Tomball reviews $30 million debt plan and timelines for major water and wastewater projects

City staff briefed the Tomball City Council at a March 17 workshop on the five-year capital improvement program and a planned $30 million certificate of obligation issuance to finance major water and wastewater projects, staff said.

Jessica, a city staff presenter, said the capital improvement program (CIP) is “the long term plan for major infrastructure projects for the city. It’s a 5 year plan.” She said the city maintains a rolling debt program and that year 1 of the CIP becomes the capital budget for the fiscal year.

The presentation listed 28 active CIP projects and identified four large projects staff emphasized as priorities: the Baker Drive Water Plant ($10,679,000; demo began March 3; construction under way; probable completion late summer 2026), the East Water Plant along Lizzie Lane (estimated $19,500,000; bidding extended with bids due April 21; anticipated completion fall 2026), the FM 2920 lift-station consolidation (budget about $15,500,000; phased; phase 1 pending final easement approval from Harris County; anticipated completion spring 2026) and the South Wastewater Treatment Plant (estimated about $70,000,000; design contract and an initial GMP issued; multiple GMP bids due in April; staff anticipates contracts coming forward this summer and final completion in winter 2027).

Jessica said the city plans a $30 million certificate of obligation issuance in FY 2025 to fund the east water plant and the south wastewater project and that the notice of intent will be scheduled for council consideration on April 21, with delivery of proceeds expected in July 2025 so the issuance can be incorporated into FY 2026 tax-rate calculations.

Staff also reviewed projected debt-service impacts on the tax rate. Under the assumptions presented — 30-year debt at 4.5% interest (a conservative assumption staff said) and 6% annual growth in taxable values — the model shows additional debt service adding about $1.8 million per issuance until stabilizing near $12 million in annual debt service in later years, and a projected tax-rate stabilization near $0.35 by FY 2028 if assumptions hold. Jessica noted that if market interest rates drop (for example to 4.0%), the city could save roughly $6 million over the life of the bonds compared with 4.5%.

Council and staff discussion clarified that allocations shown in the CIP charts represent how the city plans to assign previously authorized debt to projects (first-in, first-out use of older issuances when possible) and that allocation timing may shift between issuances as project schedules change. Council members also noted the city requested an additional $1 million in debt-service contribution from the Economic Development Corporation (EDC) for the South Wastewater Treatment Plant; that contribution is included in the model presented to council.

Staff said they will rerun the debt and tax-rate models as market and appraisal-district data become available and will return to council with updated information as assumptions change.