After a great deal of discussion, the Whitesboro City Council decided to move forward with a plan to issue certificates of obligation in the amount of $3.5 million to help pay for certain projects in the city. The resolution passed at the July meeting was just to allow the city to publish a notice of intention for certificates of obligation.
Alderman Ben Edwards had a number of questions for City Administrator Phil Harris over just exactly how the city planned to spend the money that might come from such an issue.
Harris said funds would go to allow the city to continue with a number of infrastructure projects including water distribution infrastructure and other sewer, street and utility projects.
He said projects included the replacement of water meters, rehabbing manholes, changing out streetlights to LEDs and a system that will help the city track the amount of water in each of the water towers from a phone at all times.
He said cleaning up the 35 manholes alone “dropped us from what typically when Whitesboro has a rain we would usually get about three million ... a good size rain about four inches ... we would get about three million gallons of water in drainage to our wastewater treatment plant. Rehabbing those manholes, we dropped that to 1.7 million.” He said that keeps a lot of debris out of the water treatment plant and extends its life.
Harris said the certificates of obligation proceeds will be used to replenish the funds that were spent on the projects because the city was unable to get funding while the city waited for the resolution of the state’s review of the city’s interpretation of SB1851, which said the city could not increase the property taxes if the previous year’s audit was filed late.
Harris said the term of repayment for the $3.5 million in certificates of obligation would be 15 years and the interest rate will be 4.59 percent. He said he thinks it is better to go out for enough in bonds to pay for all of the projects at once rather than having several different bond issues for smaller amounts.
“I feel like this is the right amount and the right time for us,” Harris said. He said the primary costs of the certificates will be paid over time by the city’s sewer rates.
Ben Edwards asked if Harris could explain the difference between the certificates of obligations and a bond issue. Harris said he could not.
Edwards asked if the city was going with the certificates of obligation because there was not another method of financing available to the city due to the Attorney General’s ruling on SB 1851.
Harris said the city was presented with three different options, and the certificates of obligation are payable by both ad valorem taxes and the pledge of surplus revenue.
Alderman Jessica Edwards asked if all three options were certificates of obligation and Harris said he didn’t really recall.
Ben Edwards then asked exactly how the city arrived at the $3.5 million amount as the amount needed.
Harris said he discussed it with several people and went with that number because going out for the financing does cost the city money each time it is done, and he thought it better to go ahead and get enough to cover all that was needed at once rather than paying the fees over every time the city needed to go out for more financing.
Edwards said the way the matter was presented to the council, and the public, made it sound like the proceeds from the certificates of obligation would be used to pay for those specific projects but Harris’ explanations made it sound like the proceeds would just go back into the city’s bank as cash because the city had already paid cash for the projects.
“It is for infrastructure projects. That is what it’s for,” Harris said.
“So, when the money comes in, we are gonna then use it for infrastructure projects?” Edwards asked.
Harris said the proceeds would be the payback for the infrastructure projects. He said the money won’t just stay in the city’s wallet. It will be used for other infrastructure projects going forward.
In the end, both Ben and Jessica Edwards voted against allowing the publishing of a notice of intention to certificates of obligation. The rest of the council voted in favor of it.
