Panama City pursues $80M loan, new in-house project management office

PANAMA CITY — With plans to build a premier city, Panama City commissioners have authorized city staff to pursue $80 million in loans and establish an office to manage the projects funded by the loans.

At Tuesday's regular meeting, City Manager Mark McQueen made the recommendation to approve the establishment of a project management office following the commission's unanimous vote to pursue the line of credit from PNC Bank.

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"We established a relationship with PNC Bank where they have a line of credit so that we can draw from that line of credit, which is tied directly to each of those obligated funded projects by FEMA," McQueen said. "This will allow us to draw against that line of credit, do 90 days' worth of work, submit for reimbursement to the state and get those funds back and pay down the loans immediately."

The loans will cover 72 projects related to "Hurricane Michael response, recovery and mitigation, including debris removal and stormwater system repair" — all of which are 75% reimbursable by FEMA, according to city officials. The remaining 25% of costs will be shared with the state, with the city's portion ranging from 5% to 12.5%.

Commissioners appeared content with the agreement.

"It's just safe to say it's a work in progress," Commissioner Billy Rader said. "It's a matter of doing it right."

"I'm happy that the staff and everybody came up with a way to start this process because we don't have cash — everybody knows that — and we can't do something until we have the money for it ... because (FEMA) doesn't pay us until we do the project," said Commissioner Jenna Haligas. "This is really going to speed up the process."

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Although a rate has yet to be negotiated, McQueen said the interest expense on the loans is expected to be eligible for reimbursement, which was not the case when the city took out a loan with PNC for $75 million for emergency response and debris removal immediately following Hurricane Michael. However, legislation has been introduced that addresses retroactive interest expenses incurred by local governments in Hurricane Michael-impacted areas.

When asked for a timeline for the construction projects, McQueen pointed to his recommendation to open an in-house project management office that will be responsible to develop a timeline, among other tasks.

"We anticipate having a website, that you can go on there and click on the project, what the amount is, what the obligated funds are, what the city's share is," he said, noting the PMO will present a monthly report for the commission's approval detailing any draw on the line of credit. "You're going to know what projects are in place ... and the timeline, as well."

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McQueen said it was fiscally responsible to forgo contracting out project management services to third parties; instead, the in-house PMO is expected to make up about 5% of the costs under each project.

"Clearly, the scale and scope of projects that are coming into the city of Panama City from FEMA and other sources is beyond the organic capability of the city staff to function. As a result, we're creating this office to better, more efficiently manage these projects and to make sure we're having transparency and audit readiness throughout the process," McQueen said. He added, the PMO "is designed to more efficiently and effectively execute those dollars so that we can get back on our feet quicker than what we've seen in other cities."

The 10 to 15 positions will be advertised, then filled across the four components of the PMO: accounting, procurement, technical management, and construction management. Functions of the office will close as sections of the projects are completed, officials said.