During its Oct. 2 meeting, Tomball City Council unanimously approved publishing a notice of intent to issue $28 million in certificates of obligation—a way cities can borrow money—to fund capital projects. Council Member Randy Parr was absent from the meeting.
This is not an issuance of the debt, just publishing a notice that the city is intending to issue the debt, Finance Director Katherine Tapscott said during the meeting.
Tapscott also said by publishing the notice of intent, the city establishes a not-to-exceed amount, meaning it does not have to issue the full $28 million, but that is the maximum amount it can issue.
In a nutshell
The $28 million in certificates of obligation is part of $53 million planned in capital projects for fiscal year 2023-24, according to the city’s multiyear capital improvement plan. Council approved the plan at its Sept. 18 meeting in a 4-1 vote with Council Member John Ford voting against approval.
According to Tapscott’s presentation, the projects that are anticipated to be funded with the $28 million of certificates of obligation include:
- North Sycamore Street parking: $1.5 million
- Baker Drive water plant: $4.6 million
- FM 2920 lift station consolidation: $4.8 million
- South Wastewater Treatment Plant expansion: $16.97 million
City Manager David Esquivel said the city is moving forward with a multiyear capital improvement plan due to tax and utility rate implications, Community Impact previously reported.
“The cost of the projects that are absolutely the highest priority, the highest needs—those costs are so high that if we decide to try to issue the debt all at once, that impact to the tax rate would be so large,” Esquivel said at the Oct. 2 meeting.
Esquivel said the recommendation is to spread out debt issuances by fiscal year, which would incrementally increase the city’s tax rate. During the Oct. 2 meeting, council members approved on first reading a proposed tax rate of $0.29332 per $100 valuation for FY 2023-24.
In case you missed it
Council previously delayed action on approving this item due to residents’ complaints about high water bills.
City Manager David Esquivel said around 150 households reached out to the city with complaints of high water bills with consumption identified as the main cause.
“I can report to you, I think there was one or up to three ones during the swap-out; there was a transposing of the beginning reads that were incorrect,” Esquivel said. “So we’re under about 1% as far as finding any errors in the 150-some odd ones that were reported to us.”
In response to a question from Council Member Derek Townsend, Esquivel confirmed people can set up payment plans with the city.
Also of note
During discussion on a separate item, council members discussed the $28 million in certificates of obligation, and Townsend expressed a desire to further prioritize only the most highly needed capital projects.
“Let’s really look at things when we start issuing debt as to what we absolutely have to have to keep our city functioning,” Townsend said.
Stay tuned
Tapscott said in October and November, city staff will go through the process of developing the preliminary official statement and do rating agency and due diligence calls.
On Dec. 4, city staff will ask council to authorize the issuance of the certificates of obligation with the city expected to receive the funds around Dec. 21, Tapscott said.
