SAN BENITO — After more than a year of debate, city commissioners appear ready to vote on the proposed first phase of a state-mandated sewer overhaul whose deadline keeps ticking louder.
Later today, commissioners are expected to consider a $1.5 million plan to borrow money through the sale of certificates of obligation to fund the planning and design phase of a project to upgrade six sewer lift stations.
As part of the project, city officials next year are planning to propose a $6.7 million bond sale to fund the project’s construction phase.
The proposal stems from a 2012 agreement with the Texas Commission on Environmental Quality that requires the city to upgrade its sewer system by March 2023 or face severe fines and corrective action as a result of sewer spills in 2009 and 2010.
While Mayor Ben Gomez and Commissioners Rene Villafranco and Carol Lynn Sanchez appear to support the project’s funding, Commissioner Tony Gonzales stands against it.
City Manager Manuel De La Rosa has told commissioners the $1.5 million bond sale would not force an increase in the city’s property tax rate of 72-cent per $100 valuation.
But Gonzales believes the project would lead to a tax hike.
“I’m against it,” Gonzales said. “It’s going to raise taxes for the city of San Benito. Maybe they can look some place else. There might be grants or something.”
Yesterday, Commissioner Rick Guerra said he was undecided.
“I have questions,” Guerra said.
Don Gonzalez, the city’s financial advisor, has said he expects to lock an interest rate of about 3.25 percent to fund the project’s $1.5 million planning and design phase.
Meanwhile, Guerra said he’s asked De La Rosa for information on banks’ current interest rates.
According to Guerra, the Texas Water Development Board would reduce the bank’s interest rate by 1.65 percent if commissioners requested the agency loan the money to fund the project.
While Guerra said funding the $1.5 million planning and design phase won’t force a tax increase, he believes the proposed $6.7 million construction phase would lead to a tax hike.
“I’m trying to get the best interest rate for San Benito so taxes won’t go up so much,” Guerra said. “As much as I hate to say, I’m not going to vote for it. We’re at the end of our rope. If we keep on pushing it back, we won’t make the TCEQ deadline.”
As part of the proposal to fund the $1.5 million planning and design phase, the San Benito Economic Development Corporation has agreed to earmark $65,000 during the bonds’ 10-year term.
The EDC’s move helped the city dodge as much as a two-cent property tax hike and a possible boost in one of the Rio Grande Valley’s highest water rates.
“We’re very interested in assisting the city in making these improvements,” Rebeca Castillo, the EDC’s executive director, said. “With our assistance, they’re moving forward. That’s imperative.”
But Guerra warned the EDC’s move could slash revenue to fund economic development projects.
“We’re draining EDC,” Guerra said. “If companies come in, how are you going to give them incentives?”
For more than a year, commissioners have battled over the proposed project to upgrade the aging sewer system.
Last year, the commission’s majority appeared to support the finance plan — until it came time to vote.
Then, suddenly, commissioners voted down a proposed $12.5 bond issue that included street and water line projects, warning it would force a 6-cent property tax increase.
Instead, commissioners opted to search for grants to fund the project— but neither state nor federal agencies were handing out money.
How we got here
For nearly 10 years, the multimillion-dollar sewer system overhaul has loomed over one of Texas’ the poorest cities.
In October 2012, the city entered into an agreement with TCEQ to participate in its Sanitary Sewer Overflow Initiative program following a series of sewage spills near the Arroyo Colorado totaling 49,000 gallons from November 2009 to January 2010.
As part of an agreement, the state waived penalties, ordering the city to upgrade its sewer system by March 2023 or face severe fines and corrective action.