MILLTOWN — With the most recent rejection of $11.7 million in potential funds from the Federal Emergency Management Agency (FEMA), the question of funding for a new electric substation in Milltown is again a topic of discussion.
Currently, the borough has an interim $14 million New Jersey Environmental Infrastructure Trust (NJEIT) construction loan with a 19 percent principal loan forgiveness, or approximately $2.6 million, for the new substation.
Denise Biancamano, chief financial officer, said at a Borough Council meeting on Dec. 14 that borough officials had to make a decision to convert the interim loan into permanent financing for the substation or face the possibility of losing the 19 percent principal loan forgiveness if officials decided to close the trust.
“There is a possibility that we may receive [the $2.6 million], but I can’t guarantee [it],” she said.
The dilemma that borough officials had to decide was to continue with the loan and/or appeal the FEMA rejection.
Biancamano said there was a question on whether FEMA would provide funding if borough officials decided to convert the interim loan into permanent financing.
The aftermath of Tropical Storm Irene in 2011 led borough officials on a journey to move the electrical substation to higher ground. Irene brought torrential rains that overflowed area waterways, flooding nearby streets as well as the borough’s electric substation, resulting in a nearly weeklong power outage. Borough officials shut down the substation in preparation for the floodwaters, which reportedly rose halfway up the transformers.
Officials and contracted electricians then spent five days drying and repairing the substation before restoring power.
Milltown is one of eight municipalities in the state that operates an electric utility for the benefit of its residents and businesses.
In September 2014, borough officials awarded a contract for the construction of a new electric substation.
Borough officials entered an agreement with Welsbach Electric Corp. for the Borough Electric Utility Flood Mitigation project, which includes the construction of a new electric substation for a sum not to exceed $12,368,122.
Michael Marcinczyk, department supervisor of code enforcement and zoning, said despite the FEMA rejection, there is a good chance they can win an appeal, which he said is decided at FEMA headquarters in Washington, D.C.
This is the second denial of FEMA funds for the new substation.
Marcinczyk said from talking to state police officers and people from FEMA, there was an issue with the decisions that came out of the FEMA Region 2 level.
“We still stand a very good shot for the $11.7 million,” said Marcinczyk, who explained that the rejection boils down to the electric substation was not destroyed, but instead heavily damaged.
Marcinczyk said the language in FEMA’s Stafford Act includes the language “destroyed” and “damaged.”
“We have met every criteria requested from [FEMA] on why the substation should move,” he said. “I, along with the state police and OEM (Office of Emergency Management], feel confident that we will ultimately prevail once it hits Washington.”
Councilman Ron Dixon said it is important to protect the residents of Milltown and move forward with the loan as well as appeal for the FEMA funds.
The council unanimously voted in favor of moving forward with converting the interim loan into permanent financing for the new substation.
Marcinczyk said they would file an appeal and expedite the process by not waiting the 60-day window to file the appeal.
In 2013, the borough purchased the Schwendeman log cabin property adjacent to Albert Avenue and Mill Pond Park for the purpose of a land swap with Middlesex County for property adjacent to Borough Hall on Washington Avenue. The next year, the borough acquired the 1.3 acres from the county for the new substation.
The use of the property on Washington Avenue will allow the new substation to be built on higher ground, outside of the flood plain, according to the New Jersey State House Commission, which had jurisdiction over the land swap.
In exchange, Milltown will convey the former Schwendeman property — 2.6 acres on Kuhlthau Avenue — to the county.