Loan may hinder Bessemer grant eligibility

By CHARITY SMITH

[email protected]

Bessemer — Grant funding the city of Bessemer was hoping to get through the Drinking Water State Revolving Fund to cover the replacement of lead service lines might be more difficult to obtain than the city had originally thought. This is because the grant monies are highly sought after, and the city already has loan funding for the project, according to city manager Charly Loper.

“This one’s kind of frustrating because at first it was looking really promising like we could get grant funded. Now we’re not sure, because we already got this loan funding,” Loper said during the council’s regular meeting on Monday. “They’re not sure if they allocate the loan, if they then could give us grant funding for the same project.”

Loper said they had to replace all of the lead water lines identified in the city, so they applied for a loan, before the grant monies were even available. Now, she said, it is like the city is “just stuck.” She said the state Department of Environment, Great Lakes and Energy (EGLE) is looking into it, but she does not feel “super optimistic” about receiving the grant monies.

“The issue we have with EGLE is the amount of applications they received for these Booker funds is substantially more than they have received in the past,” said Darren Pionk, project manager with C2AE. “Typically for the Drinking Water State Revolving Fund, they have always had enough money to cashier all the projects communities have submitted for. This year with the grant funding availability there has been a very big influx of additional projects.”

According to Pionk the issue is will the city score high enough in regards to principal forgiveness points or what they call a priority list. He said it is a good possibility that they will, as the city has been deemed a disadvantaged community, the number of service lines that are needing work and then the combination of the projects that are happening together with the Michigan Department of Transportation and the U.S. Department of Agriculture.

“If we had not gotten the low interest loan, we could potentially look better to get the grant. However, if we didn’t get the grant, we’d really be screwed,” said Mayor Adam Zak.

The grant monies in question would not cover work that is to be done this year. The funds would only cover the replacement of lead lines in 2022.

“My concern is that we could have reduced the project scope, just to include this year, and if we got a better understanding from EGLE that grant funding was going to be there. I think we could have moved forward that way. But the problem is if we don’t get that funding, you’re actually at a loss of several hundred thousand dollars — probably $300,000 plus — that there’d be no funding mechanism for the city at that time. I don’t think that was a risk that we could take with the city,” Pionk said.

Councilman Terry Kryshak pointed out that essentially what this means is that if the city does not get the grant funding they will have to continue with a projected water and sewer rate increase again in 2023 to help pay for the loan.

“We thought we may get a benefit to reduce that increase at some point, but we’re not going to be any worse than what we were with that increase,” Kryshak said.

Pionk said that if it comes out favorably for the city and they do get the grants, they can move forward at that time, but it also may not be 100% forgiveness. This is the first year that grant monies are being offered for lead service lines through grant or principal forgiveness.

Pionk said there have been many applications because there was up to $3 million worth of principal forgiveness, and that “opened eyes for everybody.”

The city is waiting to get the final approval on the 2021 project from the USDA regional offices in Chicago, Pionk said. He said that everything has been approved on the local level of the USDA since Feb. 4. However, they cannot proceed with the bidding of the project until they receive the approval from the regional office.

“We’ve been talking to (the local USDA offices) on a daily basis in regards to this project and forcing them to at least give them a call at the regional office in regards to their timing for bidding on this project,” Pionk said. “We have the plans and the specs ready to go its just a matter of getting a bid date. We are waiting on USDA at this point.”

“It is was it is. I think we’re all a little bummed out that it is not out for bids right now,” said Zak.

The council voted to have the executive committee meet with state representatives to push for the grant approval and authorized C2AE to put in the bid date of Feb. 23 with opening on April 8.

The council also voted to rezone the properties of Michael Westeen and Jason Rommel back to residential. The properties were rezoned in 2011 and had somehow been moved to light industrial. The vote was 3-1, with councilman Bill McDonald voting against, and Rob Coleman was absent from the meeting.