Commerce council approves wide notice of intent to issue certificates of obligation as state debt rules loom

The Commerce City Council voted to publish a notice of intent that would allow the city to issue certificates of obligation covering multiyear capital projects, including an estimated $8 million wastewater upgrade and downtown streetscape work, citing pending Texas legislation that could limit municipalities’ debt options.

City staff told the council the move is a precaution: if the Legislature narrows or eliminates certificates of obligation or other short‑term debt tools effective Sept. 1, the city might be unable to complete projects already started without costly alternatives or voter elections. Assistant City Manager of Financial Services Molly Campbell and financial advisers outlined two scenarios and the likely short‑term cost to taxpayers and ratepayers before the council approved the broader notice known in the meeting as “scenario 2.”

Campbell said the city’s capital plan includes multi‑year projects that were intended to be phased to limit interest expense. She told the council the city expects a hotel‑tax fund balance of about $110,000 at the end of the fiscal year and reviewed requests that would be considered later, but emphasized the separate capital financing discussion that follows the city’s capital improvement plan.

Jorge, a financial adviser with Hilltop Financial, and another adviser, Corey, presented the financing options and the risks posed by pending bills in Austin. They said repeal or severe restriction of certificates of obligation would leave municipalities to choose between larger general‑obligation bond elections, higher‑cost revenue debt, or smaller, shorter notes with less market appeal. Jorge described two notice sizes staff prepared: a limited issuance tied to the 2025 work and a larger notice that would cover additional CIP items the city expects to need in the next 24–36 months.

Council members were shown the estimated household impacts for each path. Campbell and advisers gave examples: under the one‑year issuance scenario, the average Commerce home (reported by staff at about $184,511) would pay roughly $3.38 a month in additional property tax; under the larger scenario the same home would pay about $6.60 a month. On the utility side, Campbell said issuing $2 million of an $8 million wastewater project now would raise the typical residential bill by about $4 per month; issuing the full project up front would raise that bill to roughly $9 per month for a household using 4,000 gallons a month.

Councilmember motioned to adopt the resolution directing publication of a notice of intent for the larger issuance (scenario 2). The motion passed by voice vote.

Council directed staff to publish the notice and continue to refine the timing and amount of any sale; staff said the notice provides a legal ceiling but does not force the city to sell the full amount if circumstances change. City staff and the advisers said they would return with sale‑level decisions and recommended structures once there is greater clarity from the Texas Legislature and as the city works to minimize budget impact through reserves and timing.

The action was framed as a risk‑management step to preserve options for core infrastructure projects rather than to commit to delivering all work immediately. The council voted to publish notice for the larger scenario.