Lewes BPW, city plan loans to pay for land purchase

The City of Lewes and Lewes Board of Public Works are each planning to take out a loan to pay for their portion of a $5.5 million land purchase at the corner of Kings Highway and Clay Road. 

A deal to purchase the 37.5-acre Jones Farm was announced July 9. BPW will contribute $2 million, while the City of Lewes will add $1.5 million and Sussex County has committed $2 million. Owner J.G. Townsend and Co. agreed to trim more than $1.5 million off the appraised value to secure the deal. 

During a July 22 discussion about the BPW’s five-year capital budget, General Manager Darrin Gordon said he will likely seek a low-interest loan from the state revolving fund and pay for the BPW’s portion of the land purchase over time. Gordon said because of the BPW’s aggressive five-year capital plan, the loan will help maintain cash flow. Interest rates for SRF loans are currently below 2 percent, he said, and he anticipates they will remain at that level when the BPW finalizes the loan in early 2021.

The BPW has about $11.9 million in reserves, but Gordon said board members must look at the budget and future projects when making decisions on funding. The reserve fund protects against possible disasters, he said.

“2020 has proven that almost anything is possible,” he said.

Lewes Mayor and City Council also voted to apply for an SRF loan at its Aug. 10 meeting. Mayor Ted Becker said the city has adequate resources to make the purchase without the loan. He said the council will have to consider if the loan is an appropriate path after approval when the interest rate is known. Applying for the loan does not commit the city to it, he said.

The city may also use proceeds from the sale of three lots on Tennessee Avenue to fund a large part of its portion of the sale. One lot has already sold for about $400,000, and Councilwoman Bonnie Osler recommended the city use that money to lower the total amount sought for an SRF loan.

Sussex County is using funds collected through a 2006 ordinance that allows developers to increase project densities in targeted growth areas of the county in exchange for added fees that are earmarked for open-space preservation.

BPW officials approved the five-year capital budget at their July 22 meeting. Across water, wastewater, electricity and stormwater departments, BPW plans to spend about $25 million on capital projects by 2025.

The 2020-21 budget is just over $5 million, with $3 million earmarked for the water department. The majority of those funds – $2.78 million – will go toward a project to replace cast-iron water mains on Pilottown Road and Cedar Street.

Water main replacement projects are planned to continue beyond the five-year scope. Work will move to Kings Highway and Third Street in 2022-23. 

The BPW eventually plans to build a 1 million-gallon water tank on the soon-to-be-acquired Jones Farm property, and $1.45 million is budgeted for the project over two fiscal years, with construction in 2023-24.

BPW continues to plan for upgrades at the wastewater treatment plant following malfunctions in December and January that resulted in 4 million gallons of partially treated effluent being dumped into the marsh adjacent to the facility.

In the current fiscal year, BPW plans to replace and upgrade equipment, and expand drying beds. BPW also plans to create redundancy at the facility over the next two years so the plant can continue to operate if a problem occurs. A new equalization tank ($950,000) is planned for the facility in 2024-25.

In the electric department, BPW has budgeted $1.6 million for planning and construction of a solar field over two fiscal years with completion in the 2022-23 fiscal year.