City proposes funding sewer overhaul without hike

SAN BENITO — For years, city officials have been bracing to boost the property tax rate to fund a state-mandated sewer system overhaul as the clock ticks toward a March 2023 deadline.

Now, City Manager Manuel De La Rosa is proposing a plan to fund the multimillion-dollar project without a tax hike or water rate increase.

“We’re trying not to raise taxes or water and sewer rates,” he said Wednesday during an interview.

Under the proposal, the city would borrow about $8 million through the sale of certificates of obligation whose terms would be extended from 20 to 25 years.

Meanwhile, the city could also refinance its long-term debt at lower-interest rates, De La Rosa said.

Options, he said, include requesting the city’s Economic Development Corporation earmark about $137,000 a year to help fund the project as the agency completes its annual payments on the city’s 20-year-old police station.

As part of a 2012 agreement, the Texas Commission on Environmental Quality is requiring the city upgrade its sewer system by March 2023 or face severe fines and corrective action as a result of sewer spills about 10 years ago.

Last year, commissioners borrowed $1.5 million through the sale of certificates of obligation to fund the planning and design phase of the project to rebuild six sewer lift stations.

For nearly 10 years, the multimillion-dollar sewer system overhaul has loomed over one of Texas’ poorest cities.

In October 2012, the city entered into an agreement with TCEQ to participate in its Sanitary Sewer Overflow Initiative program following a series of sewage spills near the Arroyo Colorado totaling 49,000 gallons from November 2009 to January 2010.

As part of an agreement, the state waived penalties, ordering the city to upgrade its sewer system by March 2023 or face severe fines and corrective action.

Proposed $1 million street project

During a special meeting Tuesday, De La Rosa also proposed dipping into the city’s $4 million cash reserve to pull about $550,000 while giving the city 120 days’ worth of back-up revenue to maintain operations during an emergency.

Under his proposal, De La Rosa would use the $550,000 to tack onto the city’s annual $450,000 street repair account to fund a $1 million street overlay project.

Mayor Ben Gomez said commissioners would tap the streets for the overlay project.

“Hopefully, we can get that up and running,” Gomez said during an interview. “We’ve got some real bad roads.”

During the meeting, De La Rosa also called for a $30,000 water rate study.

On Wednesday, he said he isn’t planning to propose a water rate hike.

Instead, he said he was planning to review rates as the city prepares to put its 10-year-old, $17 million water plant back into operation after a previous administration shut it down six years ago while officials filed a lawsuit against companies behind its construction, arguing the plant didn’t run properly.

Second thoughts

The proposal to fund the state-mandated sewer system overhaul without a tax hike comes years after officials prepared to boost the current tax rate, which stands at 72 cents per $100 valuation, by as much as three cents.

As early as June, De La Rosa proposed “options” including a tax hike, a water rate increase and a street maintenance surcharge.

In the June workshop, he proposed options including as much as a 3-cent property tax rate increase that would boost the general fund budget’s revenues from $12.2 million to $12.38 million.

At the time, De La Rosa also proposed boosting water rates to offset a water production fund shortfall of $880,022.

For years, the city’s water rates have stood as some of the highest in the Rio Grande Valley.

Currently, the city’s base residential water rate is $20.59 for up to 2,000 gallons for homes with 5/8-inch meters and its sewer rate is $29.09 for up to 2,000 gallons.

Now, De La Rosa said he doesn’t want to burden taxpayers with tax or water rate hikes amid the coronavirus pandemic that’s cost many residents income losses.