Guadalupe County hears tax-note and bond scenarios; debt service could rise temporarily to fund capital projects

Guadalupe County Commissioners Court on Sept. 30 reviewed preliminary financing scenarios from Samco Capital Markets showing how tax-note or bond issuances could support capital projects while affecting the county's I&S (debt-service) tax rate.

Samco representative Duane Westman told the court the county's taxable assessed value has averaged about 8% growth over the past decade and that current county debt is scheduled to be paid off in 2027. He presented modeled impacts for $12 million, $15 million and $20 million tax notes (7-year payback) and a larger, hypothetical $150 million issuance, using conservative interest-rate assumptions (about 4% for short notes and 5.25% for the large-issue example).

Those scenarios showed a possible one-cent to three-cent increase in the I&S portion of the tax rate in early years under a $15 million tax-note plan, with the rate declining thereafter as principal was repaid. Westman and commissioners framed the increases as configurable: "You could even, you know, set this up so it maybe only goes to 2 cents and done," Westman said.

Why it matters: Commissioners said the models are intended to let the county plan for known capital needs (roads, buildings) and an uncertain larger project such as a new adult detention facility. Court members repeatedly noted that the financing choice affects not only capital budgets but future operating budgets; one commissioner warned that opening a large facility would create millions in new annual operating costs for staff, utilities and services.

Key details and context - Term lengths and instruments: A county tax note must be repaid within seven years; certificates of obligation or bonds can be longer-term but may carry different petition and notice procedures. Rating agencies favor quicker paybacks, Samco said. - Illustrative tax-rate impacts: Under the $15 million tax-note example, the I&S tax rate could rise about 1 cent in 2027 and to about 3 cents in 2028 before declining; a much larger $150 million issuance in the illustration would raise the I&S portion further (to about 4 cents under the firm's assumptions). - Homeowner effect: Using Guadalupe Appraisal District figures, Samco showed the average county home value at roughly $308,000. The I&S-only tax increases in the model equated to roughly $34 per year at current I&S levels, and increases of roughly $35'$70 annually for the pictured penny increases (examples in presentation translated to $6.44 per month on a $350,000 home for part of the scenario). The presentation stressed these were examples, not decisions. - Debt-service totals: Westman noted that current annual debt service is about $2.8 million under existing obligations; adding a larger issuance could raise annual debt service into the neighborhood of $11 million under certain structures, with timing and interest-rate assumptions driving the actual numbers.

Commissioners' concerns and next steps Court members repeatedly pressed about tradeoffs between moving capital costs from M&O (maintenance and operations) to I&S (debt service) and how to avoid a sudden tax shock to residents. Commissioners asked Samco to model alternate structures and later refine the county's capital-priority list based on the scenarios presented. The court directed staff to return with narrower project-cost lists and said it would continue the financing discussion at a future meeting (October 14 was proposed as a near-term follow-up). Westman said a tax-note issuance can typically be completed in 60 to 90 days once the court directs staff to proceed, but holidays and scheduling could extend that timeline.

Ending note Commissioners said the materials gave them a clearer framework for timing and scale of borrowing. No formal financing decision was made; the presentation was a planning step to inform future budget and capital decisions.