A plan to replace water meters throughout Devine is one step closer to reality after the Devine City Council voted to publish a notice of intention to issue $1.1 million in Certificates of Obligation to fund the project at a Special meeting held last Tuesday, March 5.
Around 700 of the City’s approximately 1,700 water meters are not registering water usage, and all of the meters are past their guaranteed lifespan. The Texas Water Development Board (TWDB) recently denied funding to replace the meters, leaving the City to finance the project on its own.
Mark McLiney, Senior Managing Director with SAMCO Capital Markets in San Antonio and one of the City’s financial advisors, presented Council with a 10-year financing plan for the project, beginning with a payment of $110,533 in 2020, when the City’s existing utility system debt is set to be $426,320.
According to McLiney’s projection, which was calculated at 2.95 percent interest for illustrative purposes, payments for the water meter debt would jump to $149,381 in 2026, after some of the City’s existing debt service has been retired, and remain near that level through 2029.
Much of that existing debt is due to $9 million in TWDB loans the City received in 2018 to pay for the upcoming replacement of asbestos cement water pipes throughout Devine. The TWDB required the City to raise water and sewer rates in order to guarantee the revenue to repay the loans.
“These water meters, reading them correctly, are likely to increase the revenues with the same rate structure,” McLiney said. “Correct water meters are going to read the amount of water going through into the household at the right amount. Right now, a lot of these meters are probably a 25 percent discount because they’re not reading how much water is going through.
“So in reality, we believe that your current rates are going to generate enough once the correct water that’s being sold is being processed and billed.”
McLiney also presented Council with a 12-year plan that featured lower annual payments, but calculated at a 3.05 percent interest rate that resulted in an additional $50,000 in interest.
District 2 Councilman Steve Lopez made the motion to adopt the notice of intention to issue the Certificates of Obligation based on the 10-year plan, which was seconded by District 5 Councilman Cory Thompson. District 3 Councilman David Espinosa also voted for the measure, which passed 3-0. The notice of intention is published in full in the Public Notice section of this edition of The Devine News, and will run again in the March 20 edition.
District 1 Councilman David Valdez and District 4 Councilwoman Jennifer Schott were absent.
Bids from potential purchasers of the Obligations will be due on Monday, April 15, and Council will have the opportunity to authorize the issuance of the Obligations at a Council meeting on Tuesday, April 16.
“These [water meters] will last 12 years,” McLiney said. “In 12 or 13 years, you ought to be looking at doing this again.”
By Marly Davis
Staff Writers
