To align project start dates with funding from debt issuances, provisions in the Texas Government Code and the United States Department of Treasury Regulations permit the City to initiate projects before the debt is issued, allowing reimbursement for related expenses from the proceeds of that issuance. Following the amounts outlined in the Capital Improvements Plan (CIP), the City plans to issue approximately $41.5 million in debt to fund projects beginning in the fiscal year 2024-25.

According to Texas Government Code 1201.042, the proceeds from the sale of obligations issued to finance the acquisition, construction, equipping, or furnishing of any projects or facilities may be used to reimburse the Issuer for costs incurred for such projects or facilities prior to the date of obligation issuance.

Projects scheduled to commence before the arrival of the new debt funds in late August include the 2024 and 2025 Streets Preservation and Maintenance (SPAM) program, which encompasses the rehabilitation of Kramer Farms, Boenig, and Buffalo Valley South, as well as improvements to Main Street. Facilities improvements involve renovating the County Building on FM 78 for use by the Police Department to address space issues in the current facility and replacing the generator at the East Live Oak pump station and facility.

Planned water projects for this year include the Elevated Storage Tank pipe replacement, the Schertz Parkway 16" replacement waterline, utility relocations along IH 35 NEX in the northern section, the FM 3009 18" transmission line replacement, the IH 35 Ground Storage Tank and Pumping Station, the Robin Hood Way line replacement, the Greenshire Subdivision main replacement, and the IH 35 Dedicated Water Transmission Main.

If the council does not approve this resolution, any expenditures incurred on the aforementioned projects before the debt proceeds arrive would need to be funded from alternative sources, such as fund balance or operational budgets. Alternatively, staff may need to pause these projects until funds become available.

This resolution allows the City to reimburse itself from the proceeds of debt issued later this year for projects that begin before the funds are received. It does not approve these projects or authorize the debt issuance. The council will need to take separate action to approve each project, if it has not done so already, and the debt issuance will be addressed separately from this resolution.
 

To receive authorization from Council to start projects now and reimburse the City from a future debt issuance later this year.

This resolution permits projects to start earlier in the year without adhering to the strict timelines of debt issuance, enabling quicker completion for the benefit of the community.

Staff recommends council approve Resolution 25-R-042 allowing the City to reimburse itself from projects starting prior to the upcoming debt issuance.

This resolution would enable the City to reimburse itself up to $41.5 million from the planned upcoming debt issuance for related expenditures. Given project timelines, it is unlikely that all $41.5 million will be utilized before the bonds are issued. Staff estimates that the actual amount needed could be up to $5 million; however, our Bond Council and legal team at Norton Rose Fulbright recommend using the higher figure based on identified project costs as a precaution. Both the Water Fund and the General Fund could finance their portions of the estimated project expenditures using available cash while the debt funds are being raised.

Staff recommends approval of Resolution 25-R-042