LCUB borrows $10M ‘cushion money’
Lenoir City Utilities Board approved a resolution at its meeting Monday, Nov. 19, to take out a loan of a not-to-exceed amount of $10 million over the next three years.“We just needed some cushion money, if you will,” said Shannon Littleton, LCUB general manager.
In the past year, LCUB paid off all its outstanding debts in the electrical department, about $13 million. Now the Utility is operating entirely on revenues month to month.
“In paying that off, we’re living on our revenues to pay all our operational expenses as well as capital needs,” Littleton said.
While the Utility is able to fund all expenditures over the year, there were “monthly cash flow issues.”
Littleton said he doesn’t expect LCUB will use the full amount of the loan, but took advantage of low-interest, bank-qualified funds. LCUB probably would use around $6 to $7 million over three years of the loan from BB&T, which has a .79 percent interest rate.“It’s practically free money, and in this economy, we thought we should take advantage of the full amount,” Littleton said.
In addition, Littleton said he expected the Utility to pay off the loan within three years.
“We anticipate being debt free in a very short time again,” he said.
In a related action, LCUB unanimously ap-proved opening a bank account at BB&T to facilitate the loan funds. Board members Pat Beasley and Bobby Johnson Sr. were absent.
In other business, LCUB:
• Postponed approval of a contract with Proton Power for a “green power” generator that turns cellulose into hydrogen, and which could fuel most of the power needed at LCUB’s treatment plant.
LCUB would use a $100,000 grant from the state toward the generator, which would be fed with old utility poles, wood chips from tree trimming, cardboard and other cellulose waste products.
The Board opted to postpone a vote on the contract until January, when three similar generators are expected to be operational at Lenoir City’s Wampler Sausage plant.
• Approved a resolution to seek an economic development grant in order to relocate a water main from a Norfolk Southern railroad site to a location off C Street
• Approved a contract with Community Development Partners LLC to administer a $500,000 community development block grant LCUB received for the sewer department
• Approved a contract with Fulghum MacIndoe & Associates Inc. for engineering services for various projects using the CDBG grant funds, including sludge heaters and a mechanical bar screen
• Requested authorization from Lenoir City to install a water line main under C Street
• Appointed Pat Beasley, Harry Wampler, Jim Shields and Mike Henline to the budget committee, with Beasley acting as chair
• Appointed Joel Garber, Eddie Simpson, Douglas “Buddy” Hines and Bobby Johnson Sr. to the personnel committee, with Garber acting as chair
• Canceled its December 2012 meeting