SAN BENITO — City commissioners today will consider taking the first steps toward borrowing about $8 million to fund a state-mandated sewer system upgrade whose completion comes with a March 2023 deadline.
During the meeting, commissioners are expected to consider approving a finance plan aimed at borrowing the money through the sale of certificates of obligation.
Commissioners are also set to consider the sale of general obligation refunding bonds.
Last year, city officials discussed raising the city’s 72-cent property tax rate by as much as three cents or tacking on about three cents to the water rate to fund the construction of about six sewer lift stations.
Now, City Manager Manuel De La Rosa believes the city could borrow the money without a tax or water rate hike.
Instead, officials are considering extending the bond’s term to 25 years to avoid a tax or water rate increase, he said.
De La Rosa said officials are also considering refinancing the city’s long-term debt at lower interest rates to lighten its annual payments.
Meanwhile, officials are considering requesting the city’s Economic Development Corporation help fund the project as the agency completes its annual $137,000 payments on the city’s 20-year-old police station.
Background
This year, commissioners appear bound to fund the project.
Last year, they borrowed $1.5 million through the sale of certificates of obligation to fund the planning and design phase of the project to rebuild six sewer lift stations.
For about 10 years, the multimillion-dollar sewer system overhaul has loomed over one of Texas’ poorest cities.
As part of a 2012 agreement, the Texas Commission on Environmental Quality is requiring the city upgrade its sewer system by March 2023 or face severe fines and corrective action as a result of sewer spills about 10 years ago
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.
