A view of City Hall and Main Street in Biddeford. The City Council Jan. 18 made some decisions on American Rescue Plan funding. Derek Davis/Portland Press Herald Photo

BIDDEFORD — The city of Biddeford has calculated it lost an estimated $3.6 million in revenue throughout the pandemic and will use a portion of the American Rescue Plan money it received to make up the losses.

Replacing lost revenues is one of four uses of the money allowed under the federal rules.

The City Council voted in favor of the proposal to do so Jan. 18. They also voted to use $1.7 million of the of the $3.6 million lost revenue funds to pay off an internal interfund loan made several years ago to the Waste Water Treatment Plant’s enterprise fund from the general fund.

Biddeford was awarded $9.7 million in federal American Rescue Plan funds. The first half of the funding was released in 2021, the second will be released this spring. Last year, the City Council voted to allocate about $5 million from the fund to reduce borrowing for CSO work and an estimated $364,000 was earmarked for premium pay for eligible city workers, leaving a balance of $4.4 million.

City Manager Jim Bennett said paying off the interfund loan should improve the city’s bond rating going forward.

Moody’s Investor Services downgraded Biddeford’s rating to A1 from Aa3 in 2019, even though the city’s fund balance had increased to $2.9 million and the interfund loan had decreased to $3.2 million by that year, Bennett said. Both ratings, according to Moody’s scale, present low credit risk to the investor. The Aa grade indicates that the bond obligations are judged to be of high quality, according to Moody’s; A1 are judged to be upper medium grade.


“This recommended action will provide the best position for the community to achieve the bond rating upgrade,” said Bennett, noting the city’s unassigned fund balance is currently estimated at more than $10 million. A better bond rating means better interest rates when it comes to bonding — and the city is looking to issue $12 million in bonds.

The actions taken by the council leaves a balance of about $1.9 million from the $3.6 million the council agreed to use to make up for lost revenues after the WWTP loan is repaid. The ARP fund will have a remaining balance of about $745,000.

“One of the major advantages of being able to qualify to use ARP funds to replace lost revenues is the removal of the limitations,” Bennett wrote in a memo to the City Council. “We’ll still keep track of it, so you know how it is being used.”

“(I want to) thank the staff for all their hard work digging into this,” said Councilor Martin Grohman, who asked about the plan for the remainder of the lost revenue funds replacement. “I think it’s a credit to the city and the federal delegation we are receiving this revenue, and we want to make sure we put it to work.”

Bennett told councilors it was his assumption that much of the balance may be used in capital work like sidewalks and paving.

Council President Norman Belanger noted the council’s Finance Committee had recommended using the $3.6 million to make up for lost revenue, which is one of four categories’ municipalities and counties can use ARP funds under the federal rules. The three other categories it may be used include in a response to public health or its negative economic consequences; investments in water, sewer, and broadband infrastructure; and premium pay for eligible municipal workers, the latter of which has taken place.

“(We’ll) still have to have a discussion on how to spend” the balance after the $1.7 million loan has been paid, Belanger said. He agreed paying off the loan should mean a better bond rating.

Belanger said a workshop is being planned for February.

Both council votes were unanimous.

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