Finance Committee recommends loaning money to pay for water main replacement on Broadway

QUINCY — Does the city need to pay interest when borrowing from itself?

The Finance Committee said no during Monday’s night’s meeting before the regular City Council meeting, agreeing that an interest-free transfer will be fine. It recommended transferring $4 million from the city’s $6 million general fund balance to the water and sewage fund to pay for a water main replacement project on Broadway from 24th to 30th Street.

The moving of money is necessary to pay for the Broadway project, as well as planned projects on College Avenue from Fourth to Eighth Street (in the city’s 2nd Ward) and Jackson from Fifth to 12th (which spans the city’s 6th and 7th Wards). Both projects have previously been delayed.

During last week’s City Council meeting, Alderman Mike Rein (R-5), chairman of the finance committee pushed to have a discussion about how the money would be taken from the reserve fund. He asked that rather than just transferring the money if a low-interest loan should be paid back over 10 years?

Comptroller Sheri Ray explained that for a $4 million loan, a 1.5% interest rate would cost $337,000, a 1% interest rate would cost $223,000, and a 0.5% interest rate would cost around $111,000.

Ray explained that the reserve fund comes from unspent money at the end of each fiscal year.

“Nobody wants to see more water and sewer rate increases,” she said.

Director of Public Works Jeffrey Conte said the city originally allocated spending $5 million for the Broadway project, but those costs now have risen to $7.3 million.

“To do all street projects that we have capital funds available for, we don’t have the water and sewer funds to match them,” Conte said. “We’re going to have to put projects on hold until we get the water and sewer funds.”

Rein questioned if it was necessary to complete the water and sewage project beneath Broadway while the street is being fixed.

Alderman Eric Entrup (R-1) voiced support for bundling road work with water and sewage work.

“That requirement (to do street work and water/sewer work at the same time) that you guys passed before (other aldermen) were here, it’s one of the best things you guys have done,” he said.

Entrup then was reminded it wasn’t a formal policy. That didn’t change his mind.

“Where you have these special projects like Broadway, then you have these lead lines, and we’re going to be doing all this underground work that’s going to cost water and sewer money, I don’t really see any reason just not to make the transfer myself, but that’s my own opinion,” he said.

Mayor Mike Troup pointed out that if a transfer wasn’t eventually agreed upon, the water and sewer fund doesn’t have the money to repay a loan.

“So that means you’re going to have less money to do any projects in the subsequent period, whereas if you just transfer it, it doesn’t take any other money from those funds,” he said.

“I don’t think this is the last water and sewer project that needs to be done, so that’s where I say the argument is in favor or just to give the money. Don’t have a payback. Don’t have any interest. We’re lucky. Broadway is a huge project. This community will do backflips when they see that street redone, but let’s redo it with the water and sewer being done that way. We won’t have to touch it again for 25 years.”

The committee voted to keep the money as a transfer with no interest involved. The committee also agreed it would skip a third reading of the resolution and try to get the full City Council to pass it during the regular Monday meeting. Doing that would allow the money to be encumbered, preventing it from being spent and getting a contract signed.

However, at the City Council meeting, an important item — the original ordinance — was missing from the agenda.

Entrup got up from his seat during the meeting to discuss with Ray before bringing it up to the entire room.

“We should have for second reading on the agenda that supplemental ordinance,” he told Troup.

“That was sent back to finance (last week),” City Clerk Laura Oakman said.

“Would it be proper bring that up in new business? Or do we need to have an agenda (item) next week?” Entrup asked.

“If you’re going to pass it, it’s got to be on the agenda,” Corporation Counsel Bruce Alford said. “It can’t be passed tonight. I’m sorry.”

“I didn’t realize it was being pulled from the agenda,” Ray said. “I apoloigize.”

“It’s not your fault,” Ben Uzelac (D-7) said.

The full City Council is expected to vote on the ordinance next week.