Trenton City Council votes “No” on loaning money to wastewater department

Trenton Municipal Utilities

The much-discussed financing of the proposed headworks project at the Trenton sewer plant took another turn Monday night.

The City Council, on a vote of three in favor and four against, defeated a motion that would have allowed the electric department to loan $2,000,000 to the wastewater department.

The motion to make the transfer, with an interest rate of one half of a percent, was made by Brad Chumbley. A roll call vote was taken with yes votes from Chumbley, Larry Porter, and Dave Mlika. Opposed were Glen Briggs, Lou Fisher, Travis Elbert, and the last to announce his vote was Larry Crawford with Jenn Hottes absent.

Crawford moments earlier had stated if the council was “not 110% in support of the transfer of money”, he’ll vote no which he did. Crawford then asked the city administrator to begin the process for TMU wastewater to borrow money to do the project. It’s anticipated that a financial consultant will have quotes within eight weeks. That moves the financing decision to the month after the April election in which four councilmen and the mayor will be elected.

Just six days ago, the finance committee had recommended the council borrow $2,000,000 from the reserves of the electric department and use $1,000,000 of reserve funds from the wastewater department. Both City Administrator Ron Urton and TMU Comptroller Rosetta Marsh provided the council with their written objections to an intra-departmental loan. Such action also was discouraged by the city attorney Monday night and previously the city auditor, a financial consultant, and bond counsel.

Mayor Nick McHargue has spoken out several times in favor of making the intra-departmental loan noting what he calls excessive electric department reserves. Mayor McHargue, in addressing interest savings on a low-interest loan made “in house” versus a conventional bank loan, explained he’s trying to save the citizens of Trenton $1,000,000 over the life of a 20-year loan.

Councilman Travis Elbert said he’s been told such a transfer is not illegal. Mayor McHargue said he talked to the state auditor’s office and was told there would be no penalty if the intradepartmental loan was made. Councilman Brad Chumbley said due diligence has been done and he feels the reserve funds can be used without jeopardizing finances of any department in the future.

Numerous concerns also were raised by council members, some of which include whether the transfer is considered to be an investment for the electric department which is said to be limited to three years. Under a long term loan with payback; some of the council wondered what happens if future councils decide money is tight so they won’t authorize the annual payment? Concerns also were expressed with several electric department projects that were described as needing to be done but were postponed or canceled due to uncertainty with the ConAgra plant situation.

There’s also a need to replace aging sub-station transformers; concerns for a possible increase this summer in purchased power costs paid by TMU; and what new requirements might be forthcoming from the government regarding all utility departments.