Bank of Holly Springs
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Melanie Balducci (left), area specialist with USDA-Rural Development, and Mayor Kelvin Buck discuss the loan and the cast iron gas line replacement work.

City to get loan for gas line project

Mayor Kelvin Buck signed obligation documents for a loan last week for just over $6 million to complete the natural gas cast iron replacement project.

Those documents "reserve" the money with USDA-Rural Development for the project.

The loan, which offers a good interest rate, will complete the project which has been on the plate for over 10 years.

The state had about 35 miles of cast iron gas line to replace and Holly Springs accounted for the majority of that.

Bill Stone, general manager of the Holly Springs Utility Department, said there was a little more than 30 miles of cast iron left to be replaced when he came on board. Everything east of the Old Mississippi Central Railroad has been replaced, leaving about 28 miles remaining in the project, he said.

The loan is for slightly over $6.3 million and the city has committed $800,000 to the project. That money has been saved up from a 10 cent per 100 cubic feet adder (increase) that HSUD has been charging for several years, Stone said. The proceeds from that adder, other than what was spent east of the railroad, have been held in reserve in advance of obtaining the financing.

And going forward, the proceeds from the adder will be used to retire the debt, Stone said.

When the city made application, the interest rate was at a 4.5 percent interest rate, according to alderman Mark Miller.

The current rate is 2.375, which will be the maximum rate. If the rate is less at the time the loan is closed, the City will get the lesser of the two, the alderman said.

Stone said the money borrowed is expected to be enough to complete the project, as estimated by Larry Britt, engineer on the project.

And Rural Development would not have approved the project loan if the income from the adder would not be sufficient to retire the debt, Stone said. Britt expects plans to be completed in the next eight to 10 weeks and the project will be advertised for bids shortly thereafter.

"This is a huge deal," Miller said. "We're going to be able to get it done. We hope to get it started right away. Our crews will have (to be there with the contractor) to help."

Stone agreed.

"This is a huge deal," he said. "Though it will, for the most part, go unheralded because people can't see it, this may be the most consequential project of this administration. The new lines will have a life expectancy of more than 50 years and will provide safe, reliable gas service for generations."

Mayor Buck expressed his excitement at being approved for the USDA loan.

"We are excited about getting the funds from USDA to finally begin on replacing the old cast iron gas lines throughout our system," he said. "The more than $7 million project will completely upgrade our gas line delivery system, saving thousands of dollars over a period of time in lost gas."

The Federal regulatory agency over natural gas companies and the Public Service Commission requires that the cast iron pipes be replaced. The city had completed the first phase of the project. The fact that the interest rates are low (2.375 percent for the USDA loan) will save the city over a million dollars over the life of the 35-year loan, Buck said.

"This major infrastructure project is another huge step in moving our city forward," the mayor said. "This upgrade, along with the Ashland Substation electric system upgrade, amounts to over $25 million of capital investment in the modernization of the Holly Springs Utility Department in the last few years.

"We anticipate further expanding our natural gas system to offer natural gas to even more areas around our system in the near future. This will accommodate the growth our area is experiencing recently, as well as customers who want to switch from propane tanks to natural gas through the city."

Holly Springs South Reporter

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Holly Springs, MS 38635
PH: (662) 252-4261
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