Sep 19, 2018

Texas City May Issue Up to $2 Million to Fund Repairs for Wastewater System

$2 million worth of repairs needed to repair Texas city wastewater system

$2 million worth of repairs needed to repair Texas city wastewater system.
$2 million worth of repairs needed to repair Texas city wastewater system.

In Smithville, Texas, city leaders are considering issuing $2 million in certificates of obligation to fund repairs to the city’s wastewater system, elevated water towers and ground storage tanks. According to the Statesman, City Manager Robert Tamble is expected to present the bond proposal to the city council at the October meeting. The bond proposal does not require voter approval.

Some of Smithville water storage facilities were flagged last year by the Texas Commission on Environmental Quality (TCEQ) as needing repairs or to be replaced. TCEQ could charge the city up to $25,000 per day per instance until the repairs are complete, according to officials.

“It doesn’t mean our water has issues; it doesn’t,” Tamble said. “It means our storage has issues. Don’t confuse the two.”

Smithville staff is concerned about possible tank failure, the tanks have rust marks and problems with the seams. According to Tamble, the “band-aids aren’t working anymore.”

Recent natural disasters have exhausted any available funds that could have been used for these issues, even with maintenance of the water storage system being needed for years.

The estimated cost of $2 million for the water and wastewater improvements are not in the budget. Among the most costly of the improvement is a new water storage tank. The tank is estimated to cost $500,000, and needs to handle current use as well as new construction in the southern part of the city.

City officials are negotiating a partnership with the city school district to place the tank on the district’s 100 acres off Texas South, where the high school is located.

“If we open a fire hydrant on the south side, you can’t flush a toilet,” Tamble said.

Issuing certificates of obligation is doable with the current debt at $5.5 million, according to Tamble. The city has reduced its debt service by $1.5 million in the last three bonds it holds and around $3.5 million since Tamble became city manager in 2014.

“I’m a firm believer in paying down debt but this can’t wait,” Tamble said.

City council has asked staff to look into grant funding. Tamble and City Utilities Director Jack Page warned that the time it takes to apply and get awarded is prohibitive to getting the repairs done before there is potential tank failure.

Mark McLiney, senior managing director of SAMCO Capital Markets, will present to the Smithville city council about structuring the debt and discuss rate, terms and debt schedule on Sept. 23 at city hall in Smithville, Texas. The 6 p.m. workshop is open to public.