San Benito mulls borrowing $10.1M for sewer upgrades

SAN BENITO — After months of debate, the city appears prepared to borrow $10.1 million — mostly to comply with a state order to overhaul its sewer system.

Later today, city commissioners are expected to consider plans to sell certificates of obligation to fund $7.4 million in sewer system upgrades or face hefty state fines stemming from sewage spills about nine years ago.

The city plans to meet the Texas Commission on Environmental Quality’s three-year deadline requiring it to refurbish six sewer lift stations as a result of nine sewage spills totaling 49,000 gallons near the Arroyo Colorado in 2009 and 2010.

Another $2.7 million would fund the replacement of a water main that sprung a leak a few years ago.

For months, commissioners have sought options to the sale of bonds, including a public-private partnership in which the city would borrow money from a private developer.

However, Don Gonzalez, the city’s financial consultant with Estrada-Hinojosa Co., recommended the issuance of certificates of obligation, arguing private financing would likely come at a costlier price.

Currently, the city’s long-term debt stands at about $30 million to be paid through 2032, Gonzalez told commissioners last month.

Yesterday, newly-elected City Commissioner Rick Guerra said he opposes the plan to borrow money and continues to seek an option.

“I’m against it,” Guerra said. “It will increase debt.”

Guerra questioned the reason the city’s past administrations did not upgrade the sewer lift stations following the state order in 2012.

“Why did the past administrations wait so long? Now we don’t have time,” Guerra said, referring to the state’s three-year deadline.

“The people of San Benito are going to be pointing fingers at us,” Guerra said. “Now what choice is there? We don’t have enough money in reserves to (fund) something like that in cash. I’m still looking to see what we can do. I’m looking for other options.”

For about five years, the city has been working to comply with the 10-year state program aimed at upgrading the sewer system to avoid severe penalties stemming from the spills.

As part of the 2012 agreement, the state gave the city until March 2023 to comply with numerous requirements aimed at upgrading its sewer system.

In 2011, the city sold about $7 million worth of certificates of obligation to borrow money to help launch the project.

So far, the city has upgraded lift stations, improved thousands of feet of sewer lines, repaired or replaced hundreds of manholes, turned its old sewer plant into a wetlands area and made many other improvements, according to a report from city-contracted engineer Victor Gutierrez.

Where would the money go?

$7.4 million – upgrade of six sewer lift stations

$2.7 million – replacement of main water line