City’s Low Interest Loan Is In Jeopardy

— The Arkansas Natural Resources Commission has notified the City of Gravette that the city is in danger of losing a sewer improvement project loan, of up to $9,000,000.

In a letter dated June 29 and received by Mayor Bill Howard last Wednesday, J. Randy Young, Executive Director of the ARNC, wrote, “If I do not hear from you regarding continuation of your project within the next thirty (30) days (July 29, 2010) the Commission will deobligate the $9,000,000 CWRLF loan to the City of Gravette.”

The state agency, in December, 2007, had approved the loan at a special interest rate of 2.275%. It “was intended to enable Gravette’s Wastewater Treatment System to comply with the NPDES discharge limits required by the Arkansas Department of Environmental Quality by October 31, 1910.”

Young wrote the mayor “there is no significant forward movement on this project including the signing of a Memorandum of Agreement with ANRC to establish the interest rate, a proposed schedule for submission of a Facility Plan, an Environmental Document, Plans and Specifications, or other documents required for participation in the program.”

Gravette has been under contract with the Fayetteville engineering firm McGoodwin, Williams and Yates to design a system to comply with the effluent discharge limits. The city has received several reportsand heard several presentations by representatives of the firm, but has not given approval to a plan.

If Gravette defaults on the loan agreement Young indicated the city could reapply for consideration of a new loan. However the interest rate on that loan would increase to the ANRC normal rate of 3.25%.

Should that occur, financing the upgrade of Gravette’s sewer system would require seeking other funding methods to meet the state/federal discharge limits. In addition, Gravette’s permit to operate its treatment facility expires October 31 of this year and to continue operation the non-permited system could result in state imposed fines.

News, Pages 1 on 07/07/2010