City finds funding for manhole project

WILLIAMSBURG — An Iowa Department of Transportation project will cost the City of Williamsburg nearly $200,000. The City Council decided this month how to pay the unplanned expense.

The Iowa DOT plans to widen the Interstate 80 bridge at Williamsburg which will necessitate the moving of a manhole. The City has to pay for it, the DOT says.

The cost for the manholes will be about $115,000 with an additional cost for HR Green’s engineering service, Williamsburg City Manager Aaron Sandersfeld said.

The city’s sanitary sewer can remain in place, said Sandersfeld. The manhole on the north side of the road can be raised a few feet, but the manhole on the south side will have to be moved.

The city needs to “get our stuff out of the way” before the DOT starts construction, Sandersfeld said.

The council has considered for months how it will pay for the unexpected project. During the Nov. 10 council meeting, the city council agreed to borrow from the City’s Boyd fund and repay the loan to the city with interest, as suggested by Tim Oswald of Piper Sandler, the city’s investment company.

Because the amount was so low, Oswald thought this was the best solution for Williamsburg, said Sandersfeld.

Oswald offered four repayment options — 20-year, 15-year, 10-year and 5-year.

In each scenario, the City would repay the Boyd fund principal plus 4% interest per year through the city’s water billing. “The idea is that the loan should not be dissimilar to what the City would pay if the City borrowed money from others,” wrote Oswald in an email to Sandersfeld.

The interest rate can be raised or lowered as the city council determines.

Oswald assumed a principal of $204,300 to cover costs, plus contingency, engineering and legal help.

City Attorney Eric Tindal said he talked with attorney John Danos, who deals with municpal financing and complex government matters, “to make sure we didn’t have to do anything special to … repay the debt.”

The loan will create a debt in the sewer fund that the city will repay. This way the sewer fund is paying interest to the city rather than to someone else, said Sandersfeld.

“You’re just borrowing against yourself,” said Tindal. That gives the city flexibility to pay off the loan early, forgive the debt or change the interest rate.

“It’s not going to go against any borrowing limits,” Tindal said.

The City definitely wants to pay the money back to the Boyd fund, said Sandersfeld. “We want the money back so we can borrow from it again.”

Councilman Jake Tornholm said the city doesn’t want to raise sewer rates too much.

“We got no option here,” said Sandersfeld. The city has to move the manhole because of the DOT project, and it doesn’t have cash to pay for it.