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Council hears stark repayment projections for proposed wastewater treatment plant financing
Summary
Council heard a staff memo and a Hilltop Securities analysis showing the Certificates of Obligation package could total up to $11 million and would likely increase the city's wastewater improvement fee and strain reserves.
Levelland City Council members on June 2 received detailed repayment scenarios for financing a proposed new Wastewater Treatment Plant and related projects, including a $4 million public facility allowance and other improvements. A memo from Jason Hughes of Hilltop Securities outlined options using the city's interest-and-sinking (debt service) tax rate and water/sewer revenues and showed the proposed Certificates of Obligation would not exceed $11 million.
The memo included specific figures: the city's property tax rate is .53500 per $100 valuation (maintenance and operations .498729; interest and sinking .036271); a Wastewater Improvement Fee (WWIF) of $21.62 per customer generates about $1,349,080 per year and effluent sales bring roughly $322,000 per year, for combined wastewater revenue near $1,671,088 annually. The analysis showed current annual bond payments of about $1,577,666 and estimated additional annual repayment obligations of roughly $657,000 from wastewater revenue over 20 years, which the memo said could equate to an approximate $10.42 increase in the WWIF. "I am not proposing that we adopt these numbers, I wanted you see what it will take to repay this new debt. These numbers are alarming and extremely concerning," the memo stated, attributed in the agenda packet to Jason Hughes of Hilltop Securities.
Council members discussed trade-offs: using wastewater revenue will deplete reserves earmarked for improvements and could limit the city's ability to implement the 2023 Infrastructure Master Plan in the near term, officials noted. Staff also recommended financing the SCADA system from Water and Wastewater Improvement Funds and removing the fire department roof from the bond package pending an insurance resolution.
