The loan will be taken at a 3.5-percent interest rate and will be repaid within a 45-day period, according to LaFayette city manager Frank Etheridge.
Etheridge said a number of factors combined to cause a $250,000 shortfall this month, which would leave the city unable to pay its monthly portion of its bond debt without taking a short-term loan.
“With all the crises we have going on, we find ourselves in a funding shortfall,” said Etheridge, “specifically on day-to-day cash operations.”
Mayor Neal Florence called the situation a “perfect storm” of circumstances that led to a lack of revenue this month.
“It’s not one single item that’s done this,” said Etheridge. “There’s been a number of items that’s come together just this month, in January.”
First, the city is still waiting on about $140,000 in reimbursements from the state on the airport terminal project.
“We have some reimbursements coming from those, but we don’t know when,” said Etheridge.
Previous reimbursements have been taking six to eight weeks from the time the request is filed, meaning that the money will likely not appear this month.
“We’re probably looking at about $140,000 on that draw to close that out,” said Etheridge of the airport project as a whole. The remaining funds have been requested from OneGeorgia and GDOT, but not yet received by the city.
Also in January, the city faced about $80,000 in unexpected health care costs for two of its employees.
“Other things that we had this month,” said Etheridge, “we got the (health care) bills for two employees that were fairly sizable — way more than the normal. So we are doing some discussions with our providers to look at alternatives as we move forward to try to get to a more levelized billing so these surprises don’t hit us hard.”
Council member Wayne Swanson suggested the city look at all its current and previous options to find a smaller, more standardized health care payment for its employees.
“It’s costing us two arms and three legs to pay this health care,” he said.
Furthermore, the city suffered a sudden dip in its water revenue for December’s utility bills, which are just now coming due for most residents.
“We’ve had an anomaly where we had an extremely low water usage month in December,” said Etheridge.
The city only received payment for usage of 38 million gallons of water in the month of December, “when historically, we’re always at least in the forties,” said Etheridge. “Forty-five, 47 million, and in the fifties is not uncommon. We’ve never been in the thirties as far as billed consumption.”
The source of the anomaly has not yet been determined, though the city is double- and triple-checking all the relevant data.
“We’re looking at everything. We’re looking at (city water and sewer manager Jim Speir’s) calculations and we’re looking at ours,” said Etheridge.
“What we’re seeing is Jim’s been able to isolate it to specific areas and it appears to be in the unincorporated residential bills and in the industrial bills.”
“We’re looking at the backup data right now – what actually spit out of the reader – versus what was billed and we’re trying to compare those numbers.”
The city is unsure whether the discrepancy is a meter malfunction or software issue, or some other complication. Nonetheless, it caused a significant dip in their expected revenue for this month.
“What that equated to on the residential side was basically an average consumption of about 5,200 gallons dropping to about 3,200 over a one-month period.”
As a result of all these factors, the city finds itself in need of a quick inflow of cash to meet its requirements for the rest of the month of February, and it expects to soon have more than enough funding to pay off the loan in 45 days as well as to place some in reserve.
“The reason I’m talking about a short-term,” Etheridge said, “as you know we’re looking at doing the bond issues for the consolidation of loans and the water phosphorus project. That will release $628,000 and change that’s been in reserves for GEFA loans. So I would recommend we take a portion of that and pay that short-term loan off.”
The city will also soon be closing out the account on the north Walker County water project, which has about $74,000 remaining, that will return to the city general fund and can be used to help pay off the short-term loan.
The council agreed that the loan was necessary and was relieved that funds to repay it were within sight and would soon be released, but were nonetheless dismayed at having to take out a short-term loan in the first place.
“I think we’re in a position now where we don’t have much choice,” said council member Ben Bradford, “but I would just like to say that moving forward, I’m going to be pushing very hard for us to make sure that we build a reserve, whatever it takes – and it’s going to hurt, because saving money hurts – to make sure that this doesn’t happen again, because this is unacceptable.”
The motion passed the council 4-0. Council member Andy Arnold was not present at the meeting.