SHAMOKIN - During a special meeting Monday, members of city council reversed a decision to impose a fee on the joint sewer authority in return for guaranteeing a federal loan and voted instead to support the project with no strings attached.
"We were caught in a hard place," Councilman William Strausser said following the five minute meeting.
He said council originally voted to impose the fee because of recent budget problems, including the city's responsibility to pay $504,495 to the state Department of Economic and Community Development (DECD) and U.S. Department of Housing and Urban Development (HUD) for misappropriation of funds associated with the Community Development Block Grant (CDBG) program in 2003, 2004 and 2005, and the HOME Program in 2003.
Council voted 4-1 Feb. 21 to request a 5 percent fee from Shamokin-Coal Township Joint Sewer Authority for guaranteeing a $17.6 million USDA loan over 40 years with a fixed rate of 2.375 percent to upgrade and expand the sewer plant. Mayor George Rozinskie cast the dissenting vote.
During Monday's meeting, Solicitor H. Robert Mattis Jr. said someone from the prevailing side would have to move to reconsider the original vote.
Councilmen William Milbrand and Strausser made and seconded the motion to reconsider the Feb. 21 vote. It passed Monday 4-0. Councilman Michael Snyder was unable to attend Monday's meeting.
The next step was to approve the original ordinance without the fee, which would effectively dissolve any votes taken to implement said fee.
Strausser and Milbrand made and seconded this motion. It also passed 4-0.
Help sought
The fee, if it would have not have been reversed, would have cost eight cents for each sewer customer, city clerk Steve Bartos previously said. That's in return for taking on the risk of a default by the authority, leaving both Shamokin and Coal Township jointly liable for the loan. The loan could top out at $19 million if interim financing for the project is necessary.
A guarantee would also save customers $3.58 each over the life of the loan, Bartos previously said, comparing that to the sought-after eight-cent fee.
Last week, authority board member Phil Zalar and Coal Township Board of Commissioner Chairman Gene Welsh sought the help of Northumberland County Commissioner Vinny Clausi to help change the minds of council members.
Strausser, who was unable to be reached last week for comment, said he agreed with the councilmen who said the loan guarantee was not properly explained to them.
"We were trying to get money to pay for HUD, but when I found out we couldn't do it, I decided to go along with the original ordinance," he said.
Council also voted unanimously in favor of sending a letter of support to USDA in relation to different funding for the project down the road.