Concerns about meeting required creteria necessary to obtain a $5.5 million Texas Water Development Board (TWDB) loan for wastewater system upgrades led Wimberley city leaders to table action on authorizing the debt.
Instead, Wimberley city leaders approved by a 4-0 vote April 18 a resolution stating their commitment to the TWDB to allow Aqua Texas to operate the wastewater facility. Council member Allison Davis was absent from the meeting.
City leaders chose to wait on debt authorization, which would have been done via an ordinance, as the city has not met all requirements necessary for the project. Along with pledging to institute a property tax to pay down the debt if needed, Wimberley also had to conduct an environmental assessment on its wastewater plans.
Some city leaders feared not checking off all requirements could pose financial risk for the city.
“…If we do this before the other conditions are met, and we can’t meet them, then we’ve obligated ourselves with a project that we may not be able to complete,” Councilmember Craig Fore said.
However, city leaders discussed how Wimberley plans to pay for the debt, should they move ahead with authorization.
Sales tax dollars, as well as monies generated by utility fees when the plant goes online, are ways officials plan to pay the debt. Stephanie Liebe, Wimberley’s legal counsel from the law firm of Norton Rose Fulbright, said if a property tax is needed to pay down the debt, city leaders could impose a property tax without an election. Requirements to hold an election for bonds is statutory and not constitutional, Liebe said.
Using bond revenues to pay down debt is a similar tactic Wimberley employed when it incurred debt from the TWDB roughly four years ago. Those bonds, which totaled $650,000, went toward completing the planning and design for a future wastewater system upgrade.
At that time, TWDB officials asked the city to pledge a property tax in the event they were unable to pay back the bond with revenues the city generated. Wimberley uses sales tax revenue to pay down the $650,000 loan and anticipates paying that off by 2020.
“I think what I’m hearing is there is nothing new happening here that didn’t happen three or four years ago,” said Councilmember Erik Wollam. “It may have different names, but everything is the same.”
Mayor Susan Jaggers argued that the debt still belonged to the city and it needed to be paid. Jaggers said the city would be conveying a good faith effort to the TWDB to move forward with authorizing the debt. Liebe also recommended authorizing the bonds April 18. Liebe said authorizing the bonds “doesn’t mean the bonds will be issued and closed.”
Several considerations, including the upcoming Wimberley City Council elections, led city officials to hold off authorizing the bonds.
Mayor Pro Tem Gary Barchfeld said the prudent move for the city would be to pass the resolution sending a strong message to the TWDB.
“There is no tie so I couldn’t vote,” Jaggers said throwing her hands in the air jokingly. “Hopefully, in two weeks I can.”
The $5.5 million loan would pay for connection to Aqua Texas, boring under the creek and more. The city still has about $200,000 of the $650,000 outstanding.