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Keene council adopts drought plan, declines Certificates of Obligation and agrees to pay TWDB match from cash
Summary
The Keene City Council unanimously adopted a water conservation and drought contingency plan required for a Texas Water Development Board grant, then voted not to issue $385,000 in Certificates of Obligation and to pay the city's $355,000 grant match in cash using 60% water/sewer funds and 40% general fund.
The Keene City Council on June 10 adopted an updated water conservation and drought contingency plan and resolved how it will finance required local matching funds for a state water grant.
The council unanimously approved an ordinance to adopt the water conservation and drought contingency plan, a document city staff said is required every five years and is part of accepting a Texas Water Development Board (TWDB) grant for water system improvements.
City officials described the action as necessary to receive a TWDB grant of $3,160,000. Jim Sabonis, the city’s financial adviser with Hilltop Securities, called the grant “a tremendous achievement,” saying the state award covered roughly 90% of a project and the city would be responsible for the remainder.
Council then considered whether to issue City of Keene combination tax and surplus revenue certificates of obligation (COs) to cover the city’s share. After discussion, council voted to not approve issuance of the COs and instead direct staff to fund the city’s $355,000 obligation in cash. The council approved a motion to borrow surplus cash for that purpose and to allocate the outlay 60% to the water/sewer fund and 40% to the general fund. The vote on the cash option was unanimous.
City Manager Jonathan Sykes told the council the city had sufficient on‑hand funds and intends to repay the surplus internally in future budgets. “The goal here is the keyword is borrow, and I just want the public to know this. You know, our plan is to pay the money back and work that into the budget,” Sykes said.
Sabonis told the council the notice of intent to issue debt had been published earlier as part of the grant application process and that the formal ordinance would close the loop now that the city has chosen the cash option.
Council members said choosing cash avoids issuing additional debt at current market rates and gives the city flexibility in budgeting. The finance director reported the city’s accounts and audit preparation remain in progress, and that staff expect to begin the formal audit soon.
What happened next
- The council unanimously approved an ordinance adopting the updated water conservation and drought contingency plan (required by the city’s 2001 ordinance and by TWDB grant terms). - The council voted unanimously to not approve the ordinance that would have authorized $385,000 in Certificates of Obligation for the project; that motion effectively declined to borrow via COs. - The council then unanimously approved borrowing available surplus cash to meet the $355,000 local match for the TWDB grant, using 60% from the water/sewer fund and 40% from the general fund; staff said the funds will be repaid in coming budgets.
What this means
Adopting the drought plan was a precondition for accepting TWDB money. The council’s decision to use cash rather than long‑term CO debt means the city will avoid immediate borrowing costs but will need to budget to replenish the surplus. City staff said using cash is feasible now and that repayment will be included in future budgets.
Council and staff indicated the decision closes the financing phase of the TWDB award and that engineers and the financial adviser will coordinate project closeout steps and drawdown of grant funds.
