Port Arthur council authorizes notice to pursue up to $18 million in certificates of obligation after debate on project allocations

The Port Arthur City Council voted to publish notice of intent to issue up to $18 million in combination tax-and-revenue certificates of obligation to fund city public-works projects and professional services, the council voted unanimously after an extended discussion about which projects would get money.

The council approved a resolution (PR No. 24351) authorizing the publication of a notice of intent to issue certificates of obligation and to distribute a preliminary official statement. The action starts the public and procedural steps required to sell the debt; council members and staff said a detailed, project-level allocation will be developed before the bonds are priced and sold.

Why it matters: Certificates of obligation allow a city to borrow without a separate voter election. Council members said the issuance would fund streets, water-utility work and other capital needs; several members pressed for a clearer breakdown of how the $18 million would be assigned before the sale so voters and the council can see specific uses.

City financial advisers and staff told the council that the action before them was a not-to-exceed authorization to begin the process, not a final approval of allocations. “This $18,000,000 is a not to exceed and that number will be further refined as we get closer with the information and the feedback on the project sizing as well as the certification of your taxable assessed valuation and what is going on in the interest rate markets,” said Mr. Burton, a financial adviser to the city.

Mayor Pro Tem Dusett and Councilman Dusett (remarks throughout) and other council members pressed staff on timing and on the effect on the city’s interest-and-sinking (I&S) tax rate. Staff said the planned structure would be designed so the city’s debt-service tax rate would not increase as a result of the issuance. “It will be structured in a way to make sure that your I and S tax rate, your debt service tax rate, remains the same,” staff said.

Council members asked for the next steps to include: (1) a specific project list with dollar allocations for each category (streets, water utilities, etc.), (2) confirmation of the city’s certified taxable assessed valuation, and (3) updated interest-rate and market analysis before pricing on July 29. Ron (city finance/manager staff) said the council would see a detailed list and recommended amounts before the bonds are priced.

Council members also discussed the broader legislative environment: Mr. Burton told the council that legislation debated in the recent Texas legislative session had threatened limits on local debt issuance but that, as of June 2, those measures were not adopted and the city retains the authority to issue debt under current law. He advised the council to consider the next legislative session when planning long-term capital strategies.

The council moved and seconded the resolution and approved it by voice vote; no roll-call tally was read into the record. The motion to begin the issuance process was offered by Councilwoman Becker and seconded by Councilwoman Hamilton; the mayor declared the resolution approved.

The council and staff said they will return with a refined project list and specific dollar allocations before final bond pricing, and staff emphasized that the notice before the council is a permissive step to permit public notice and additional review rather than a binding commitment to exact allocations.