HUMBOLDT — Resigned that they had no choice in the matter, Humboldt city council members began the paperwork Monday night to request a $1.5 million loan from the state of Kansas to offset sky-high natural gas charges incurred from a bitter cold spell in February.
“We were facing bankruptcy,” said Cole Herder, city administrator.
Herder said the invoice from the Kansas Multiple Gas Agency, which secures the city’s natural gas, is due to arrive Friday, and should be for $1,509,818.
Last week the figure was $1.6 million. The week before, $1.2 million.
“The numbers have been rolling around a bit,” Herder said, adding, “It’s been a long week.”
Among KMGA’s members, 49 cities are asking for a combined $45 million, Herder said, estimating there’s double that number adversely affected by the gas spike.
Considering the state has freed up $100 million to address the situation, Herder surmised, “There will probably be more requests than funds. They will either prorate the loans or increase the amount,” he said.
The interest rate on the loan is 2% below the variable market rate and will be recalculated each January. If the current interest rate is below 2.25%, the interest rate is 0.25%
The loan is for 10 years. Payments begin no later than July 1 and will be paid on a quarterly basis.
The city’s amortization schedule will be established between the dity and the State Treasurer’s Office.
“One hundred and twenty months is going to be a very long time,” Herder said of the loan.
Council member Paul Cloutier commended Herder for his “making some noise” with legislative and Congressional officials about the matter.
“Somebody profited off of this. It’s not like we’re a business. We’re a city. This is no small thing. We’re going to have a lot of people struggling to pay their bills,” Cloutier said.
To that matter, the city currently has $40,000 in past due utility bills. At this time last year, the amount was $5,000.
Part of the reason for the higher amount was the federal requirement during the pandemic forbidding municipalities from disconnecting utilities on delinquent accounts.
