By Karen Gleason
The 830 Times
Increases in water and sewer rates are likely on the horizon for Del Rio customers, the city’s top administrator told city council members Tuesday.
The council held a special meeting Tuesday to allow City Manager Shawna Burkhart to present “a status update on city water and sewer operations and second international bridge funding options and cooperation from other entities.”
Burkhart began her presentation with a brief word about city administrators working on financial reconciliation and audits.
Burkhart next spoke about meetings she and other city administrators attended in Austin last week “to advocate for financial assistance on water and wastewater issues facing the city of Del Rio.”
She said city officials visited with Keith Graf, executive director of the Texas Military Preparedness Commission. She said the city’s financial advisors and contract engineers joined them for the meeting.
Burkhart said city officials also met with Texas Rep. Eddie Morales (D-Eagle Pass) and with the staff of Texas Sen. Roland Gutierrez (D-San Antonio).
Burkhart told the council, “In addition to that meeting with Keith Graf, we discussed the DEAAG opportunities, which is the Defense Economic Adjustment Assistance Grant, which grants from $50,000 up to $5 million. We also talked about the opportunities available with the Texas Military Value Revolving Loan Fund.”
She said city officials also met twice with staff of the Texas Water Development Board.
Burkhart told council members the city will have to incur more debt “to address these emergency water issues.”
She said, “What will then happen? We will, most likely, have utility rate increases. The city will have to approve and adopt a five-year utility rate study that would cover all M&O (maintenance and operation) expenses, as well as debt.
“I use this as an example: Just like a home mortgage, the bank wants to know you have consistent revenue coming in to cover the mortgage payment; similarly, the grantor of the COs (certificates of obligation) wants to know that the city has a consistent revenue stream to cover the bi-annual debt payments,” Burkhart said.
She added in the past the city has used certificates of obligation to address water and wastewater projects as opposed to utility revenue bonds to obtain lower interest rates.
“When you use the good faith and credit of the city, the city council is pledging that if the city cannot make its financial obligations based on utility rates, that the debt will be subsidized by ad valorem property tax(es). I just bring this up simply for you to know that we have been using COs that put the good faith and credit of the city out there as a potential subsidy or backer of our debt issuances for water and wastewater. This is normal for most cities, (as) a way to drive down the interest rate,” Burkhart said.
Burkhart then spoke about the city’s critical wastewater infrastructure issues.
She said city officials also addressed those needs during the meetings held in Austin.
Burkhart said, “We’re upsizing the Silverlake wastewater line and raising the walls on the aeration ditch 2, which, the Silverlake line is approximately $28 million, and . . . the raising of the walls is $4 million at the Silverlake Wastewater Treatment Plant.
“These are required for future housing developments and economic development north of Walmart, so we must upsize that Silverlake wastewater line for us to continue building new homes and developments as well as ensuring economic development north of Walmart,” she added.
The city will need to incur new debt for its wastewater infrastructure needs as well, Burkhart told the council.
“Again, new debt will increase wastewater utility rates, potentially. There is, unfortunately, no way around that. If you add those two dollar amounts up, it’s $32 million, and (that amount) must be paid back as well,” she said.
Burkhart said the council may want to consider imposing “water and wastewater impact fees” in the future.
“What is an impact fee? Impact fees help offset new developments’ financial impact on public water, wastewater and roadway systems. These fees are used to fund projects that upsize or expand wastewater, water and roadway systems so they can adequately serve new developments. It is probably a new concept that’s being brought to the table, but it is a tool by which you can plan for the future,” Burkhart said.
Burkhart briefly addressed the city’s plans for a second international bridge.
She said, “There have been questions as to the second international bridge. The city’s second international bridge project or funding really has nothing to do with the city’s water and wastewater utility enterprise fund or its operations. These are two separate and completely different funding sources.
“The bridge and wastewater and water utility funds are very separate funding sources. They do not interact. I just want to leave that with you because one does not have to do, necessarily, with the other,” she added.
Burkhart ended her presentation by telling the council, “Honesty and transparency is what the city strives to provide to its citizens. The city’s goal is provide a superior clean and consistent flow of water for the citizens of Del Rio, Laughlin Air Force Base and those currently served in Val Verde County. In addition, the city’s goal is to also provide a superior wastewater system that accommodates existing homes and businesses, as well as future growth.
“Any additional funding, through outside sources, can potentially, lower water and sewer utility rates for those served by the city of Del Rio water and sewer utilities. Finally, I would like to end by stating that we must consider maintenance and improvements to our current infrastructure prior to considering any future extensions to our city’s certificate of convenience and necessity, also referred to as CCNs. That is the footprint of the city’s service area approved through the state,” Burkhart said.
The city manager then fielded a series of questions from council members. (See separate story here.)
The writer can be reached at delriomagnoliafan@gmail.com.
