Plan for future: City insures against lossPublished 2:00am Wednesday, February 13, 2013
Brewton city officials are taking active steps in “risk management” by establishing a line of credit and taking out a little insurance.
Brewton Mayor Yank Lovelace said establishing a line of credit for the city is makes sense — especially given the complications other cities have seen in the wake of natural disasters.
“There are people who have suffered from Tropical Storm Sandy who still haven’t seen any FEMA money,” Lovelace said. “If we have a disaster, we just can’t wait that long to get back on our feet.”
During Monday’s meeting of the city council, the group approved a plan to establish a $1.8 million line of credit through the Bank of Brewton.
“If we ever had a tornado through here like they had in Hattiesburg this weekend, we need to be ready to do what we can to get back on our feet immediately,” Lovelace told the council.
City Clerk John Angel explained the plan with the line of credit through the bank.
“This would only be used for emergency operations when needed,” Angel said. “It would give us something to put in our back pocket for whenever we need it.”
The council unanimously agreed to establish the line of credit.
In a second move that Lovelace said would help the city in cases of disaster, the council approved securing an insurance policy against possible losses of tax revenues in the city.
“What would happen if certain retailers here were hit by a tornado or some other disaster and we lost that revenue?” Lovelace asked. “
Angel said the policy would help keep the city budget solid in the event of revenue loss through retail tax collections.
“If Walmart got blown away by a tornado, it would hurt the city financially,” Angel explained. “If the Walmart people tell us it would take seven months to rebuild and reopen, we give our insurance carrier records to show what seven months worth of tax receipts would have been from Walmart and they give us a settlement based on that claim.”
Lovelace said the move to secure these avenues to act quickly in emergency situations is something necessary to ensure the city’s operations.
“This is just good risk management,” Lovelace said. “We hope we never need to use either of these things, but if we do, we now have it in place to keep the city alive after an emergency or a disaster.”
The line of credit through Bank of Brewton carries a 4.5 percent interest rate with adjustments if needed in the future.
The premiums for loss of tax revenue insurance for the city is $3,087 per year and will be paid to Alabama Municipal Insurance Corporation.