by ANDY SEVILLA
Even as Kyle begins the new fiscal year with a constrained $41.64 million budget, a higher tax rate and higher utility rates, a more alarming issue is the city’s $96 million debt at a time when infrastructure improvements are urgent.
Kyle faces $95,839,681 in debt, of which $68,207,951 is principal and $27,631,730 is owed in interest.
Half of the principal owed is equal to the amount of a proposed road bond package that would have addressed improvements to Lehman, Burleson, Bunton, Marketplace and Goforth streets. These five roads were identified as priorities in a city visioning process.
The $34.7 million road bond package failed to garner enough council support to make it on the November ballot. A reduced version of the bond package also failed on the dais, though council members have voiced interest in revisiting the manner and potentially putting a bond package before voters in May.
“I’m very excited about the opportunity to fight for a road bond package again and I hope that this time we can get something that council will send the voters,” Kyle Mayor Lucy Johnson said last week about “seriously” looking into “tackling” the issue anew.
For the past decade Kyle has added long-term debt as its population exploded to nearly 30,000 residents while the city continued reducing property taxes and keeping utility rates flat, causing a draw down of city reserves.
In 2008, Kyle’s property tax rate was the lowest it has been since at least 1988, at $0.2707 per $100 of assessed valuation. Meanwhile the city issued $22.8 million in bonded debt that year.
Under the new city manager, Lanny Lambert, the city raised property taxes to pay for increased debt service, and raised utility rates to pay for increased water services from GBRA (Guadalupe-Blanco River Authority), and to pay for the ongoing costs of the HCPUA (Hays Caldwell Public Utility Agency) long-term water supply.
Property tax rates increased by seven cents last year and another four cent jump went into effect this fiscal year; while water fees went up by 30 percent last year and up again by 20 percent this year. It is expected that water fees will increase by 20 percent next year.
Kyle Finance Director Perwez Moheet said the city is looking into implementing some debt management strategies over the coming months and fiscal years in an effort to minimize long-term financing costs.
The city’s Fiscal Year 2014 debt is on track to increase by almost $1 million because payments on the State (TxDOT) Infrastructure Bond Loan II (SIB II) are scheduled to begin. Moheet said his office is evaluating options to refinance the SIB II loan in an effort to minimize the impact of repayment.
Moheet said he is also looking into refinancing and restructuring options for all other existing debt in order to reduce financing costs. He said he will also examine other types of bond instruments available, such as revenue bonds, for future bond issues to not only stabilize future rate increases but also to better match users of new infrastructure with the timing of debt costs – minimizing inter-generational inequity.
Options for a commercial paper program are also being evaluated, Moheet said, so future bonds do not have to be sold upfront but only as cash flow requirements are determined to fund planned capital projects.
Some of the projects the debt funded include about $51.4 million in road improvements such as Kohler’s Crossing, the 1626 extension and the I-35 and FM150 realignment. Kyle also built the library and revitalized downtown, including the renovation of City Hall and the current renovation of the historic train depot.