Board approves funds for HSUD/city
The Holly Springs Board of Aldermen approved application for a line of credit from Unity Bank, use of a certificate of deposit and use of ARPA (American Recovery Plan Act) funds to provide a safety net to the operations of the Holly Springs Utility Department at the Dec. 5 meeting of the mayor and board of aldermen.
Mayor Sharon Gipson asked for approval to obtain a line of credit of $1.5 million from Unity Bank in Holly Springs. She also sought permission to dip into a $1.9 million ARPA fund to the tune of $500,000 to help pay stormrelated expenses accrued at HSUD.
Third, Gipson requested the board use a $1.4 million Emergency/Resiliency CD to infuse more cash into the HSUD savings account.
Gipson said expenses at HSUD to recover from back-to-back storms ran up costs to make repairs to the electric system. Problems also cropped up with billing for electricity caused by a glitch in General Electric’s ability to collect data from GE Smart Meters was citied as causes of financial pressures at HSUD.
This year cash flow became a problem because of billing problems that began in August.
Gipson has been seeking approval to obtain a line of credit and to use a certificate of deposit to assure operating funds at HSUD in the short term.
Gipson said she was also notified there was an overdraft in one of the city’s accounts which also made it necessary to take immediate action.
Approval by the board to not renew the $1.4 million CD has made it possible to use this money as a temporary measure to ease the present financial emergency at the HSUD and the City of Holly Springs.
“So, these are the solutions to move forward, so what’s your pleasure?” Gipson asked the board of aldermen.
Alderman-At-Large Dexter Shipp said he does not think $500,000 in ARPA money is enough. The city has $1.9 million in ARPA funds on hand.
Ward 1 alderman Bernita Fountain asked if that ARPA money should go into the general city fund to use for costs to operate the city since the HSUD has not been able to pay fee-inlieu tax owed the city this year.
Gipson said the city could use ARPA monies to take care of possible issues in the city.
Board attorney John Keith Perry said he thinks ARPA funds can be used directly at HSUD as well.
“It (ARPA) has to be used for a purpose, right?” Shipp asked. “This money has to be used specifically and proof of what it is used for.”
City Clerk Jerrica Jones said once the ARPA money is expensed it will have to be reported separately to the funding agency.
Ward 4 alderman Patricia Merriweather wanted some questions answered.
“My question is, we do not have a plan,” she said.
`We see this as over $2 million we have been asked to acquire. What specifically are we paying for?” She asked if money was needed to meet payroll at the city since the fee-in-lieu tax payments from HSUD are in arrears for nearly a year.
“What specifically are we paying for off arrearages? Are we going to pay the city part of that?” she asked, since the city is not getting the required money from the utility department.
The city budget includes $1.7 million in fee-in-lieu of taxes from the HSUD.
Merriweather said she is concerned that audits have not been completed by the HSUD.
“I understand, Madam Mayor, saying there is no financial situation. I beg to differ,” Merriweather said.
She said she has asked to meet with the Mayor and Annie Mason, accounts manager at the HSUD, and make a plan. Perhaps the HSUD needs to raise utility rates, she said.
She and Ward 2 alderman Andre Jones asked for financials.
“I am not in agreement in using taxpayers’ money. My motion is to table this until we have met (with HSUD),” she said.
She said she wants to know how the HSUD arrearages will be paid to the city and to prepare for winter months ahead.
“We have had many many budget plans,” Gipson said. “We definitely had a plan in place.” But emergencies such as storms have challenged the HSUD for two years in a row, she said.
Gipson said her door has been open to the aldermen.
“This can and has been kicked down the road so many times that we are at the end of the road, at the edge of the cliff,” Gipson said. “This line of credit has been on the agenda for months, as well.”
Speaking metaphorically, Gipson said, “Anything that has two heads, they call a monster. This is a monstrosity,” she said. “Tell me tonight what your recommendation is.”
Ward 1 alderman Bernita Fountain said the board understands the city is in a deficit and needs the funds. She asked to streamline the motion to state what the money would be used for. She said the city has $1.9 million in ARPA funds that lists specific ways the money can be spent.
“There is no need to be in conflict,” she said. “Also, meeting payroll. It’s (the ARPA money) has been there for two years. Since we need the money now, we may have to wait on using the ARPA funds for a Hiram Revels Library.”
She said the city needs to use the ARPA money now that has been sitting there (in the bank) for two years.
Fountain said she prefers to use the $500,000 Gipson requested to be put into the city fund to make payroll.
She said the $1.4 million CD should be put into the HSUD.
Jones recommended that the $500,000 be given to the utility department that could use the money to make two payments to the city.
The city clerk said the money would have to be used by HSUD to pay their bills first before they can give the city any of the ARPA money. The money should be put in the general fund of the city so it can be used now, she said.
Perry said he had spoken with TVA and HSUD has to pay its bills first before it can pay the arrearages it owes the city.
Fountain thinks the CD and line of credit would be used for arrearages at HSUD and for the winter storms coming up.
Merriweather said the board needs to know what the arrearages are at HSUD first. She said TVA said if the HSUD situation is not solved, TVA will “hire at our expense, an accountant, because of the inaccuracy of the reports they are receiving.”
“So, there’s a lot of ambiguity and questions that I have,” she said. “Until I can see these figures from the utility department, I don’t know if they are telling the truth or not. We have to have a picture of where we are going. That’s my thoughts.”
Fountain said she cannot go to the utility department and tell them what to do.
“Our job is to put the money out there. It’s her job (Mason’s) to make sure it goes’s to the right places. That’s my thought,” Fountain said.
She made a motion to allocate $500,000 of ARPA funds to the general city fund specifically for payroll.
“Second,” said Shipp. The motion passed 5-0. Fountain’s second motion was to allocate $1.4 million in the CD’s emergency funds to HSUD to pay for arrearages. The motion passed by unanimous vote of the board. “I request that a line of credit of $1.5 million from Unity Bank be used only for expenses from the storms and for future storm expense,” Fountain said. The motion stipulated that the expenditure of monies from the line of credit must first be approved before each disbursement. Shipp seconded the motion and it passed by a vote of 4-0 with Jones absent, having left the board room before the last motion.