College Station City Council approved issuing certificates of obligation for $37 million for new water well systems throughout the city during the July 23 meeting.
The overview
The new water wells also account for the creation of distribution and transmission lines. As previously reported by Community Impact, the city had approved the project parameters in March, with the original set price being $28.6 million, to increase College Station’s water infrastructure and production.
The city’s increasing population has raised concerns about future groundwater use; however, Community Impact also reported that the outlook from Brazos County Commissioners Court meetings paints a picture of stability, especially regarding expansion.
Michael DeHaven, the city’s assistant finance director, was asked by council member Bob Yancy why the certificates of obligation were issued instead of being associated with taxes. DeHaven said the certificates are associated with the city’s utility funds, and the certificates help the city obtain a favorable interest rate.
“We could go out and issue utility revenue bonds, but then we would not have as favorable a rate on them,” DeHaven said.
The city of College Station blog states there are three different types of bonds the city issues, with certificates of obligation “[allowing] more flexibility in their issuance than GOBs, particularly when other revenues are expected to assist in debt service. The City’s financial advisor, Marti Shew of Hilltop Securities, recommends that the City issue Certificates of Obligation for utility projects rather than Utility Revenue Bonds.”
What’s next
The council unanimously approved passing the item. Mayor John Nicolas said he looks forward to DeHaven coming back with news about the project during future council meetings.
