By Anton Riecher
The Lytle City Council voted unanimously Monday to approve the sale of $8.5 million in certificates of obligation, the majority of which will be used to finance water and sewer improvements.
On a motion by District 3 Alderman David Emery, seconded by District 2 Alderman Sam Cortez, the council voted to sell the certificates amortized over 20 years at a 3.94 percent interest rate. The sale closes on Sept. 28.
To see full video of the latest Lytle City Council session visit the Devine News channel on YouTube at youtube.com/channel/UC5NvVUNwMPeR-VVmLSKY-Ng.
Andrew Friedman, representing SAMCO Capital Markets, the city’s financial advisor, told the aldermen that the sale required establishing a credit rating for the city.
“We went through a rating process with Standard and Poor’s,” Friedman said. “They look at not only audited financials but also want to get a sense of who Lytle, Texas, is on top of what you can read on paper.”
As a result, the city attained a strong AA- credit rating, the highest rating possible is AAA, followed by AA+, AA and AA-, Friedman said.
“When you drop below that you have to go out to pay for municipal bond insurance,” Friedman said. “We were able to avoid that.”
City Administrator Matt Dear told the council that $6.1 million of the certificate sale will go toward water system improvements, including building a water tower to feed a new looped water system. The certificates will also finance a $1.4 million sewer plant project.
Aside from utilities, $1 million will be designated for streets and sidewalks, Dear said.
A portion of the debt will be paid from the interest and sinking (I&S) portion of the city tax rate, Friedman said. However, the $7.5 million going to water and sewer improvements will be repaid from revenues generated by the city’s utility system rates.
Emery questioned Friedman about whether the debt could be refinanced if interest rates improve in the future. Friedman replied that the current rates would be “locked in” until February 2031 when the certificates can either be purchased from the investors using cash or the interest rates can be renegotiated.
In other business, the council voted to table action on proposals to address traffic issues on Lytle-Somerset Street, including the use of speed humps to slow vehicles. Dear informed the council that state law requires an official study by a traffic engineer.
Without state sanction, anyone who damages their vehicle going over a speed hump could potentially have a legal claim against the city, Dear said. In 2021, a plan calling for six speed humps and appropriate signage was estimated to cost at least $10,000, he said.
With inflation, that price is now calculated to be at least $15,500, Dear said.
A motion by District 4 Alderman Michael Rodriguez to table the matter until public sentiment about adding speed humps passed 4-1. District 5 Alderman Charles Cate, a reservist presently serving overseas, monitored the meeting by internet and voted against tabling the action.
Lake Shore Estates resident Trace Joyce once again addressed the council regarding flooding in the subdivision. Joyce reported that his home flooded in 2010 and has been threatened by rising water several times since.
Dear said he has filed a request for quotes from engineering firms in hopes to negotiate a price for the project. It is also under legal review, he said.
“Realistically, this project will probably take a year or two,” Dear said. Resolving drainage issues that stretch back to the beginning of the subdivision is not going to be cheap either.
Joyce asked if the city might have legal recourse against the engineering firm that developed the initial drainage plan for the subdivision.
Action on the item was tabled pending further research into the exact cause of the flooding.
On a motion by Emery, seconded by Rodriguez, the council voted to enter into an amended and restated solid waste contract with Waste Management, Inc., a waste and environmental services company.
Also on a motion by Emery, seconded by Cortez, the council voted to enter into a one-year extension of the CPS Energy gas systems contract.
Lytle increases rates
At the September 12 meeting, the City of Lytle voted to increase water/sewer rates. See details in public notice on page 13 this week.