Marion City Council OK’s loan for derecho recovery

MARION — The Marion City Council on Thursday officially approved a loan agreement with Wells Fargo to help with financing derecho recovery.

The council at its Thursday night meeting unanimously authorized a short-term loan of up to $20 million over four years.

The loan is to provide cash-flow relief as the city waits for federal and state reimbursements for derecho recovery.

Recovery projects must be completed before the Federal Emergency Management Agency sends funding to a state, which then distributes the money to local jurisdictions.

Marion, like other cities in Linn County, are still busy with derecho recovery and cleanup.

“The city’s need for flexibility with regard to disaster funding and grant reimbursement is best addressed with a line of credit that will allow the City to draw funds as needed,” council documents read.

The city has three contracts — with Southern Disaster Recovery, Debris Tech Monitoring and Wendling Quarry — for debris collection, monitoring and disposal, with an estimated total cost of around $30 million.

About half of that sum will go to Southern Disaster Recovery for cleaning the city’s waterways. The company has been working for the last few months on cleaning up storm debris from Dry, Indian and Wanatee creeks.

Additionally, Marion has been working with disaster recovery consulting firm Tidal Basin to navigate the city’s various projects, City Manager Lon Pluckhahn previously told The Gazette.

The city is confident in getting federal and state reimbursement for its recovery projects, Amal Eltahir, assistant to the city manager, previously told The Gazette.

The city has been relying on the FEMA policy guide in terms of a project’s eligibility.

City staff posted a request for proposals in December, looking for a line of credit with a $25 million ceiling to “cash flow” contracted service costs, the council document states.

After receiving only two proposals, city staff recommended the city go with Wells Fargo as the lender.

Budget Manager Zachary Wolfe previously told The Gazette that taking out a loan gives the city more flexibility than bond financing.

If reimbursements come quickly, the loan is expected to cost the city about $200,000. If the opposite happens, the cost will be closer to $400,000, Wolfe said.

In the case that Marion does not receive the FEMA reimbursement it is expecting, Eltahir said it would not impact the current financing plans.

“However, the city will have to think about refunding the short-term loan with a longer term one a couple of years from now,” Eltahir said.

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