Downtown Project Phase 1 Funding
On Monday, May 6th, at 7:00pm as a requirement by the state, the City of Ely will hold multiple public hearings related to financing the Downtown Phase 1 project.
Loan #1: $1.6M (paid with Water Revenue)
Loan #2: $1.0M (paid with LOST & TIF revenues)
Loan #3: $0.55M (paid with LOST & TIF revenues)
Total Project Cost: $3.15M
Why does the city have to take out three loans for one project? Loan #1 and Loan #2 are water and sewer-related loans and qualify for State Revolving Funds (SRF Loans). These loans have an artificially low interest rate, currently at 2.75%. There is a portion of the project that does not qualify for SRF funding. Loan #3 is a standard loan which is borrowed at market rate, currently 4.5%.
Approximately half of the project is being paid for with existing funding sources. The remaining balance of the project will require new funding sources. This funding will be generated by increasing water revenues.
What are the revenue sources to repay the loans?
- Water Revenue: There will be a $9.00 flat monthly fee added to water bills + a 14% water usage fee increase, per tier, starting July 1st
- Local Option Sales Tax (LOST) Revenue is paid to the city from the 1% sales taxes collected in Linn County
- Tax Incremental Financing (TIF) Revenue is paid from property taxes collected on new construction in the city's TIF district approved by the state (mostly Founders Grove)
To review the Public Hearing information, click here.