WaterWorks mulling bond issue

No plans to raise water rates

HARLINGEN — Harlingen WaterWorks System officials are considering borrowing money to help fund projects.

Board members might call for a bond issue of about $12 million as early as the 2020-2021 fiscal year.

“While HWWS’s fund balance and revenues will remain sufficient to cover operating and capital expenses for the next few years, a bond issue may be warranted after fiscal year 2020 to maintain a healthy level of fund revenues,” General Manager Tim Skoglund stated.

Officials are proposing a utility rate study in the 2020-2021 fiscal year.

However, board members don’t plan to raise water or sewer rates to generate revenue to pay back the bonds, board Chairman Josh Fields said.

“Typical bond issues don’t have an immediate effect on rates because debt service payments are spread out over 20 to 30 years,” Skoglund stated.

In 2015, board members issued $12 million in bonds to help fund projects.

“As we did in 2015, HWWS periodically issues revenue bonds to help pay the cost of capital improvement projects that maintain and expand our infrastructure and though it won’t be absolutely necessary to issue bonds the year after FY 2020, it may be desirable to do so to maintain operationally appropriate levels of working capital,” Skoglund stated.

Skoglund stated the agency’s next bond issue could be around $12 million.

“Future issues might be similar but to date there has been no specific analysis performed or direction given by the board of trustees to specify exact amounts,” Skoglund stated, referring to the previous $12 million bond issue.

In 2014, board members increased the base sewer rate by 10 cents each month for 40 months as part of plan to fund future capital improvement projects.

By the end of the 40-month period in February 2018, the base sewer rate had increased by $4.

Projects planned

For the upcoming fiscal year, the board has approved a budget operating on $21.2 million in cash in-flows, with a projected fund balance of $25.4 million.

The budget includes $16.48 million in cash out-flows, with a projected year-end balance of $18 million.

During a presentation, Skoglund outlined several projects including a $5.2 million water line replacement along 3.3 miles in the Treasure Hills subdivision area.

The project would include a $225,000 design phase in 2019 and $4.9 million construction project in 2020.

Skoglund also presented plans for a $4.7 million water line replacement along 4.6 miles in the Pendleton Place area during 2021.

Others projects include a $4.9 million program aimed at removing asbestos cement along pipelines, development of a $1.5 million slug dewatering plant, the $600,000 purchase of 300 acre-feet of water rights, a $550,000 water meter replacement program, a $415,000 road improvement project, a $490,000 office renovation and a $350,000 sewer line project along the city’s industrial park.