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Adviser: State funding letters set aside millions for Crockett water and sewer projects
Summary
A financial adviser told the council a Texas Water Development Board funding determination letter has set aside roughly $7.3 million in grant funding and a $3 million 0%-interest loan toward a roughly $11.2 million sewer project, and about $1 million in grant funds toward a ~$4 million water project; adviser emphasized the notices are not final awards.
City financial adviser Ben Rosenberg (US Capital Advisors) told the council the Texas Water Development Board has issued funding determination letters that effectively reserve funds for two city projects. Rosenberg said the sewer (clean water) project totals about $11.2 million, with approximately $7.3 million in grant money, a $3 million 0% interest loan and an additional market-rate loan portion; the water project is roughly $4 million with about $1 million in grant support.
Rosenberg walked council through financing scenarios, saying the city would likely pledge water and sewer revenues to repay loans rather than property taxes. He presented two amortization scenarios (20- and 30-year terms) and noted that a 30-year structure could reduce annual payments and improve coverage ratios, potentially avoiding immediate rate increases for utility customers. He cautioned that the funding determinations are not final awards and that the TWDB board would need to formally approve the funds in September before the city could proceed to market and issue debt.
Council members asked for a utility rate study, and staff said they would finalize numbers and return with a full debt-issuance plan and timing if the board confirms awards. Rosenberg said the city’s prior borrowing and credit profile make it feasible to solicit market bids when the council returns in September.
