by Devin McCue, Sumner Newscow — Wednesday evening the Wellington City Council held a special meeting to pass a resolution and ordinance allowing it to participate in a Kansas low-interest loan program to stymie rising utility costs.

Wellington City Manager Shane Shields walked the council through the new loan program passed by the Kansas State Legislature and signed into law by Governor Laura Kelly on March 4. In short, the state has allocated $100 million towards cities in need to help cover extraordinary spikes in utility costs.

The loan can only be used to cover these exorbitant costs and would be payable over a period of 10 years. In addition to the long repayment period, the loan has the advantage of an especially low-interest rate of 0.25% (2 percent less than the typical rate).

The loans are awarded on a first-come, first-served basis and the deadline for cities to submit their applications is Monday, March 15.

Shields said the city currently has funds available to handle any sudden or unexpected price spike. Wellington has been building its utility fund since 2015 and has $10 million in reserves, $6 million specifically in a reserved fund. Shields said spending down the reserves without help from sources outside the Wellington city limit is unwise for myriad reasons.

Preliminary estimates gauge the surge in prices for Wellington is anywhere between $2 million and $4 million, drastically higher than the $150,000 price tag typically seen around this time of year. The reason the gap between the low and high estimates is so great is that Wellington officials are still unsure what the final cost will be. KPP doesn’t receive its bill for the power issued until the middle of the month between March 15 and March 18. Officials at KPP hope to have the number by Monday but can only estimate until the final tally comes in.

The resolution proposed to the Council would grant the City permission to start applying for the loan in order to finalize it by the deadline. The City will start the application with an asking price of $3.1 million with plans to cover the remaining costs with $900k from the utility fund. The loan would be paid back through regular customer utility payments over the next 10 years.

The $3.1 million asking price is only a tentative figure at the moment, but the effect on consumers’ monthly bills comes out as follows:

•$3.1 million * 0.25 interest + $3.1 million = $3.875 million

•$3.875 million / 120 pay periods = $32,292 a month

•$32,292 / 8k (approximate population of Wellington) = $4.04 per person per month.

The following Ordinance would grant the City the ability to enter a loan agreement with the state should the loan be necessary. Before they would accept any money, however, the official bill will come out and we can see if KPP has enough funds to handle the problem itself.

Wellington Mayor Jim Valentine called the situation a “no brainer” and moved to have both the Resolution and Ordinance approved.

Councilmember Robert Hamilton seemed to think differently, however and was the only “no” vote on either decision.

Hamilton elaborated that voting no was not a reflection on Mr. Shields and Mr. Newberry and that he hoped his vote would call citizens to be more attentive to this process.

The Resolution and Ordinance passed on a 4-1 vote with Council member Jennifer Herschee absent, and the special meeting adjourned after 22 minutes.

Follow us on Facebook.

Follow us on Twitter.