MARCO ISLAND — The next step in the Septic Tank Replacement Program (STRP) for Mackle Park and Kendall districts is procuring permanent financing for the owner-paid portion of the wastewater facility.
Patricia Bliss, city finance director, requested council approve up to $4 million: $2 million for Mackle Park and $2 million for Kendall at Marco Island’s City Council meeting on Tuesday. The money would pay off a temporary note due on March 2 and transfer debt to permanent financing.
After discussion, council decided to move approval to its Feb. 29 workshop. In the past, the city’s finance department has asked council to approve permanent financing for districts completed or in process, and councilors passed those requests without much hesitation.
At its Tuesday meeting, council held back for the first time to consider its options and determine how much money it really needed to borrow. To do so, councilors passed a motion to ask Bank of America for a 90-day extension on a current $6 million loan. The motion passed by a vote of 6-1 with Councilor Wayne Waldack opposing.
The actual amounts needed turned out to be $1.5 million for Mackle Park and $1.45 million for Kendall, Bliss said. The final amounts were not known until recently and reflected payments through the end of last year.
The earlier request had to be more flexible because bids for permanent funding went to financial institutions on Jan. 17 with responses due back by Feb. 3. Two out of 12 banks contacted submitted bids with Branch Banking and Trust the only bidder meeting STRP’s criteria. BB&T offered 18-year bonds at 4.17 percent.
Councilors were concerned that no other banks responded. At least one first-time bidder, Mutual of Omaha Bank, let council know it would need more time to meet Florida’s state-required paperwork. Consultants told council banks often turn down the opportunity to bid because they are not already doing business with the city, or they are not ready for this kind of debt.
Councilors also felt they needed more financial details to make a conscientious decision.
“To do fiduciary responsibly for our citizens, we need more time,” said Councilor Bill Trotter. He asked Bliss for cash flow information on the two STRP districts.
Bliss explained the problem with creating hard numbers was exacerbated by the many ways payback programs were structured in STRP districts. Some residents pay STRP costs upfront, some pay annually, some defer payments and some, based on specific circumstances, are allowed to defer payments for up to 10 years and then pay annually.
Taking all payment plans into account requires the city’s finance department make decisions based on assumptions. Bliss assured council the assumptions were grounded in good financial practices.
“We are not, at the end, going to have more expenses and less revenue,” Bliss said. “We will have enough money if all the assumptions are met.”
Without better financial information, Bliss’s assurances made some councilors queasy.
“I don’t like this position. We’re being forced into a corner,” said Councilor Frank Recker.
Councilors requested additional financial data from the finance department, and said they will use the time extension to evaluate how they can best provide permanent funding.