The City of Seminole has secured nearly $2 million in “bridge financing” from three local banks to pay engineering fees for a proposed new wastewater treatment plant.

During its regular meeting Tuesday evening, the city council unanimously approved a proposal from First United Bank, with participation from BancFirst and First Security Bank, to provide the city with a $1.7 million line of credit for the sewer plant project. The interest rate is fixed at 3.25 percent for a 24-month term. The city will not be required to put up any collateral.

Bank of the West, which has a branch in Seminole, also submitted a proposal with a floating interest rate of 2.5 percent, but the bank wanted the city to pledge revenue from utilities as collateral.

“We received two bids. Bank of the West was very competitive and offered a low floating interest rate, but of serious consequence to us, they wanted us to pledge the revenue stream from the sewer and water. It’s hard for us to do that, because we’ve pledged it once already. It would be very hard for us to get credit ratings, especially going into building a sewer plant, if all of our revenue streams are pledged out,” Saxon told the council.

“I was really relieved when we received the package from our other banks. They are jointly offering to participate in this. They are offering a fixed rate of 3.25 percent, which is a little higher than the other bid, but most importantly, they have agreed they are not going to require any collateral for a $1.7 million project. That is community banking,” Saxon said.

According to Saxon, the city may not have to use the entire $1.7 million, as a loan/grant from the U.S. Department of Agriculture (USDA) is in the works.

“We expect to have to draw about $800,000 before we get a loan/grant from the USDA. We’ve been working with them, and everything looks great. We would expect that sometime, maybe as early as December or January, that we would get a soft commitment, at which time they would take the loan that we have with our community banks. The USDA will pay the engineering fees through that loan/grant,” Saxon said.

In April, the Seminole Utilities Authority, which is comprised of city council members, approved a $1.7 million agreement with Wall Engineering to bring the current wastewater plant into compliance with the Department of Environmental Quality (DEQ) but made the contract contingent upon bridge financing. Saxon told the authority that the engineering project will only hit “benchmarks” to satisfy the DEQ and a new sewer plant is still needed, whether it’s funded with a bond election and/or grants.

“Our current sewer plant is really showing signs of not doing well, to put it mildly. The DEQ has told us were going to have to do a significant rebuild or build a new sewer plant,” Saxon said at this week’s meeting.

The plant has been flagged with multiple violations from DEQ, and Saxon said the city has been spending anywhere from $350,000 to $500,000 each year in efforts to keep it up and running.