An Oregon agency that financed the city of Yachats’ new south water tank has “forgiven” $700,000 of the $1.73 million loaned to build it.
So now, instead of having to repay the full amount at 2.2 percent interest over 20 years, the $1.03 million balance will be paid back at 1 percent interest over 30 years. The yearly payments are made through tax collections by the city’s urban renewal district.
The 250,000-gallon water tank was finished in late 2018 to help provide a source of city water south of the Yachats River. Originally budgeted to cost $1.25 million, the cost at one time rose to $1.78 million because of changes, cost overruns and contractor delays. The city negotiated that final amount down to $1.73 million.
The loan came from Business Oregon, the state’s economic development agency that operates a federal-state financing program to help ensure safe drinking water. The program provides below-market interest rates and forgivable loans based on various factors, including the community’s median household income, current water rates, and how rates would be impacted when the project is complete.
For loans to be forgiven, the project must be finished by the contract’s scheduled completion date. When the city’s contractor finished the project in the contract’s 36-month timeline, Business Oregon was able to cancel the forgivable loan amount — $700,000 in Yachats’ case — and any interest on it.
