Wastewater change hits delay in decision
The Texas Water Development Board postponed a decision on the city of Wimberley’s change in scope for the sewer system, which would change the loan from revenue-back to ad valorem tax-backed loans.
The change will likely add to delays that are already estimated to total 90 days from the March completion date that was originally expected.
Jeff Walker, Executive Administrator of the Texas Water Development Board, originally recommended approval of the change in scope with some significant changes to the agreement. At the meeting, however, Walker asked the board to postpone the vote because he did not “received adequate responses from the amended environmental review including the city’s responses to the public comments and the responses to coordinating agencies like Texas Parks and Wildlife.”
Beyond the requests the city still needs to provide to the Texas Water Development Board, the change in scope would come with a major change in the loan.
“Both delays in the project and changes to the pledge revenues lead us to conclude that it is prudent to request additional security for the financing of this project,” Walker said.
The TWDB loan is currently revenue based, which means that only revenues from users of the system could be used to pay back the loan. An ad valorem tax could not be used to pay for the current loan. The city of Wimberley planned to be a customer that could pay up to $200,000 per year for the use of treated effluent at Blue Hole Regional Park. Since the change in scope would not provide reuse effluent to Blue Hole, the city could not be a paying customer causing revenue issues.
This would require the city to get a new ad valorem tax-backed loan from the TWDB and refund the current loan. Just because an ad valorem tax is required does not necessarily mean that a tax would have to be charged. The city currently has an ad valorem tax of zero percent that the TWDB required to issue a nearly $700,000 design loan for the project. The city has nearly paid the loan off without raising any tax funds and the required tax will go away when the final payment is made later this year. If enough funds are available, the city could attempt to do the same thing for tax-backed loan for the construction of the system, but it is unclear at this time if that would be possible.
The city is required to pay notes on the loan it currently has with the first payment coming in August. The longer the delay continues the more the city has to pay by itself without the assistance of a revenue stream from customers.
“The City’s 2019 budget, adopted on September 25, 2018, includes a transfer of $501,131 from its general fund into the utility fund that is available for the payment of approximately $340,000 in debt service,” the background information from the Texas Water Development Board said. “After 2020, annual debt service payments are approximately $250,000. In 2017, the City’s existing utility system and parks department combined produced approximately $75,000 in net revenues available for debt service and had $930,000 in cash reserves. While the reserves provide near-term security, a completed project with revenues from the expanded system are needed for long-term repayment.”
This issue brought up concerns that the monetary issues and delay could cause the project to fail to be finished all together. In asking for approval of the change in scope, Councilmember Gary Barchfeld said it “greatly diminishes the probability of an incomplete project.”
Multiple members of the council and the public spoke to the board both for and against the change in scope with the same arguments that have permeated the local political discourse for the last few years.
Jaggers said that the change was more environmentally friendly because it removed the chance of discharge. She said the change made the project affordable. Susan Nenney, Executive Director of the Friends of Blue Hole, said that project could irreparably harm the park, specifically noting the proposed sewage pipeline under the creek while William Bowman said that with the $2 million in grants, the original project was actually cheaper than the change in scope.
Former Mayor Mac Mc-Cullough said that change in scope should not be approved until after the city’s election in May.
“We are going to be right back here in June of this year if another swing in the election takes place, and we will want to go back (to the original plan),” McCullough said.
The Texas Water Development Board postponed the vote on the change in scope but did not specifically say when the item would be back on the agenda. The next meeting of the board is March 5.