Title
Hold a public hearing and consider ordinances authorizing the issuance of Water and Sewer Revenue Bonds, Series 2025, and Combination Lease and Airport Revenue Bonds, Series 2025.
Body
DATE: June 17, 2025
TO: Kent Cagle, City Manager
FROM: Judith Tangalin, Executive Director of Finance
SUBJECT: Water and Sewer revenue bond and combined lease and airport revenue bond.
BACKGROUND AND FINDINGS:
The proposed ordinance authorizes the issuance of Water and Sewer Revenue Bonds, Series 2025, in an estimated amount of $37.50 million to fund seven capital improvement projects identified in the 2025 Water and Wastewater Master Plan (W&WWMP). These projects are included in the plan’s 5-year capital forecast and are designed to address growth and infrastructure reliability:
|
Highway 195 24-Inch Water Line |
$8,901,000 |
|
Highway 195 Ground Storage Tank |
5,281,000 |
|
Chaparral Road 24-Inch Water Line |
6,817,940 |
|
Featherline Road 24-Inch Water Line |
3,516,300 |
|
Dead-End Looping/Auto-Flushing |
3,000,000 |
|
Lift Station No. 6 Rehabilitation & Expansion |
6,121,770 |
|
Trimmier Creek Basin 12-Inch WW |
3,450,500 |
|
Issuance Cost |
411,490 |
|
Total Water and Sewer Revenue Bonds |
37,500,000 |
The estimated debt service requirement for the new revenue bond issue is included in the current rate structure and will be included in the FY 2026 budget. As prior water and sewer bond issues have fully matured, the corresponding debt service capacity will be redirected to cover the increase in debt service associated with the new bond issuance. Additionally, $2 million has been included in the FY 2026 budget as a debt service to support the upcoming bond payments.
The second ordinance authorizes the issuance of up to $3.55 million in Combination Lease and Airport Revenue Bonds, Series 2025, to finance the construction of a new 9,000-square-foot facility at the Killeen-Fort Hood Regional Airport. The facility will be leased to CSI Aviation, Inc. under a build-to-suit agreement and is expected to promote commercial activity, economic development, and job creation in the region.
|
Building |
$3,500,000 |
|
Issuance Cost |
55,000 |
|
Total Combination Lease and Airport Revenue Bonds |
3,555,000 |
These bonds will be secured by a pledge of lease revenues and airport net revenues and will not be backed by property taxes. The financing structure aligns with the City’s economic development goals without impacting the general fund or debt capacity for other priorities.
The total combined revenue bond issuance, including both the Water and Sewer Revenue Bonds and the Combination Lease and Airport Revenue Bonds, will not exceed $41.06 million.
THE ALTERNATIVES CONSIDERED:
NA
Which alternative is recommended? Why?
NA
CONFORMITY TO CITY POLICY:
Texas Government Code Chapters 1502 and 1371 (Water and Sewer Bonds)
Texas Government Code Chapters 1509, 1503, and Texas Transportation Code Chapter 22 (Lease and Airport Bonds)
City Charter Article VI - Issuance and Sale of Bond.
FINANCIAL IMPACT:
What is the amount of the revenue/expenditure in the current fiscal year? For future years?
The total revenue bond issuance will not exceed $41.06 million, consisting of $37.50 million in Water and Sewer Revenue Bonds and $3.56 million in Combination Lease and Airport Revenue Bonds. This is a one-time capital expenditure, and the bond proceeds along with related expenses will be recognized through a subsequent budget amendment. Debt service for both bond issues will be included in the proposed FY 2026 budget and will be incorporated into future budgets as needed.
Is this a one-time or recurring revenue/expenditure?
This is a one-time revenue and expenditure related to the issuance and use of bond proceeds for capital projects. However, the associated debt service payments will be recurring and included in future annual budgets is a one-time expenditure.
Is this revenue/expenditure budgeted?
A budget amendment is required.
If not, where will the money come from?
Upon Council approval, an end-of-year budget amendment to the FY 2025 budget will allocate the bond proceeds to the appropriate projects.
Is there a sufficient amount in the budgeted line-item for this revenue/expenditure?
Upon approval of a subsequent budget amendment.
RECOMMENDATION:
Staff recommends City Council approve the ordinances authorizing the issuance of Water and Sewer Revenue Bonds, Series 2025, and Combination Lease and Airport Revenue Bonds, Series 2025.
DEPARTMENTAL CLEARANCES:
Finance
Legal
ATTACHED SUPPORTING DOCUMENTS:
Airport Revenue Bond Ordinance
Waterworks and Sewer System Revenue Bond Ordinance
Presentation