During a meeting of the Brazil Board of Public Works and Safety, a resolution was approved for the restructuring of payments in the Guaranteed Savings Performance Contract with Energy Systems Group, LLC.
City Attorney Traci Lawson explained the contract began in 2006, which included improvements to the Wastewater Treatment Plant.
Some of the improvements were on the airline, blower and main lift station, which City Engineer Brian Pohlar added was the bulk of the project.
The total cost of the project was slightly more than $2 million and there is a current need to restructure payments on the remaining $1,240,700, which will allow the city to meet some current and upcoming financial obligations.
"Right now, the city has been paying approximately $115,736 every six months on the note," Lawson said. "Old National Bank, which was assigned the rights, has agreed to restructure the note to lower payments over the next few years, which will free up some cash in the city's debt reserve."
According to the amortization (payment) schedule, the city will only have to make payment on the interest this month, then $13,000 principal payments plus interest every six months from 2012-14, then the principal payment increases to $15,500 in 2015, $17,000 in 2016, and $29,500 in 2017. In 2018, the final two principal payments balloon up to more than $519,000 to close out the note July 15, 2018. Payments are made on Jan. 15, and July 15, each year.
"The city is also currently in the process of paying off the note on the 2004 sewer bonds, which will finish up in 2017," Lawson told The Brazil Times. "The principal payments on that note is approximately $485,000 every six months, so when those end, it can be applied on the energy savings note without a huge jump occurring in the overall annual debt payments for the city."
Pohlar said some of the upcoming financial obligations include cost of constructing the Pogues Run Detention Pond, along with 10 percent of the cost to replace sewer lines, which is included as part of the United States 40 project.
Lawson added both the Board of Works and Common Council of the City of Brazil approved the initial contract in 2006, so both entities will need to approve the restructuring as well.
The Common Council of the City of Brazil has set a special meeting for 7 p.m., Wednesday, for the sole purpose of considering the debt restructuring resolution.