Centerville approves up to $2.4M interfund loan for Main Street waterline and awards construction and material bids

Centerville’s City Council on May 5 approved an interfund loan arrangement to allow the city to replace a failing Main Street water main and simultaneously awarded construction and materials contracts for the project.

Finance staff explained the city faces an urgent Main Street water‑line replacement (Chase Lane to Jennings Lane) after a major leak that lost about one million gallons and cost over $100,000 in repairs. The water fund’s available cash (~$1.2M) is insufficient for the full project, so staff proposed a loan from the capital projects fund of up to $2.4M to cover the replacement costs.

Loan terms and safeguards

Staff recommended a 10‑year amortization with a 3.8% annual interest rate, monthly payments, and a built‑in trigger to revisit terms if the PTIF (public treasurer’s investment fund) rate decreases below 3.3% or rises above 4.3%. Finance staff said the loan could be drawn down as needed — not necessarily issued as a single lump sum — and that the water fund could apply available funds toward the principal as they are available. There is no prepayment penalty if the city repays sooner.

Councilwoman Hurst ran an affordability calculation on the record, using a MAGI (modified adjusted gross income) guideline: her rough estimate set the city’s current water combined charges just under a 1.5% affordability threshold for the average household, and she said the staff recommendation and the proposed loan structure should preserve affordability.

Contract awards to proceed with construction

The council also awarded the construction contract for the Main Street waterline replacement to 3XL Construction, low bidder at $1,393,748, and awarded the materials purchase to Ferguson Water Works for $567,335.47. Council approved both awards (recorded 4–0). Staff said the project must coordinate with the I‑15 construction schedule and that a drawdown schedule will be used to match expenditures.

Votes and implementation

Council approved the loan motion unanimously (vote recorded 4–0) and authorized staff to proceed with contract execution and drawdown as needed. Staff will finalize the amortization schedule and adjust if the water fund applies a down payment or if final borrowings are less than the $2.4M authorization.

Project timeline

Staff said the city will attempt to complete work to meet grant and scheduling constraints tied to regional road projects; payments on the maximum loan amount were presented as illustrative (roughly $293k annually if the full $2.4M were borrowed) and will be updated if the actual borrowed amount is less.