Langley considers loan opportunity to fund infrastructure projects

The low interest loan would fund the Langley Infrastructure Project, which is $3.5 million short.

The City of Langley is eyeing an opportunity to accept a low interest loan through the Public Works Board that would help fund the Langley Infrastructure Project, which comprises 14 individual projects that would improve the city’s drinking water, storm water and sewer systems.

Public Works Director Randi Perry applied for the loan on July 7, 2023. On Sept. 8, the list of awards was published, revealing that Langley’s application scored 84.5 points, being the 20th of 61 applicants to be awarded funding out of a total of 85 projects.

The loan would be repaid in 20 years at a 1.72% interest rate. According to City Administrator Mark Rentfrow, it’s a remarkably low rate.

“That is far and away better than any commercial interest rate,” he said in an interview.

The first year is interest only payment, meaning the city won’t have to pay the principal until the second year. The city also wouldn’t have to spend all of the money, as it can look for other grant opportunities. It is possible to spend a part of the funds and “de-obligate” the remaining funds back to the Public Works Board.

Additionally, there are incentives that would further decrease that interest rate. If the project is completed in three years, the interest rate will drop by 0.5%. If it takes four years, the rate drops by 0.25%.

The project’s budget is $3.5 million short of the amount necessary for the construction part of the plan. So far, the project has been allocated $4 million from the Water Utility Management Bond, which passed with 80% supporting votes, and a $3 million grant from the Island County Rural Economic Development Funds. According to Perry, the grant only pays for design costs and the installation of a sewer extension in the Furman Firs neighborhood.

The design of the project is 90% complete. At 100%, the project is ready for the bidding phase.

One of the requirements to receive the loan is for the city to have an up-to-date comprehensive plan, development regulations and critical areas regulations. While the critical areas update is due in June 2025, the city won’t qualify for the loan unless it updates the ordinance by the January 2024 deadline to accept the loan award.

Langley last updated its comprehensive plan in 2018 but did not have the time to include a review and update of the critical areas ordinance. Though the Community Planning Department had planned to do that in 2022, it was unable to as there was more work to do than expected. Furthermore, the state has released new guidance for the protection of streams which must be incorporated in the city’s critical areas ordinance, according to a memo presented to the council during a meeting Sept. 18.

Perry also said that the other criteria to obtain the grant is income eligibility, so planning and public works are in the process of developing the Community Development Block Grant Survey to determine income eligibility.

During the meeting, Mayor Scott Chaplin said the city needs to figure out how to pay back the loan, an issue that Councilmember Gail Fleming found concerning, though she said she would like to see more information before making a decision. Councilmember Thomas Gill shared a similar opinion.

“I don’t think there’s any way without a major change to the way the city operates that we can hope to repay this in any sort of reasonable timeframe,” he said.

Councilmember Rhonda Salerno said there needs to be public outreach before they take a loan.

“I’m not sure that our public wants us to go into debt for 20 years when we’re going to need to use these loans when it comes to our sewer treatment facility,” she said. “There is plenty of money … in the bipartisan infrastructure bill to cover these costs and we haven’t spent any time on that.”

Councilmember Harolynne Bobis said she is worried that they might miss this opportunity. To Perry, further postponing infrastructure work is a risk.

“All of the things that are in this project need to be done and have been deferred for many years,” she said. “We’ve already kicked the can quite a bit down the road and we are definitely feeling the effects of it.”

Additionally, if construction is not completed by Dec. 31, 2024, the city will have to repay the county grant funds, Perry wrote.

The council will further discuss this topic at a later meeting.