Bosque Farms councilors vote to apply for loan to upgrade one well
Village of Bosque Farms councilors revisited a loan application for funds to upgrade Well No. 2 one more time at their January meeting, just in case they wanted to call the whole thing off.
Last month, the councilors approved a resolution to apply for the funds through the New Mexico Environmental Department's drinking water revolving loan fund. The resolution passed 3-1, with Councilor Wayne Ake voting no.
If the loan is approved, the money will be used to replace the well's variable speed motor with a direct drive to save on electric costs, as well as the installation of an emergency generator and a computer system that would let water department staff run both wells remotely.
The loan application was for $765,000, said Village Clerk/Administrator Gayle Jones last month, with 75 percent of that to be repaid and the remaining 25 percent to be forgiven.
During the December meeting, Councilor Wayne Ake had a number of questions about the loan, many of which didn't have answers at that time.
"I'm a little concerned about how we're going to pay for this," Ake said. "We have an estimated cost and interest rate, but we don't know how long the term of the loan is or how much the payments are going to be."
Councilor Dolly Wallace asked how long it would take the village to pay back that amount. Jones said she wasn't sure now the department would amortize the loan, so the time frame portion of the application had been left blank at this point. She did say the sewer loan was for 50 years. Previous loans had an interest rate around 2 percent, Jones said.
Treasurer Deborah Kelly added that most of the village's loans for water systems were for 20 years and it was done paying those, freeing up about $20,000 annually.
"Right now we have no loan debt," Kelly said. "The only outstanding debt is on the sewer."
At the January meeting, Jones told the mayor and councilors that the loan had not yet gone before the loan fund board, and if the council wished to "pull back" the application, now was the time.
While Ake voted against submitting the original resolution and application, neither he nor any of the other councilors moved to rescind the application.
Mayor Bob Knowlton said the two main concerns were the debt service of the loan and whether the motor switch would actually save the village money.
After reviewing a year of electric bills, Knowlton said Well No. 1 ran for 18 hours a day and cost $4.09 an hour on average. Well No. 2 averaged six hours a day at $8.56 per hour.
"It's wasting power and in my opinion, we should go forward with the loan," Knowlton said. "We are living on borrowed time with the age of those wells. We have the opportunity to replace the motors in Well No. 2, plus add the computer system and generator."
If the loan is approved and accepted by the village, Knowlton said the village would make annual payments of about $35,000 through 2035.
"We've retired all our previous loans on the water system this past year. We were paying over $100,000 out of water," he said.
Last month, Jones said if the village did not apply for the funds, the money could be lost completely.
"We were pulled this funding cycle and I don't know when we will come back around," she said. "We can always opt out of this. Once the loan documents come back to us for approval … we can opt out at that point."
Jones continued, saying the application was just going to the drinking water revolving loan fund's board, not its attorneys.
A recent loan application for a fire truck cost the village more than anticipated after the loan documents were reviewed by the lender's attorneys. With that review, came the obligation to pay certain fees for the loan, even if the village rejected the funds.
"So we can send this in and find out if the board approves, get back the amount owed, interest, yearly payments and terms, and we can opt out and it will not cost us anything?" Wallace asked.
Jones said if the loan documents were not sent to the board's attorney, and were just reviewed by the board, the village shouldn't be charged anything.
Ake asked why Well No. 1 ran for 18 hours a day. Utilities Director Cliff Hibdon said because of the variable speed motors, Well No. 1 ran when use peaked up, whereas the direct drive motors in Well No. 2 ran during prescribed times, whether there was demand on the system or not.
"Well 2 has twice the kilowatt consumption," Hibdon said. "Well 1 isn't working right not — we have to replace the computer 'brain' of it, so we are running 2. And Well 2 doesn't have power back up. If we have a power glitch, then we can manually go put 1 into service by someone playing with the controls."
In regards to the undersized generator at Well No. 2, Ake said he remembered the village investigating that issue before it was purchased.
"We have a 150kw generator at Well 1 and the generator at Well 2 is the same," Hibdon said. "But there are different mathematics for the power schematics for direct and variable. And that's way out of my league."
Knowlton asked if the old generator would work at Well No. 2 if it were switched over to variable motors, like Well No. 1.
"I'm not an electrician," Hibdon said. "I don't know if it would work or not."
Ake asked if the variable speed motors would be more expensive to maintain that the direct drives. Hibdon said he has replaced two drives and had seals rebuilt in the 19 years he's been with the department.
"But we've had no motors replaced since 1996," he said. "When the 'brain' goes bad, you have to replace it, but the power costs are going to be more over time."
Another benefit of getting the loan would be the installation of the computer system that will allow the two wells to be set up to work in conjunction with each other, Hibdon said.
Councilor Russ Walkup said since the councilors had already put forth a resolution for the loan, there was really no need for action unless they wanted to stop the process. No one made a motion.
Jones said she felt there was a high likelihood that the request would be funded.
"And this is not a done deal. I want to thank everyone," said Mayor Knowlton. "I think this is the right way to go."
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