City Council members approved the sale of $2 million in certificates of obligation when they met Tuesday night.
The money is to be used for improvements to the city’s utility system, including the installation of a new bar screen at the wastewater treatment plant on Moore Street and improvements to the water distribution system in far west Beeville.
The water system improvements also will allow the city to begin selling bulk water to the Blueberry Hills Subdivision just west of the city limits.
The owners of the Blueberry Hills area have experience problems with their well water and distribution system for years. But recent efforts by state agencies have made it necessary for the neighborhood to seek a new source of water because of high levels on arsenic in the subdivision’s wells.
Victor Quiroga of Southwest Securities in San Antonio and Noel Valdez of the Austin law firm of McCall, Parkhurst and Horton both addressed the council.
Quiroga said his firm had asked seven financial institutions, mostly banks, to propose bids for the certificates but only two had responded and one of those offered a variable rate, which was not what the firm requested.
The other bid was from Prosperity Bank, which has a branch in Beeville. Because Prosperity had the only legitimate bid, Quiroga recommended awarding the sale to the firm.
The bank agreed to purchase the certificates at an interest rate of 4.95 percent with a repayment period of 20 years. He said his company had anticipated selling the bonds at an interest rate of between 4.75 and 5 percent so the figure was within its estimates.
Quiroga said the first payment the city would make, $88,275, in 2009, would be all interest. The payment the next year would be $128,257.50 and annual payments after that would average about $166,000.
City Manager Ford Patton had told councilmen earlier that the proceeds of the sale would not be “project specific” and that the money could be used to finance various utility improvements.
Current plans are to invest $175,000 in the Moore Street bar screen replacement, $382,000 to rehabilitate a thickener at the same site, $81,400 to renovate water storage tanks on Mussett Street and at the Texas Department of Criminal Justice’s William G. McConnell Unit, $800,000 on the water system improvements on FM 351 which will improve water pressure on the west side of town and provide a bulk water connection for Blueberry Hills and $174,500 for improvements to a 300-foot drainage ditch on Kennedy Street.
Patton told the council during a recent meeting that the city would not be required to relocate a 10-inch water line on East Houston Street before the Texas Department of Transportation begins improvements to that thoroughfare.
The city had planned to spend $254,200 on the water line relocation but now that money can be spent on something else.
Some alternate projects the council may consider would include $98,000 in wastewater system improvements and $568,000 in water system improvements.
Valdez told the council that they had a draft ordinance in their packets that they could pass, thereby approving the sale.
“We’re very pleased with it,” said Patton. “We’re ready to move forward with it and we recommend approval.”
Mayor Pro Tem John Fulghum made the motion to approve the sale and Councilman David Carabajal seconded the motion. The adoption of the ordinance passed without opposition with Fulghum, Carabajal, Mayor Kenneth Chesshir and Councilman Jimbo Martinez voting. Councilman Mike Scotten did not attend the meeting.