Wysox Township To Guarantee $3 Million Loan For Township's Water
0 Comments | Daily Review, The; Towanda, Pa., Jul 13, 2010 | by JAMES LOEWENSTEIN
WYSOX TOWNSHIP – The Wysox Township supervisors on Tuesday passed an ordinance which requires the township to guarantee a $3 million loan to help pay for the planned $7.9 million municipal water system in the township.
The loan, which is a line of credit with the First Citizens National Bank, will be used to pay for the initial construction costs of Wysox Township Municipal Authority’s planned water system, said David Unkovic, the Wysox Township Municipal Authority’s bond counsel.
The line of credit has a fixed, 2.75 percent interest rate and must be paid back within two years, Unkovic said at a special meeting of the supervisors on Tuesday.
However, for the first 23 months, the Wysox Township Municipal Authority will only have to pay interest on the loan, he said. The principal will be due at the end of the two-year period, Unkovic said.
Unkovic said the township’s guarantee of the loan has lowered the loan’s interest rate.
The loan can be paid back at any time within the 2-year period, with no penalty, he said.
Under normal circumstances, the township will not have to help pay back the loan, he said.
However, under “extraordinary” circumstances, namely if the authority could not pay back the loan, then the bank could take the supervisors to court and require them to raise taxes to pay back the loan, he said.
The authority will pay back the line of credit with a $5 million “H2O” state grant that has been awarded for the water system and with an approximately $1.7 million 40-year loan from the U.S. Department of Agriculture Rural Development program.
The U.S. Department of Agriculture Rural Development normally requires that for a project like this, a bank loan be taken out to pay the initial construction costs before the Rural Development loan is made, Unkovic said.
The township supervisors voted unanimously Tuesday to pass the ordinance.
The water system will serve approximately 500 equivalent dwelling units
construction loans