Oil City to Draw Down Money, Put It in New Account

| July 13, 2018

OIL CITY, Pa. (EYT) – The Oil City Council agreed to draw down a pair of loans it took out in 2015 and 2016 and move the monies into an interest-bearing account at Thursday’s council meeting.

In August of 2015 and February 2016, the Council took out a pair of general obligation notes – one in the amount of $9 million and the other in the amount of $5 million – to pay for repairs, upkeep, etc for the city’s wastewater system and water system.

According to City Manager Mark Schroyer, his fears at the time that the monies be used by 2017 was too aggressive turned out to be true forcing the city to extend the loans last year at a cost of around $5,000.00 to the city. At the time, it was extended through July 1, 2018, and the city has still not used the money.

“Michelle (Oil City Finance Officer Michelle Hoovler) and I kicked it around,” Schroyer told the three members of the council at Thursday’s meeting – Mayor Bill Moon and Councilmen Ron Gustafson and Dale Massie. “The Bank (CNB Bank) is agreeable to allowing us to do one full and final draw on all the remaining available proceeds of the notes.”

Schroyer then said the money will be put into an escrow account, most likely with CNB Bank – the agreement with the bank was tabled because some language still needs to be worked out.

“It will be in an interest-bearing account,” Schroyer said.

The upside to moving the money is that the city would get around the prepayment penalty, which is prohibitive, according to Schroyer, while he believes the only downside to doing it this way is the City will be on the hook for the interest on the drawdown – he believes it is around $9 million left on the notes – all at one time.

“Some of that will be offset by the interest we earn on the money,” Schroyer, who said by law the city can’t make more on interest than the original money was worth, said.

According to Schroyer, the money must be used for either water projects or wastewater projects.

“We need to be cognizant of what happens with the sewer,” Schroyer said referring to the fact the City has been exploring getting out of the sewage business. “If we don’t embark on the wastewater (improvements) then a decision will have to be made. Do we put the money towards water (improvement) projects or do we return it to the bank? If we put it towards water, the debt service is entirely on the water side. We have to be careful with what we do. We don’t want to put a greater burden on the water side.”

Some of the remaining money is already basically spoken for in terms of the two water-crossing projects and the water pump project.

“I think we will be drawing down $300,000.00 per month over the next couple of months,” Schroyer said.

CITY RECEIVES THREE GRANTS

Kelly Amos, the City’s Director of Community Development, reported to the Council that the city received news on three grants this week.

Amos said the City received a $15,000.00 grant from the Edith Justus Charitable Trust to replace the zip line at the Mitchell Avenue Playground. Amos said the zip line at the playground is very popular and getting it replaced was something people were asking the City to do.

The City also received a $40,000.00 grant from the Edith Justus Charitable Trust to allow the Oil City Arts Council to put on its programming of events for the year, according to Amos.

Finally, the City received notice of its 2018 Community Development Block Grant (CDBG) allocation. The allocation is in the amount of $296,249.00, an increase of $26,000.00 from last year, Amos said.

A public hearing on the CDBG grant will take place July 26, and there is a Nov. 2 deadline for how the money will be used.

OTHER BUSINESS

In other business the council:

  • Passed on both a second and third-and-final reading the continuation of the LERTA that was discussed at the previous two meetings.
  • On a first-reading basis, approved the rezoning request from Webco to rezone a portion of the city near the current Webco location in the city’s Second Ward to I-1 Manufacturing and Industrial. A hearing on this matter was held last month. The second and third readings will take place at the next meeting.
  • Approved a liquor license transfer to the Country Fair. A hearing on this was also held last month.
  • Was introduced to three new part-time firefighters – Brandon Jones, Devin Fisher and Kove Kahle.
  • Received a report from Schroyer that he had received a call from Venango County Planning Executive Director Jason Ruggiero concerning the multimodal building that PennDOT was planning on building. According to Schroyer, Ruggiero told him that PennDOT says it can’t own the building, therefore, PennDOT would like to do a land swap with Venango County where Venango County would own the building and PennDOT would own the parking lot where the old parking garage was located. Schroyer said if that happens, the City will need to enter into a memorandum of understanding with PennDOT for the possible use of that parking lot by city residents in the evenings and on weekends, something that was in place with the County.
  • Was told by Schroyer that the Land of Laughter Playground project is coming together. There was a small mishap when the contractor backed into a swingset and bent some of the equipment. The contractor is responsible for the repairs.
  • Granted a request from Mike Canaan to hold a block party in the 300 block of West 3rd Street from noon to 6 p.m. Aug. 18.

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