Delays in state grants to reimburse Northport for upgrades to its sewer treatment plant have village officials weighing whether to take on more debt or draw on reserve funds to pay off a loan due next month, officials said.
Northport has until Sept. 22 to pay back $2.06 million owed on a short-term loan from the New York State Environmental Facilities Corp. After $377,000 in Suffolk County grant reimbursements expected later this month, the village will still owe about $1.7 million, Deputy Mayor Henry Tobin said Tuesday.
Northport is waiting for a $1.5 million Regional Economic Development grant from the state, in conjunction with the county, that was approved in October 2013, Tobin said. Two State Aid to Municipalities grants — one for $50,000 and one for $100,000 — have yet to be paid to the village.
“That it’s taken so long is very frustrating,” Tobin said. “It means we cannot repay the EFC loan without having to go into a new round of debt before getting the reimbursements.”
The Environmental Conservation Fund provides money for capital projects that protect the environment, such as land purchases or facilities construction.
Village trustees are to discuss options for handling the debt at a special work session open to the public Wednesday at 6 p.m.
The U.S. Environmental Protection Agency and the state Department of Environmental Conservation required the village to upgrade the plant and to significantly reduce its nitrogen emissions — a goal village officials have achieved.
“For half a decade, all of the activity of village government and our budgeting has been driven or affected in one way or another by the need to meet mandated requirements to update our sewer system,” Tobin said.
The first option the village is considering is a 30-year Environmental Facilities Corp. bond. But the village wouldn’t be allowed to pay it off early when the grant money comes in.
A second option would be for the village to issue a bond, which would allow for paying off the debt early. Officials said they will need to compare interest rates for that type of bond with Environmental Facilities Corp. rates. They are to review the rates at Wednesday’s meeting.
The final option would be drawing from reserves.
“We wouldn’t have any financing costs and would have great flexibility in terms of payback,” Tobin said. “But it means very significantly drawing down our reserves.”
General Fund reserves would drop about 48 percent to $1.8 million, from about $3.6 million, he said.
Had the grants been received, the village would only be short about $10,400, which could be covered by reserves, Tobin said.
It’s unclear why the grant money has been delayed, officials said. The $1.5 million Regional Economic Development grant was approved almost three years ago.
Northport has already paid off a no-interest $3.6 million Environmental Facilities Corp. grant and $578,000 of $2.6 million from a 0.51 percent loan from the corporation.