City may issue $2M in bonds for water infrastructure fixes
Mayor wants more debt paid down, but manager says repairs can’t be put off.
Smithville city leaders may consider issuing up to $2 million in certificates of obligation to fund repairs to the city’s wastewater system, elevated water towers and ground storage tanks.
City Manager Robert Tamble is expected to present the bond proposal, which does not require voter approval, to the City Council at its October meeting.
Two of the city’s water storage facilities were flagged last year by the Texas Commission on Environmental Quality as needing repairs or to be replaced. The TCEQ can charge the city up to $25,000 per day per occurrence until the repairs are complete, officials said. The city’s annual inspection is coming up.
“It doesn’t mean our water has issues,” Tamble said. “It means our storage has issues. Don’t confuse the two.”
The tanks have rust marks and seam problems, and city staff is concerned about possible tank failure.
Maintenance of the water storage system has been needed for years but Tamble said that natural disasters in recent years have depleted any available funds that could have been used for the fixes. Now, he said, the city has no choice but to get the work done.
But the $2 million estimated cost for the water and wastewater improvements just isn’t in the budget. The City Council will consider issuing certificates of obligation, or debt that city governments may issue in cases of emergency that does not require voter approval.
The costliest of the improvements is a new water storage tank, estimated to cost about $500,000, to handle current use as well as new construction on the southern part of the city. City officials are negotiating a possible partnership with the Smithville school district to place the tank on the district’s 100 acres off Texas 95 South, where the high school is located, and the new athletic facility and junior high school are being built.
The two “golf ball” towers at Dorothy Nichols and the Recreation Center both need repairs estimated to cost $350,000 each, officials said. The 600-gallon ground storage tank at Fawcett Street needs $300,000 worth of fixes, and the 100-gallon ground storage tank at Keilberg Park needs about $50,000 of work.
Water infrastructure at both the Dorothy Nichols and Keilberg Park locations have been flagged as needing improvement by the TCEQ.
The wastewater system also needs work. The facility at Gazley Street needs about $300,000 in improvements. And about $100,000 for a wastewater diverter valve and other improvements are needed between the Willow Creek facility and Gazley Street.
Tamble said that issuing certificates of obligation is doable with current debt at $5.5 million. In the past two years, the city has reduced its debt service by $1.5 million in the three bonds it holds, and by around $3.5 million since Tamble became city manager in 2014.
“I’m a firm believer in paying down debt, but this can’t wait,” Tamble said.
In the Sept. 5 budget workshop, Mayor Scott Saunders disagreed with adding more debt at this time. He wants to wait until 2021 when more debt will be paid. Both Tamble and city utilities director Jack Page believe the fixes can’t wait that long.
“Since we’ve already been written up on several of these tanks, I think it would be irresponsible of us to not go ahead with this and avoid emergency mode,” Council Member Joanna Morgan said.
If it approves issuing certificates of obligation, the City Council will have to decide how to raise funds to cover the debt. Tamble said there are three ways to raise revenues: add a flat rate to the utility bill, raise rates or structure against taxes.