chuck Kuhn’s Oct. 6 proposal for the town to annex the former 120-acre Warner Brook property, which would net the town millions of dollars in one-time utility tap fees and ongoing revenue in the forms of tax and utility rate payments.