The Town Council of Annetta deferred awarding a bid for a wastewater treatment plant during a special session at Stuard Elementary School Thursday night, but did sign off on a ground storage tank, a public water supply well and some renovations to Annetta City Hall.
The wastewater treatment plant bid was deferred for two reasons, according to Mayor Bruce Pinckard. One was because the city engineer hasn’t compared the two bids that the town received — one from AUC Group for $869,000 and the other from Fryer Construction for $729,000.
The other reason has to do with funding. The town has yet to authorize issuing $1 million in certificates of obligation (COs) to pay for the plant’s construction and installation.
Officials plan to do so during a regular meeting of the town council set for 7 p.m. Thursday, April 16, at City Hall.
Public notices published Feb. 27 and March 6 state that the town “proposes to provide for the payment of such certificates of obligation from the levy and collection of ad valorem (property) taxes in the town as provided by law and from a lien on and pledge of surplus revenues, if any, received by the town from the ownership and operation of the town’s waterworks and sewer system.”
Town Administrator Chad Roberts said that although the state requires cities to commit to using property tax dollars to pay off COs, town officials have no intention of levying a property tax.
One reason for the 30 percent rate hike the council passed in December, he said, was to insure that utilities could generate enough revenue to service the debt on a new wastewater treatment plant.
Roberts pointed to Resolution 15-3, passed by the town council March 19, which contains the council’s statement of intent:
“That repayment of the $1 million combination tax and revenue certificates of obligation, series 2015, if issued, will come from revenues derived by the uses of the Deer Creek water and wastewater systems, and it is the intention of the town council to avoid the use of any ad valorem taxes as a method of repayment of said indebtedness.”
COs different from bonds
According to the Texas Municipal League, COs are different from bonds in that cities don’t have to hold elections to gain voter approval.
Voters may petition for an election, however, and just 5 percent of qualified voters need to sign a petition to move forward with an election on the issuance of COs.
Before a city can pass an ordinance to issue COs, it must give its residents 30 days of advance notice, according to the TML.
When asked why the town chose to issue COs rather than bonds, Pinckard said it was less expensive and streamlines the process.
He said Annetta fully intends to keep a 0 percent property tax rate and let water and sewer system users pay for the COs through the new higher utility rates.
The town awarded a bid of $99,529.93 to single bidder American Tank Company for the labor, materials, construction and installation of a 75,000 gallon ground storage tank and a bid of $172,991 to single bidder Bennett Water Well for the labor, materials, construction and installation of a water supply well.
Both awards hinge on the execution of a contract with Split Rail Golf Course, where the well will be drilled. A pilot well might not be needed, Pinckard said, which would reduce well costs by about $47,000.
In addition, the town awarded a bid of $34,900 to single bidder Hutchens Construction Company for renovations to Annetta City Hall, including demolishing the roof and trusses, installing a new truss system and roof, replacing windows, removing the exterior AC and aligning doors. Plans also call for spray foam insulation.
Pinckard said a proposed well site in Split Rail Golf Course, funded by a 2012 bond issue, was delayed largely due to politics, leaving residents without adequate fire protection or sustainable water pressure.
“We paid interest on a bond that wasn’t producing any water revenue for two years,” he said. “That’s a few hundred thousand dollars. We’re on the right course now.”
The current agreement calls for Split Rail to provide a different well site, he said, in exchange for the continued acceptance of the town’s treated wasterwater effluent.
The well should be drilled at the end of May and the water tank installed in July, Pinckard said.
“By the first of August we ought to have the tank on line,” he said.
“Last year we were able to maintain without it — and we were the only city without water restrictions — but it was close.”