ANALYSIS: Town Borrowing Twice, Spending Once

By DORIE SOUTHERN
Cape Charles Wave

December 16, 2013

Cape Charles Town Council has voted to borrow $1 million for “new” projects including sewer repairs, freshwater wells, and a multi-use trail. But a Wave analysis reveals that the Town had already obtained money for these same projects, either from borrowing or from budgeting with tax money.

At a December 3 work session, Town Council reviewed “Capital Projects Priorities” (click to read) for spending $1.1 million. The priorities are:

FIRST PRIORITY: Repair 100 manholes to reduce rainwater inflow and infiltration: $100,000

An August 14, 2008, staff memo by Bob Panek (click to read) states: “The Town is correcting many problems associated with fresh water inflow and infiltration (I&I) into the wastewater system . . . So far, we have . . . fixed broken cleanout caps and installed nylon manhole inserts. Additionally, a contract has been awarded for raising the manhole covers.”

SECOND PRIORITY: Install a comminutor (grinder) for rags and other sewer debris: $50,000

THIRD PRIORITY: Upgrade sewer pump stations at Plum and Pine streets: $350,000

The 2008 Panek memo states: “Repairs and upgrades to the Mason Avenue, Pine Street, Plum Street, and Washington Avenue pump stations:” $550,000.

Town Council approved a resolution the same day authorizing (then) Assistant Town Manager Heather Arcos to sign documents for an EPA grant for “55% of project costs.” According to the resolution (click to read), “the Town has budgeted for the required 45% match.” A Project Narrative dated August 2008 states: “The proposed project will complete our efforts to eliminate the potential for wastewater overflows.”

The total projected cost of the projects was $1.2 million, with 55% funded by the EPA grant. In 2010 the Town borrowed the remaining $540,000 as part of a $2.6 million Recovery Zone Economic Development Bond. The bond application (click to read) states the following Town projects to be financed by the Town:

CONTINUED FROM FIRST PAGE

1. Develop new well and connect to Town water system
2. Construction/upgrade of pump station and in-town force main
3. Cape Charles Multi-Use Trail
4. Offshore breakwater
5. Harbor expansion with new slips and bathrooms
6. Broadband development/installation.

FOURTH PRIORITY: Multi-Use Trail Phase 2: $300,000.

Half this money ($150,000) was already included in this year’s budget, which required a tax increase to fund. The other half was planned to come from next year’s budget. Town Council’s stated reason for borrowing the money after it was already budgeted is to “free up” the $300,000 for other possible uses.

FIFTH PRIORITY: Connection of 2 Keck Wells: $300,000

The Keck wells connection cost was included in the $2.6 million Economic Development Bond described above. But in 2012, when the Town decided to quickly purchase the Bank of America building ahead of other buyers, Panek suggested to Council that it use money reserved to connect the Keck wells. “This would temporarily displace the project to connect the two new wells which is still being engineered and not yet permitted by the State,” Panek wrote in a July 19, 2012 memo.

Of the five priorities shown above as justification for a new $1 million borrowing, only the $50,000 sewer grinder appears to be funded for the first time. The manholes, the pump stations at Plum and Pine streets, the trail, and the wells had all previously been funded as may be seen in the Town documents referenced above.

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One Response to “ANALYSIS: Town Borrowing Twice, Spending Once”

  1. Roger L. Munz on December 16th, 2013 12:41 pm

    This appears to confirm the thoughts of many town residents that the town council practices “VOODOO ECONOMICS”.
    Thanks for the real story of what the town is up to. After all the criticism the town has endured recently about their economic policies and practices, the town council still doesn’t get it.
    STOP WASTING OUR MONEY. I would like to call for a complete audit of the town for the past 5 years – to find out where the money really went.