OC Plans Capital Projects With Fed Program Help

OCEAN CITY — Finance
Administrator Martha Bennett Lucey is being credited with finding a way for the
town to save a substantial amount of money as it moves forward with plans to
improve its infrastructure and readies some big projects to the tune of $18
million.

With capital projects,
such as street repairs, being essentially tabled until further notice by the
Mayor and Council due to budgetary concerns, Lucey’s proposal for the town is
to use Build America Bonds (BAB) from the federal government in order to help
pay for some huge capital projects that have been waiting in the wings for some
time.

“This is an optimum time
to issue these bonds under the Build America Bond program,” said Lucey, “but
also because interest rates in general are so low. They are actually at the
lowest point that we’ve seen in a long time. Our rate would be very good in any
case, so the timing is right if you want to move forward with these projects.”

Lucey explained that the
BAB program reimburses up to 35 percent of interest costs on debt issued during
calendar year 2011.

In order to get into the
program, Lucey said the town must sell bonds by Dec. 31.

Simply put, if the town
of Ocean City gets into the program, it will be reimbursed almost $350,000 in
the first year, thus easing the sting to the town’s bottom line and enabling
town officials to move forward with big projects including the convention
center expansion and capital projects involving water and wastewater
infrastructure that will be paid for by the recent rise in wastewater rates
that the council passed in April.

“We always explore all
options to save money when we go to the bond market, and it looks like we will
look at a couple of different ways to bid the bonds in order to get the best
deal for the town,” said Lucey. “This is a great time to get moving on these
projects, and it’s also an attractive market for hiring contractors to do the
jobs because most are out there seeking jobs right now.”

The convention center
expansion ($5 million project cost), the newly purchased 64th Street
land that will be the future site of wastewater facility expansion and a new
city boat ramp, as well as pumping station rebuilds from 15-49th
streets, are all on the list of items that will be paid for by the town’s
involvement with the Build America Bond program.

“These were projects
that have all been green lighted and have been waiting to get the funding,”
said Lucey. “All the wastewater and water projects (ie, the pumping stations)
will be paid for entirely by the recent raise in wastewater fees, the
convention center annual debt service will be paid for by the food and beverage
tax, and only a portion of the 64th Street property will be paid for
out of the general fund.”

Based on the numbers
presented by Lucey to the Mayor and Council on Tuesday, the town’s actual
general fund contribution to the estimated $1.7 million in debt service the
first year, would only be a little more than $266,000, with more than $567,000
coming from the Food and Beverage Tax, $573,000 from wastewater fees, and, of
course, the nearly $350,000 from the federal government.

The BAB program was
designed to encourage capital projects by helping to subsidize interest costs
rather than paying for the entire project through grants, according to Lucey.

“They want everyone to
move forward without paying for the whole thing,” she said.

Public Works Director
Hal Adkins has noted that many of the pumping stations that are scheduled to be
repaired are more than 40 years old and nearing the point of disrepair.

It has also been
reported that when the boat ramp at 64th Street becomes a reality,
the current and long debated city boat-ramp that sits in the Little Salisbury
section of Ocean City will be shut down for good.

Lucey recommended to the
council that it prepare an ordinance for first reading by Aug. 2, so that she
can sell the bonds, after a required 45-day waiting period, sometime before the
year’s end.

“It’s looking like the
earliest time to sell the bonds would be in October, but I’m going to be
reporting to the council on Monday that we are going to bid them a couple of
different ways,” she said.

Town officials, who had
all secretly and publicly expressed concern on the lacking line item in the
town’s budget concerning vital capital projects, tipped their proverbial hats
to Lucey’s implementation of a program that was first presented to the town by
the town’s financial advisor, Sam Ketterman of Davenport LLC, in June.

“This is just a huge
thing that happened (on Tuesday)”, said Council President Joe Mitrecic. “What
Martha helped us do was one of the biggest things for securing Ocean City’s
future infrastructure that’s been done in quite some time.”

 

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