BRISTOL — Federal officials have poured some cold water on Bristol’s quest to secure a $501,759 federal grant to help pay off a $1.1 million water system improvement bond that local voters approved back on May 10.
The USDA has decided to float the community a loan instead of a grant toward a project that calls for replacing the leaky, 111-year-old municipal water line on West Street, from Airport Drive to Maple Street; extending the town water system to the Woodland Apartments on Lovers Lane and the new fire station off West Street; and making storm water upgrades to West Street to address drainage problems and bring that area into compliance with the Vermont Clean Water Act.
Extension of the water line is key to future development of a new business park slated for land next to the new fire station. 
The change in the project financing package will have a relatively modest impact on Bristol property taxpayers. The owner of a $200,000 home will pay roughly $16 annually in debt service during the 30-year bond issue, as opposed to the lesser $10.40 amount that would have been reflected with a USDA grant.
But Bristol officials on Monday were candid in their displeasure with USDA officials, whom they said had represented the town’s grant chances as being a virtual slam-dunk.
“They came and begged us to do this,” Selectman John “Peeker” Heffernan recalled of USDA officials’ encouragement for the town to apply for assistance.
Ironically, Bristol’s financial acumen and water system management appears to have hurt its bid for the USDA grant.
The USDA’s preliminary research into Bristol’s financial standing and other criteria had indicated the town could qualify for a grant of up to 45 percent of the water project, according to Pollaidh Major, public affairs specialist for the USDA Rural Development.
But further scrutiny of the town’s eligibility showed water district users could reasonably absorb the project costs, and thus the USDA could not offer the grant, according to Major.
“When all the factors were taken into account, the underwriting support (the USDA can offer Bristol) is a loan,” she said.
Bristol Town Administrator Therese Kirby recently called USDA program administrators to get clarification.
“They felt the residents could support a moderate increase, and they felt that Bristol — because we have done planning for the future — didn’t need the subsidy,” Kirby said.
Board members weren’t happy with that line of reasoning.
“The message they are sending is if you run a shoddy operation, you are more apt to get money,” said Selectman Peter Coffey said.
USDA representatives will attend the Bristol selectboard’s July 11 meeting to provide more specifics, according to Major. And selectboard members are looking forward to the chance to question federal officials. The board will also reach out to Vermont’s Congressional delegation to see if there might be other programs that could help Bristol subsidize its water project.
If there’s no grant on the horizon, Bristol officials are poised to accept the USDA loan at 2.25 percent — which they acknowledge is a very good interest rate for the project.
“Neither construction costs nor interest rates are going to stay this low,” Kirby wrote in a memo to the selectboard prior to Monday’s meeting. “Engineer’s News Record is projecting a 6.1 percent increase in construction costs over the next five years, and we never know what the feds are going to do with interest rates.”
Kirby noted that the May 10 bond vote question alluded the possibility of a grant of “up to” 45 percent, thus conveying to voters that there were no guarantees.
“We now have to regroup,” she said.
Editor’s note: Selectman John “Peeker” Heffernan and reporter John Flowers are brothers-in-law.
Reporter John Flowers is at [email protected].