Fair Oaks Ranch authorizes notice to issue up to $9.545 million in certificates of obligation to fund water, wastewater and drainage projects; council adopts 10

The Fair Oaks Ranch City Council approved a resolution authorizing publication of a notice of intention to issue certificates of obligation in an amount not to exceed $9,545,000 to fund water, wastewater and drainage capital projects. The council also adopted the city’s fiscal year 2026–2035 financial plan, which staff says preserves a 50% operating reserve and recommends using debt to fund the drainage capital improvement plan.

Finance director Summer Fleming told council the notice complies with Local Government Code Chapter 271 and Securities and Exchange Commission rule 15c2-12 and does not obligate the city to issue the full amount. “We are seeking your approval of a resolution authorizing the publication of a notice of intention to issue certificates of obligation in an amount not to exceed $9,545,000 to fund water, wastewater, and drainage capital improvement projects,” Summer Fleming said.

Major projects and funding details outlined in the presentation included:

- Deetz Elkhorn Road waterline: a new 12-inch, roughly one-mile water main from the Elmo Davis water plant toward the city’s east side. The project is estimated at about $2,000,000; the city’s share was estimated at roughly 75%, about $1,500,000. Grant Watanabe, public works director, said the project was sized to serve a developer agreement area and other future development.

- GBRA water main extension: a north–south extension to deliver purchased water toward a co-located elevated storage tank that benefits Fair Oaks Ranch and the city of Boerne. Staff estimated the project cost at $2.0–$2.5 million and Fair Oaks Ranch’s share at about $750,000; the city expects to pursue an interlocal cost‑sharing agreement with Boerne.

- Wastewater projects: included continued work on a wastewater treatment plant phase 1 expansion and associated interceptor projects; one project was zeroed out after a developer agreed to fund it under a utility service agreement.

- Drainage CIP: staff identified nine unfunded drainage projects totaling about $1.61 million over the next four years; two projects costing roughly $325,000 were scheduled for fiscal year 2025–26.

Repayment sources and customer impact: staff said COs would be repaid from a mix of sources tied to the projects — water revenues for water debt, wastewater revenues for wastewater debt, and an ad valorem tax levy for drainage — so the issuance would be secured by the city’s taxing authority. Fleming said the structure should keep near-term debt service fees stable: the water debt service fee was estimated to increase from $23.85 to $23.89 per month and the wastewater debt service fee was estimated at $17.03 decreasing to $16.91 per month for FY 2025–26.

Timing and process: staff recommended publishing notice in mid‑July, scheduling a ratings call and, if needed, posting a notice of sale in July; the council would decide final issue amounts before sale. Fleming emphasized publication places the item on the public record and allows registered voters to petition to require an election if 5% of qualified voters sign a petition.

Financial-plan adoption: the council adopted the 10-year financial plan staff labeled “scenario 5,” which maintains a 50% operating reserve, uses unallocated fund balance for one-time costs and recommends debt‑funding the drainage CIP. Summer Fleming said the plan is a staff tool to guide the FY 2026 budget and is not binding.

Council action: the council approved publishing the notice of intent to issue COs and adopted the fiscal year 2026–2035 financial plan by separate votes. No final CO sale or amount was authorized; publication merely enables the city to later issue COs if council chooses.

What to watch: staff will return with final issuance amounts for council consideration, continue interlocal discussions with Boerne on the GBRA extension, and proceed with rating activities if the council pursues a CO sale later in the summer.