SAN BENITO — Street repairs might be part of a proposed $12.5 million bond issue.
The proposal includes about $8 million for sewer plant upgrades, $2.7 million to replace a main water line and $2 million for street repairs.
Earlier this week, city commissioners approved plans to borrow as much as $12.5 million through the sale of certificates of obligation.
To pay off the debt, the proposed issue would require the city to add six cents to its property tax rate of 72 cents per $100 valuation.
During Tuesday’s meeting, Don Gonzalez, the city’s financial consultant with Estrada-Hinojosa Co., said he plans to close the bond sale in late August.
So far, the proposed package includes about $8 million that would fund a sewer system overhaul.
“Our advisors at Estrada Hinojosa & co. have reviewed our financial documents and determined that we are in a stable growth trend with a very good credit rating to be able to sustain and manage the anticipated debt,” City Manager Manuel De La Rosa stated yesterday.
De La Rosa stated the city and its Economic Development Corp. are paying off several long-standing debts, freeing up money to help fund the bond issue.
The city also plans to tap into its water revenues and federal Community Development Block Grant program to help fund the bond issue.
“The collective use of these funding sources will help minimize any debt that could result in a tax increase,” De La Rosa stated.
Gonzalez told commissioners interest rates are rising.
“We need to capitalize now on the low interest rates that are available,” De La Rosa stated. “If we wait, it will only cost more money.”
Much of the proposed bond issue would fund improvements to the city’s aging utility system.
“This city is 107 years old and much of its infrastructure was installed in the 1930s and 1940s, with insufficient maintenance over the years to keep us problem-free,” Mayor Ben Gomez stated.
“It’s no secret that we are playing catch-up in many areas. Yet, we are making progress that will help us today and well into the future.”
The city plans to use that money to upgrade six sewer lift stations to comply with a state mandate stemming from sewage spills near the Arroyo Colorado about nine years ago.
How we got here
The Texas Commission on Environmental Quality has given the city until March 2023 to refurbish the lift stations or face hefty fines stemming from nine sewage spills totaling 49,000 gallons in 2009 and 2010.
“If you don’t make improvements they’ll fine you and force you to make improvements so that costs a lot more,” Gonzalez told commissioners Tuesday, referring to the bond issue.
Another $2.7 million would fund the replacement of a water main that sprung a leak a few years ago.
The leaking main line runs along Business 77 from FM 510 to nearly the city’s northern city-limit line.
Street repairs, too
Now, the city has proposed adding $2 million to repair streets, which residents have called the city’s biggest problem.
“The city’s plan includes using the proposed street repair funds on materials only and utilizing the city’s street maintenance crews to make the needed upgrades, which include rehabilitating related infrastructure such as storm drains,” De La Rosa stated.
“We plan to stretch this money as far as we can to get the greatest return on our investment.”
Meanwhile, commissioners continue to discuss the proposed bond issue.
“We’re still trying to figure out what we’re going to do,” Commissioner Rick Guerra said yesterday.
Commissioners have questioned the reason the city’s past administrations did not fully address the TCEQ’s 2012 order.
“We don’t want to be like past administrations,” Guerra said. “We want to do something.”
During Tuesday’s meeting, officials spoke out about a previous bond issue, apparently aimed at upgrading the sewer system to comply with the state’s order.
Using money properly
However, officials said the city might have used some of that money to fund other expenses.
“This commission is going to look to see that whatever we borrow is going to be used for what it’s (supposed) to be used for,” Guerra said.
Since 2012, 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 other improvements, a press release has stated.
Currently, the city’s long-term debt stands at about $30 million to be paid through 2032.