Metro Government is one step closer to getting a $10 million loan from the Louisville Water Company.
The Board of Water Works voted Tuesday to approve the loan, which will be used to pay a $14 million settlement with a group of retired firefighters who were underpaid for overtime work.
Water Company President Greg Heitzman says water rates will not be affected.
“If we were not doing this loan, we would be investing these reserves in government backed securities and it would actually be a slightly lower rate so this is a good short term use of the funds that will generate some interest income,” he says.
The city will pay the remainder of the settlement from its nearly $65 million rainy day fund.
The city used bonds to pay a larger settlement in a similar suit last year. Mayor Greg Fischer says the decision to borrow from the Water Company seems more popular.
“The reaction I’ve received from the citizens has been it’s an example of city agencies cooperating with each other showing common sense in how to deal with a liability that we face as a city,” he says.
The city will repay the Water Company with interest beginning in 2012. The Metro Council must approve the loan, too. They’ll vote on it Thursday. It’s expected to pass.