MILLERSBURG -- Enabling the county to get a jump start on the construction season, Holmes County Engineer Chris Young said he will use a low-interest loan to pay for the first year of a five-year plan to resurface county roads, funding for which was approved by voters in the form of a 0.25 percent sales tax.
Although approved in November, collection of the additional tax did not begin until April 1, and the engineer's office would not receive its first disbursement until July. Consequently, Young said he faced "a bit of a challenge," in moving forward on a project for which he has yet to receive funding.
"The voters approved and wanted better roads. They provided the funding mechanism, so we want to deliver on what we promised and make sure they get these newly paved roads as soon as possible," according to a release issued by Young, who recently rolled out plans for the first phase, to include paving of County Road 51, County Road 189, County Road 160 and County Road 144.
Young said he is eager to move forward with the plan this year, which will help avoid increasing cost of materials, specifically asphalt, and continued deterioration of the roads.
"So we need what amounts to a bridge loan one might get when building a house. We found such a loan with favorable terms in the State Infrastructure Bank," according to Young.
The Ohio Department of Transportation's State Infrastructure Bank is a direct loan and bond financing program, established for the purpose of developing transportation facilities throughout Ohio. County governments are eligible to take advantage of this program, thereby offering Holmes County a way to start paving roads in 2017 while it begins collecting the additional sales tax.
Initially concerned about using taxpayer money to pay interest on a loan, Young said, "the road system desperately needs repaired now and the public expects action." The SIB loan was the best way to be cost efficient, using all the available time and taking advantage of the current year's asphalt rates, which have been rising an average of 3 to 5 percent annually, according to Young.
Because of the structure of the loan, the rate at which new sales tax dollars will allow the county to effectively pay less than 1 percent interest on the loan, according to Young, adding, "You can't do much better than that unless you can find a bank that will lend you money for free, but there aren't too many banks around that do that."
Based on the 2016 sales tax collection is 2016, an estimate of revenue generated by the 0.25 percent sales tax increase will total approximately $1.8 million annually, according to Holmes County Auditor Jackie McKee, who adds, "If this SIB loan will allow prepayment of $1.8 million before any interest is calculated on the remaining principal, well then clearly that is a good deal for the taxpayers of Holmes County."
While the SIB loan is for $2.5 million over five years, Young said, "My goal is to pay down the loan as quickly as possible with the incoming revenue from the road sales tax, before any interest is charged at all," said Young, noting the first 12 months of the loan are interest free.
However, because the loan may not be fully paid back in less than three years without penalty, Young said he anticipates the effective interest rate at less than 1 percent.
Young said he's started to advertise for bids for the project, which are scheduled to be opened on April 17. Details of the submitted bids will determine if the county is able to wrap additional roads into this year's paving schedule.
Since identifying initial roads selected for resurfacing, Young said he's fielded several questions inquiring how each road was selected, to which he responds, "We have to start somewhere. We can't get them all at the same time."
And, while the paving project for 2017 will bring major improvements to a segment of Holmes County, there is still be an additional 226 miles of the 250-mile county road system Young is required to upkeep until paved in future years.
To accomplish this upkeep in 2017, an additional 50 miles of the county road system will also be resurfaced with chip and sealed, using the engineer's existing maintenance funds -- derived from the Motor Vehicle Excise (MVE) and gas tax funds -- at an estimated cost of around $1 million.
With five years of funding through the sales tax increase secured, Young said he will be able to apply for funding from the Ohio Public Works Commission to get a jump start on subsequent construction seasons. In the fall, he said, he intends to apply for the funding option, which is available without interest.
Reporter Christine Pratt can be reached at 330-674-5676 or email@example.com.