HUTTO — The City Council is considering issuing bonds to cover more than $77 million in debt funding needed to keep pace with 2026 capital- improvement projects.
Of that number, $72.5 million would be allocated to four wastewater projects that are part of the city’s expansion of its wastewater system, officials said during the Oct. 16 council meeting.
However, $5 million is also needed for design work on a proposed justice center in the years ahead, officials said.
“The four (wastewater) projects that are listed...if we didn’t issue these bonds there’d just be no way to pay for those, is that correct?” asked Councilman Peter Gordon.
Finance Director Alberta Barrett confirmed the project requires debt funding.
Hutto is undertaking a major expansion of one of the two wastewater treatment plants serving the city. The work is required to maintain compliance with the Texas Commission on Environmental Quality and will almost triple the plant’s treatment capacity.
The utility debt would come from certificates of obligation.
The other funding is being proposed for the design of a new justice center.
While the project is a few years away from construction, the need to expand the Police Department is pressing so the design was included in this year’s capitalimprovement project list.
“We’re planning on having a building that is designed and ready to go for whenever it comes time,” said Mayor Mike Snyder.
The justice center design funding would come from general obligation bonds approved in a 2018 election but not yet issued.
The 2018 project funding was approved for a public safety communications system, but the city’s advisors said the justice-center project falls close enough to qualify as a valid use for the voterapproved bond issuance. Andre Ayala with Hilltop Securities, the city’s financial bond advisor, said the utility-project bonds will be secured by a combination of property taxes and utility revenues, but he expects utility revenues to be able to cover the annual payments.
The justice center design will be secured by and paid back from property-tax revenues.
The utility bonds will have a 25-year amortization, while the justice center bonds will have a 20-year payoff.
The increase in debt payment may pose a challenge for Snyder and others on the council who are committed to not raising taxes.
Ayala said that unless there is a hike in the tax base, using the current tax rolls the debt-service portion of the tax rate would need to increase by 1.675 cents per $100 of property value.
The financial team will present the bond issuance for approval at the Nov. 6 council meeting, and expect that with approval the funding will be secured by February.
