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San Marcos City Council reviews FY2026 capital plan and potential debt for wastewater projects
Summary
City staff presented a FY2026 Capital Improvements Program totaling roughly $143 million in projects and outlined a financing plan that could include about $93 million in debt largely tied to water and wastewater projects; council questions focused on deferred projects, use of historic-preservation funds for the Dunbar building and grant dependencies for Sunset Acres and Rancho 12.
San Marcos City Council on Feb. 3 received a staff briefing on the city’s fiscal year 2026 Capital Improvements Program (CIP), which lists roughly $143 million in projects when prior-year deferrals are included and anticipates a significant debt issuance largely for water and wastewater improvements.
Assistant City Manager Joe Pantion introduced the briefing and turned it over to Sean Condor, director of engineering and capital projects, who walked the council through the CIP’s purpose, how projects are deferred and the funding mix. "This is a very dry, boring presentation," Condor said, opening a technical review that nevertheless laid out the citywide totals and next steps for issuing debt.
Why it matters: staff presented that about $114 million in projects are in the 2026 CIP and roughly $28 million was deferred from prior years, bringing the total project list to about $143 million. Condor said the water/wastewater fund represents the largest financing need, with an anticipated debt issuance on the order of about $93 million to fund projects that include water-main extensions, elevated storage tank work and a wastewater treatment plant program.
Key details: Condor gave a high-level breakdown by fund. The general fund portion totals about $16.2 million in projects with an anticipated debt issuance of about $8.655 million; stormwater showed $6.75 million in CIP projects with an anticipated $4.25 million debt issuance after deferrals; electric projects total about $16 million with more than $10 million deferred and a smaller expected debt issuance; and water/wastewater projects accounted for the largest single borrowing need. Specific line items mentioned included Bishop Street improvements, downtown alley reconstruction, airport runway extension, Dunbar education building stabilization, and design funding for Fire Station 7.
Council questions and clarifications: members asked staff to explain why some projects were deferred and to show clearer communication for residents. Condor said deferral can reflect timing issues — for example, awaiting right-of-way, environmental clearance (NEPA) or grant matches — and does not mean the city has dropped the projects. On Sunset Acres, Condor said plans are about 90% complete but federal environmental clearance and right-of-way acquisition remain critical steps; staff said the project is expected to move forward once those conditions are met, with construction unlikely before summer 2027.
Historic funds and the Dunbar building: council asked whether historic-preservation or hotel-occupancy-tax funds would cover Dunbar building stabilization work and remove the project from the debt ask. Hayden Migel, director of administrative services, said grant funds from the historic trust are currently being used for stabilization work. Assistant City Manager Rodney Gonzalez said council previously directed that historic-preservation funds be used for city-owned buildings first and that about $400,000 remains; he said staff will bring a future agenda item with specifics on Dunbar funding.
Grants and contingency items: staff noted Rancho 12 (a streets/utility oversize project) is being pursued for federal/CAMPO grant funding and that city staff are applying for grant matches; Condor said the city anticipates roughly $13–14 million in federal grant funding tied to those efforts. On a potential SAFER grant for a fire engine, staff said the city has not received formal notice of award or denial; the application window notifications elsewhere suggest the city likely did not receive the award, but staff have not received formal confirmation and will follow up.
Process and next steps: Condor outlined the financing schedule: staff will return Feb. 17 with a resolution directing publication of a notice of intent to issue debt; notices will be published in late February/early March; the rating agency conference call is expected in late March; council consideration of an ordinance authorizing issuance is planned in April; and delivery of funds is anticipated in May (week-of timelines were given).
The presentation concluded with council discussion about improving packet materials (for example, adding a slide about Sunset Acres to explain deferral reasons to residents). Staff closed the item and will return with the resolution and more detailed financing information.
