Milton committee to ask for new estimate on public works facility

The Milton Finance Committee is planning to recommend the town spend $50,000 on an engineering study to get an accurate cost estimate for a new public works facility.

The committee would then use that new estimate to seek funding options. 

A new public works facility is something Milton officials have been pondering for the last year or so. While the department has its own garage on Front Street, that building lacks office space; employees have had to use an already-crowded town hall. 

The planned facility would be built on five acres the town owns on Sam Lucas Road and would comprise three buildings: a main building with meeting space, one for equipment and another for materials. 

Town Manager Kristy Rogers told the finance committee Feb. 9 that the most recent quote for the facility was $6.34 million, but that quote was done in September. Given the rising cost of materials, that figure could now be as high as $8 million, she said.

The town acquired the land in 2018, when Loblolly LLC gave it 10 acres of an 80-acre tract. The original deal was that five of those 10 acres would be used for a new wastewater treatment plant, with the other five for an unspecified use. 

Since then, Artesian Wastewater has purchased Tidewater Utilities, the town’s wastewater provider since 2007, and Artesian is planning to build a new plant at its Sussex Regional Recharge Facility on Route 30. As part of a negotiated settlement with Artesian, the land originally slated for Tidewater’s wastewater plant will revert back to the town.

Prior to the Feb. 9 meeting, Councilman Rich Baty, finance committee chair, tasked each member with exploring a different avenue of funding: state or federal loans, federal or state grants, private loans, government general obligation bonds and public/private partnerships.

One of the first options the committee discussed was a rural development loan through the U.S. Department of Agriculture. Right now, the interest rate is 3.7%, which is favorable for the town, but that rate gets evaluated in March, and could go up. Rogers said the main problem with this loan is that the payments would be around $96,000 per quarter. Rogers said some of the loan could be offset by the town’s realty transfer tax and water impact fees, but she wasn’t keen on emptying those funds to pay for the project. 

Another option is money allocated to municipalities through the federal Bipartisan Infrastructure Law. Rogers said it is not clear how much money towns will be getting.  

The idea of a public-private partnership was discussed, but not really seriously considered because the only examples that could be found were for transportation-related projects, not municipal buildings.  

Another financing vehicle is general obligation bonds. In this case, investors would buy bonds from the town, backed by the town’s full faith and credit, and that money would be used to pay for the project. The town would then pay back bondholders through tax revenues. The committee is wary of that option because it would come with a tax increase, and council just did a 17% property tax increase intended to simply maintain services. This option would also be subject to a public referendum. 

Rogers was asked about using revenues the town will get from a special development district that is being established for the Granary at Draper Farm development. The intention of the designation is so that Granary residents, through the special tax, will help fund the increase in police, fire and administrative costs that will be incurred by the town to service the development. Rogers said the particulars are still being worked out, so there is no specific dollar amount right now. 

Rogers said the town could go to the state for funding through the annual bond bill, but the project needed to be closer to construction than it is currently. 

The committee is receptive to the idea of using a commercial bank for some of the funding. The town has an investment fund with M&T Bank, and other local banks, such as Community Bank, have done municipal loans before. The committee’s research found the possibility of getting a 20- to 25-year loan with a low interest rate. The committee agreed to further explore this option, which, combined with realty transfer tax revenue, could cut down on the amount of money the town would have to borrow.

Baty said he envisions the town pursuing a multi-pronged financing approach. Before that point is reached, the committee agreed to ask for a new engineering study to nail down the price.  

Town officials do not know what will happen to the Front Street land where the current public works facility is located. Rogers has said previously the town will likely wait until the wastewater plant is demolished before making decisions. That plant will not come down until Artesian’s new plant is online, which might not happen for another 18 to 24 months.