City moves ahead with road program
The Plaquemine Board of Selectmen voted unanimously last week to move ahead with the sale of $12.34 million in bonds to finance the first citywide road program in nearly 20 years despite litigation over a portion of the tax to finance them.
Road construction could start as early as July, Mayor Mark A. “Tony” Gulotta said.
A hearing challenging the parish's collection of a one-third cent sales tax within the St. Gabriel city limits was scheduled for 9 a.m. yesterday (Wednesday) in 18th Judicial District Court.
St. Gabriel raised its city sales tax from one-third cent to a full cent in October, pushing local tax collections over the five percent limit mandated by state law. Several chemical companies are challenging the parish's right to a third of the one-cent sales tax approved in 2006 to finance infrastructure for the parish and its six municipalities.
Initially, city bond attorney Hugh Martin thought the suits would cloud the city's bond issue and run up interest payments. He told the city council last week the suits affect only small portion of the city's sales tax income.
Last year, the city received $5.519 million from sales tax collections, Martin said; the amount collected in St. Gabriel was $215,000 of the total.
“We don't think that's significant enough to interfere with the sale of the bonds,” he advised.
The parish's attorneys are arguing that the Eastside industries had lost their chance to challenge the parish's one-cent tax by failing to challenge it within 60 days of the tax election. Martin agreed with that assessment.
“We feel very confident that we're going to be successful on that case...that we will not lose any money,” Mayor Gulotta predicted.
Gulotta and the city council have been eager to push ahead with the bond sale and the road program while both interest rates and the price of oil are low. Many products used in roadwork are petroleum-based, and could hike the contract prices.
Martin said the city should be able to deliver the bonds by July 16, and advised not letting any construction contracts before then.
The $12.34 million will be financed over 19 years, and the city will maintain a year of bond payments as a reserve account, which Martin said would help attract a better rate on their sale.
With the city's last major bond sale, Gulotta said, he and the city council let the interest accrue in the reserve account and built up enough money ($1.2 million) to pay the bonds off early.
The city plans to bid the road program out in five separate contracts, starting with a gas and water line relocation program and sewer repairs estimated at $715,000 before any road overlay work begins.
Streets not affected by the utilities contract will be overlayed first. Professional Engineering Consultants of Baton Rouge, the engineers for the program, have divided Phase I roadwork into a contract for asphalt roads at $3.425 million and concrete roads at $1.1 million.
Once the utility work is completed, the city will let Phase II contracts estimated at $4.345 million for asphalt roads and $2.16 million for concrete roads.
Gulotta said Monday he met last week with state Department of Environmental Quality (DEQ) officials, who cleared the way for $1.5 million in sewer repair funds being financed at 0.9 percent interest through DEQ.
Also unanimously, the city council agreed to shift the city's priority for its share of hurricane recovery funds to building a new sewer treatment plant to replace the overloaded South Wastewater Treatment Plant, which proved troublesome during Hurricane Gustav.
“That plant is just not safe to operate during a storm,” Gulotta said, calling having “chlorine cylinders right in the middle of a residential neighborhood a frightening prospect” during a hurricane.
The city could get $5.5 million of the estimated $9 million cost of the plant by changing its priority, the mayor said.
“We do have the capability to sell bonds to make up the difference,” the mayor said.
The Louisiana Recovery Authority (LRA) will have the final say on funding for the project.
“We might as well get a yes or no on the sewer plant,” said Selectman Timothy L. Martinez.
“Let's go for it,” agreed Selectman Lindon A. Rivet Jr.
Gulotta said the city would have to find other ways of financing other projects proposed earlier to the LRA – emergency generators on the city's water wells at Port Allen and on sewer lift stations, and a new transformer for the city's power plant, which is used as a back-up to Plaquemine's regular power supplies.