Council OKs first step for certificates of obligation

During its June 5 meeting, Waxahachie City Council unanimously approved a resolution to begin the process of funding various improvements in the city through certificates of obligation in the amount of about $37 million.

Certificates of obligation are used by cities and counties to fund public works. Unlike general obligation bonds, certificates of obligation do not require voter approval.

“As way of background, the capital improvement program describes the city’s large … capital projects, which provide new or improved city infrastructure,” Chad Tustison, senior director of finance, said. “They include projects such as streets, sidewalks, drainage, parks, public safety projects, municipal facilities, and water and wastewater projects. The CIP is funded through multiple funding sources including proceeds from bond issuances, operating funds such as the general fund, water, wastewater funds, as well as development-related impact fees such as roadway impact fees and water and wastewater.”

As part of the funding mechanism for the city’s capital improvement program, the certificates of obligation will be used to fund 24 projects, including street projects, parks projects, public safety projects, water projects and wastewater projects.

During the city council work session April 25, Tustison presented to the council the city’s five-year capital improvement plan and funding strategy. He highlighted projects to be funded, including Mustang Creek Trail connection and parking, a street project on Farley Street, the purchase of a fire engine, and more.

Of the projects’ total amount, $19.8 million will be supported by ad valorem revenue in the city’s current tax rate, and $17.2 million will be supported by water and sewer utility rates, Tustison said. According to the city staff report, there will not be an increase in the total ad valorem tax rate with the issuance of the certificates of obligation.

Tustison explained that the council’s approval June 5 did not approve the issuance of the certificates of obligation, but that approval begins the process. Following the meeting, notices of intent will be published in the newspaper, and city staff will continue to prepare required information and meet with rating agencies for the next two months.

On Aug. 7, the council will vote to authorize the issuance of the certificates of obligation during its meeting at 7 p.m. If approved, funds are expected to arrive in early September before the new fiscal year and start of the new budget, Tustison said.

Originally published June 9, 2023 - https://www.waxahachiesun.com/news/local/council-oks-first-step-for-certificates-of-obligation/article_81e2ad7a-06f5-11ee-95b5-97952c673b9c.html