2016 Bond Election

Bond Logo

On August 16, the Huntsville City Council voted unanimously to pass an ordinance calling a bond election containing three propositions. Huntsville residents will be asked to go the polls Tuesday, November 8, to consider authorizing the issuance of general obligation bonds for the three proposals.

Since March, the City Council has been conducting work sessions and reviewing studies related to the City’s infrastructure, including the Huntsville Police Department, Fire Station #2, the City Service Center, City Hall, quality of life improvements, the Palm Street Water Plant, Water Distribution system pressure plane modifications, and the A.J. Brown and N.B. Davidson wastewater treatment plants.

The Council has also carefully reviewed debt capacities to fund these projects. Debt capacity can be defined as expiring debt plus additional available revenue. All of the Council’s work in the last six months has brought the opportunity to call for a bond election in November. The Council and staff have worked together to plan a course of action with the aim that these projects may be accomplished with no increase to taxes or rates related to them. On October 18, 2016, the City Council adopted Resolution 2017-01 to clarify and reinforce this goal.


Proposition 1 - Public Safety Facilities
THE ISSUANCE OF TAX BONDS IN AN AMOUNT NOT TO EXCEED $31,000,000 FOR PUBLIC SAFETY FACILITIES.

  • Increase Security for Equipment, Officers, Vehicles, and the Public 
  • Accommodate Needs of the Growing Community 
  • Provide Protection for Fire Engines, Vehicles, and Equipment  
  • Offer the Best Fire Service Possible to the Citizens of Huntsville 
 Proposition 2 - City Services Facilities 
THE ISSUANCE OF TAX BONDS IN AN AMOUNT NOT TO EXCEED $24,000,000 FOR THE CITY SERVICES FACILITIES PROJECT.

  • Centralize Customer Services at City Hall 
  • Responsibly House Essential City Services at the Service Center
  • Provide Facilities to Complement and Accommodate the City’s Potential for Growth 
Proposition 3 - City Waterworks and Sewer Facilities
THE ISSUANCE OF WATERWORKS AND SEWER SYSTEM REVENUE BONDS IN AN AMOUNT NOT TO EXCEED $73,000,000 FOR CITY WATERWORKS AND SEWER SYSTEM FACILITIES.

  • Improve Control of Water System Pressure and Fire Flow
  • Improve Efficiency and Decrease Repair and Maintenance Needs
  • Allow for Continued Superior Treatment with Expected Growth
  • Provide Safe and Efficient Treatment Process  
  • Increase Treatment Capacity

“ The Council has worked with the staff to find a way that may allow these projects to be completed without raising rates or taxes related to them, but rather by using the debt capacity coming available in the next few years.”
- Mayor Andy Brauninger

Resources
  • Read the Ordinance 2016-33 calling the November 8 Bond Election is available at http://www.huntsvilletx.gov/DocumentCenter/View/7472 along with other election documents.
  • If you would like to reach out to any member of the City Council you can email the full Council at council@huntsvilletx.gov, or visit http://huntsvilletx.gov/343/Mayor-City-Council to find email addresses for each specific member. The Council is eager to answer your questions and help inform you on the three propositions. 

  • Learn how to register to vote at http://www.co.walker.tx.us/department/?fDD=24-0. October 11, 2016 is the last day to register to vote for the November 8 Election. 

  • Email bond@huntsvilletx.gov or call 936-291-5403 with any questions you may have regarding the Bond Election. 

  • Follow the City of Huntsville on our social media platforms for the most up-to-date information. All the City sites are listed at www.huntsvilletx.gov/social.




​Bond Election FAQs



What projects are to be completed if the bond propositions pass?

There are three propositions on the ballot for November 8.  They are as follows:

Proposition 1 – Is to build a Police Station and new Fire Station #2 (to replace the one downtown on Sam Houston Avenue) for an amount not to exceed $31 million.

Proposition 2 – Envisions renovating the existing City Hall by adding additional space to allow the Engineering and Community Development functions to move to City Hall. This will create a centralized customer service facility for residents and businesses. The remaining departments left at the Service Center (on Highway 75 across from the Walker County Storm Shelter/H.E.A.R.T.S. Veterans Center Complex) will be housed in a new facility.  These projects are to be completed for an amount not to exceed $24 million.

Proposition 3 – Is to renovate and expand the A.J. Brown and N.B. Davidson Wastewater Treatment Plants.  Proposition 3 funds will also be used to renovate the Palm Street Water Plant and create new water plants to improve service to the community.  There are also a host of waterline and sewer line projects needed to support the improved water and sewer plant renovations and the overall system. These projects are to be completed for an amount not to exceed $73 million.

How will the City pay the debt payments on the bonds if the bond propositions pass?

Between now and 2021, the City will pay off a significant amount of debt that is currently on the books.  There are also identified additional revenues that will be used to pay off new debt. The City Council has stated publicly that property taxes and utility rates will not be increased to pay the principal and interest on the debt issued as a result of one or more of these bond propositions passing.

When will the bonds be issued (money be borrowed) if the bond proposition(s) pass?

The plan is to complete design on the project before the debt is issued. This will allow the City to know how much debt is needed to pay for a project. Then, as the current debt that has been identified to pay for these projects is paid off (or very close to paid off), new debt may be issued at the discretion of the City Council. 

So, the short answer is that increments of debt will be issued depending on what proposition(s) pass and when projects are ready to be paid for. 

Why did the City decide to put all of these propositions on one ballot and not wait until the debt is paid off to call an election?

Waiting to call the elections as the debt expired would have presented two potential problems. First, the City would have been calling (and paying for) bond elections every year or perhaps every other year. Since the bond language would have been essentially the same year after year, that may have led some voters to question whether the projects were in fact “new” or if the City was experiencing cost overruns for previous projects approved.

Second, some of the expiring debt will result in new bond funds of approximately $3.5 million to $4 million.  Unfortunately, the price tag for all of these projects is much higher. Citizens should expect to see results when they authorize a bond election. Having elections for smaller amounts may not have allowed meaningful progress on projects. 

How did the City arrive at the amounts of the bond propositions?

During 2015 and 2016, the City hired industry experts to complete professional, unbiased, objective studies on almost every piece of City infrastructure.  Between the months of March and August 2016, the City Council carefully reviewed each study and identified projects needing the most significant attention.  Not all of the infrastructure elements studied are candidates for funding with the bond proposals.  The City Council selected the projects with the highest need and best available funding sources. 

What debt is expiring and when?  What additional revenue sources will be available and when?

Fund

Year

Expiring Debt/Revenue Source

Annual Principal & Interest/Revenue

General

2019

Sales Tax Revenue from expiring 380 agreement at Ravenwood

$500,000

General

2019

Expiring 2009 Refinance

$765,300

General

2020

Expiring 2012 Refinance

$417,400

Water

2016

Expiring TRA 2010A

$275,910

2018

Expiring TRA 2010B

$241,695

2017

Expiring 2012 GO

$225,528

2018

2 years’ worth of accelerating TDCJ water rate increases

$1,860,144

       

2021

Tenaska Water contract increase

$200,000

2020

TRA Tenaska/RP RTS Charge

$95,000

2021

Another 4 years of accelerating TDCJ water rate increase

$850,604

Wastewater

2016

2011 Refinance

$1,070,080

2022

2012 GO Refinance

$462,502

How does the City know it will be able to issue debt and not raise taxes or utility rates?

The chart of retiring debt and other revenue sources illustrates annual principal and interest payments on existing debt (or in the case of new revenue, the annual amount).  All of the debt (and associated principal and interest payments) are being paid at current tax or utility rates. At such time that the Council elects to issue debt as a result of the November bond election, the Council will be able to match old debt payments with new debt payments.

Does this mean my taxes or utility rates will never go up?

No, that’s not a realistic expectation. There are many reasons why taxes paid on property and/or utility rates can increase. For example, the appraised value (set by the Walker County Appraisal District, not by the City Council) can increase taxes paid on property. Other taxing entities (such as Walker County, HISD, or the hospital district) can increase their tax rates paid on property. Future elected Councils can raise taxes for any number of reasons (having nothing to do with the outcome of this election). Based on the last rate study and the plan adopted a few years ago, the City has increased water rates on a set schedule to ensure ongoing adequate investment in your water infrastructure.  What is being stated is that if one or all of the propositions pass, property taxes and utility rates will not be increased to pay the debt service for the new debt issued. 

What happens if the bond propositions don’t pass?

Because they are worded as General Obligation bonds, Propositions 1 and 2 cannot be considered by the voters again for three full years. Since this November election falls on the 8th, and the November election in 2019 falls on the 5th, three full years will mean Propositions 1 and 2 cannot be considered again until the May 2020 election.  So, if they fail, those issues will have to wait for approximately 40 months. (Facility tours for the public are being conducted at the facilities to be considered so that citizens can see their current conditions for themselves and have any questions answered.)

Proposition 3 is worded as a Revenue Bond, so it does not have the same three-year restriction.  It would be a City Council decision to call another election, or to reduce the size and scope of the projects, and/or to consider amending the City Charter provision that requires an election for Proposition 3 (because state law does not require an election for projects to be paid for with revenue bonds). 

$128 million?  That seems like an awful lot.  Are we taking on too much debt?

The decision about how much debt is appropriate is a matter of personal choice.  However, one way to review this issue is compare ourselves with other cities.  The City of Huntsville City staff reviewed the budgets of thirteen other cities in the State of Texas with populations similar to Huntsville (not more than 20% larger and not more than 17% smaller).  Some Interesting observations about that analysis:

  • Tax Rate for Debt – The City’s tax rate needed to pay the debt supported by property taxes is just over $.10/$100.  That ranks 4th lowest among the cities compared.  Since the City Council intends to use expiring debt to pay for the new debt, the City’s tax rate needed to pay the new debt will remain unchanged. 
  • Total Debt Supported By Property Taxes – The City’s total remaining debt paid for with property taxes stands at just over $11,200,000.  That ranks 2nd lowest among the cities compared.  If Proposition #1 passes, the City will likely still be in the bottom five of total debt supported by property taxes of the cities surveyed. 
  • Total Debt Outstanding – The City’s total remaining debt paid for by all funds stands at just over $36.2 million.  That is the lowest among the cities compared.
  • Bonded Debt Per Capita – The City’s bonded debt per capita stands at $939.09 (as per the population from the 2010 census).  That is the lowest among the cities compared.  Even if the population is adjusted down by 11,500 residents (in recognition of prison and student population counted in 2010 census), the City’s bonded debt per capita would still rank 4th lowest among the cities compared.  To put the issue in perspective, the highest among the cities surveyed (Schertz and Burleson) carry over $3,100 and $3,600 debt per capita respectively.  Even if all three propositions pass, the bonded debt per capita would still be less than Schertz and Burleson, or about $400 more than average of the cities surveyed. 
  • Outstanding Debt as a percentage of Assessed Valuation – Assessed valuation is the dollar value of a city’s property tax base.  The comparison of outstanding debt to assessed valuation compares the relative wealth of a city’s property tax base to the debt paid for with property taxes.  Again, the City of Huntsville ranked third lowest among the cities surveyed, indicating the City of Huntsville has a relatively light tax load. 

As for the building projects, wouldn’t it be cheaper and/or more cost effective to repair or renovate what we have?

 Prior to calling the bond election, the City completed professional assessments by licensed architects on each of the facilities. The architect was charged with comparing the cost effectiveness of repairs and renovations with constructing new facilities. One overriding feature that complicates repairs and renovations are the 2012 Texas Accessibility Standards (TAS) which govern the elimination of architectural barriers for persons with disabilities.  It requires that any constructed, renovated or modified building or facility used by the public to be in compliance with the TAS if funds from a municipality are used.  Essentially, anything other than cosmetic or routine maintenance work necessitate a full review of the building for TAS compliance. 

As a result, for instance, even a 10,000-square foot addition to the Police Department at an estimated cost of perhaps $1,500,000 would result in an accessibility review for the entire PD facility and would include renovated restrooms, widening hallways, and elevator access to the basement floor. Each of the possible ADA modifications necessitates additional square footage and likely significant cost because (for instance) there is no logical place to put an elevator.  So the sample renovation discussed above might well end up costing almost as much as a new facility (on a cost per square foot basis). Furthermore, the disruption to the entire facility would likely require moving to a different location during the renovation.

It is likely, given their locations, that the City will be able to sell the existing facilities and use the proceeds to put towards the cost of the new facilities.  Furthermore, depending on the buyer, the location of the current facility may be put back on the tax rolls. Along with the opportunity to use debt rolling off to pay for these projects, the Council decided to propose the construction of new facilities.

Is there a possibility that the projects that are proposed might save us some money, and, if so, has that been reduced from the amounts on the propositions?

 Yes. The City spends over $240,000 annually maintaining its City facilities, three of which are identified for repair or replacement with Propositions 1 and 2. It is not unreasonable to assume maintaining new facilities will cost less than a facility renovated to current purpose in 1981 (Police Department facility) or a metal building constructed in 1973 (City Service Center). 

However, there has been no attempt to reduce an estimated cost savings from the amount of each proposition for two reasons. First, the amount of potential savings isn’t known. Second, any additional savings could be used to pay off the debt early at some point in the future.

If the propositions pass, will there be continued communication about the status, cost, etc. of the approved propositions and the status of the projects approved?

 Absolutely.  If one or more of the propositions on the November 8 ballot pass, the plan is to commence design on the project(s) approved by the voters. Depending on the project and the availability of expiring debt, work may begin very soon (which is the case with some of Proposition 3).  In other instances, the City may not begin work until 2020 or 2021 (which the case with Proposition 2).  The first phases (design) of Proposition 1 will likely begin in late 2017 or early 2018. 

Regardless, any expenditure of more than $50,000 will require public action by the City Council at a posted meeting.  Also, any decision to issue debt will have to occur at a public meeting after advertising, opening bids and evaluating the best financing method available. Finally, any decision to award a contract(s) for work to be completed will also need to be considered and awarded at a public meeting after some competitive selection process for the work.  So it isn’t as if the bond will be approved and you won’t know anything until the facilities are constructed (or improvements made).  On the contrary, there will be considerable discussion and transparency after the election is completed and throughout the following processes. 

If the City ends up issuing too much debt, what happens to the excess funds?

 Excess funds can be used to make principal and interest payments in future years. In most cases, this is done towards the very end, right as the debt is about to be paid off.

Is it really necessary to construct a new City Hall?

 Proposition 2 does not envision constructing a new City Hall. Rather, the current City Hall is to be renovated and expanded so that two departments that are currently located at the Service Center can be moved to City Hall. The two departments (Engineering and Community Development) will allow almost all of the heavy customer service functions (utility billing, purchasing, permits, etc.) to be located in one place. The remaining departments (Public Works and Parks and Recreation) will be housed in a new facility on the Service Center property. The only reason City Hall is even in the “mix” is to consolidate all of the customer service functions in one place and make accessing City services more convenient.

What does a wastewater treatment plant do?  Why is Palm Street water plant important?

 A wastewater treatment plant treats sanitary sewer waste so that it can be discharged into a natural body of water.  The City has three wastewater treatment plants, and two of them (A. J. Brown and N. B. Davidson) are to be remodeled as part of Proposition 3. Each of the City’s wastewater treatment plants is permitted and regulated by the Texas Commission on Environmental Quality (TCEQ). Each plant operates under a permit containing both state regulations and treatment regulations unique to the body of water that it discharges treated water into. All of the City’s wastewater treatment plants are inspected regularly, and the City has to employ laboratory analysts to test the treated water to make sure it meets permit and State standards and report our findings (in addition to inspections by TCEQ staff). 

The main issue with the two wastewater treatment plants included with Proposition 3 is that they struggle to meet the requirements of our permits with the aging technologies used to treat our wastewater.  The A. J. Brown and N. B. Davidson Wastewater Treatment Plants were constructed in 1981 and 1971, respectively.

The process for treating wastewater to state standards involves several steps. At both plants, the equipment and technologies employed are old, outdated, in need of repair, and will benefit from newer technologies. Without these repairs and renovations, the City of Huntsville will continue to risk violations and fines trying to meet TCEQ treatment requirements (which are anticipated to become stricter as time goes on).

The Palm Street Water Plant is really the central nervous system of the City’s water distribution network.  The Trinity River Authority (TRA) plant delivers treated surface water to the City and the Palm Street water plant so that water can be pressurized into the City’s water distribution system. Without the Palm Street plant pumping water, the City’s water system simply doesn’t work.  Much like the wastewater treatment plants, the city’s water system is regulated and operated in accordance with the laws and regulations of the State of Texas. 

The Palm Street water plant relies on a series of vertical and horizontal pumps that pressurize the City’s water distribution system. The vertical pumps were manufactured in 1960 and the horizontal pumps were manufactured in 1983. (Surprisingly, the horizontal pumps have resulted in more maintenance and mechanical repairs than the vertical pumps.) The typical life of a pump operating in a continuous, “no-room-for-error” environment is approximately 20 to 25 years, which the City has far exceeded.  Staff has done their best to maintain the systems and equipment, but end-of-life for many of the parts is a reality.

The second obvious problem with the Palm Street is the location of the instrumentation and electrical controls   that operate the pumps. The instrumentation and electrical systems are literally in the same room and adjacent to the pumps.  As we all know, water and electricity are to be separated at all costs. The layout of a modern plant would also improve efficiency and safety throughout.

The final issue is, with Huntsville’s growth, it is getting increasingly difficult for Palm Street to deliver reliable, state-mandated water pressure to all areas within the City. Particularly in the areas adjacent to the plant itself (where the elevations are higher and the infrastructure is older), the plant is struggling to meet state requirements. Proposition 3 plans to create two distinct what is referred to as pressure planes to balance and enhance water pressures throughout the community and allow and enhance growth opportunities in the central core of the community. This will also aid in improvement for fire flow to lines in emergencies.

What happens if projects end up costing more than what the debt can pay for?

 Since Propositions 1, 2, and 3 are specifically worded as “not-to-exceed,” the City may not issue more than the stated amounts. The first step the City will take to insulate itself against cost overruns is to design as much of the project as possible before issuing the debt. This will help the City identify priorities and associated cost estimates before work is contracted for and before debt is issued. Much of the work envisioned lends itself to phasing, so the City should be able establish and work on priorities with funds as available. Furthermore, City staff will also recommend the use of alternative procurement methods such as sealed proposals, Construction Manager at Risk, and perhaps even Design-Build.  In the case of the Town Creek Drainage Project, the Construction Manager at Risk process is proving to be a valuable way to deliver a cost-effective project for the community.


City Public Works Director Carol Reed discusses Proposition 3 below:
 
A recent statement was printed that, “Huntsville has better facilities and infrastructure than many of our larger neighbors around us. Our sewer and water system is currently running at 50 percent daily volume. TCEQ has not noted any issues with either system, and does not recommend expansion until the daily volume reaches 90 percent daily for three consecutive months.”   

 
1.       The City of Conroe operates 16 wells and 17 water plants and is one of the beneficiaries a new 30 MGD Surface Water Plant.  College Station’s two award winning wastewater plants have a combined capacity of over 11 MGD.

2.       Combined, the City of Huntsville’s three wastewater plants have averaged over 60% of design capacity for the last six months, with one facility averaging 70% of design capacity over the last six months. Water systems are not rated on percent daily volume. The production capacity of the City’s water system is not a concern since the expansion of the TRA Surface Water Plant in 2012.  However, the ability to distribute that water throughout the system is a critical concern.

3.       The City of Huntsville has been fined and placed under enforcement by the EPA and TCEQ at least four times during the last several years for Sanitary Sewer Overflows due to infiltration into the aging collection system.

4.       TCEQ requires that wastewater systems begin planning for expansion when they reach 75% of design, and require they begin construction when they reach 90% of design capacity for three consecutive months.  However, expansion of current design capacity is not part of the proposed improvements.  Pumps, motors, infrastructure and technology which are 30 to 40 years old and which cannot meet permit requirements are the majority of the proposed improvements.
 
Regarding the water plant and distribution system, the City has been faced with numerous occasions where the system’s water pressure has come dangerously close to not meeting the State’s minimum requirement.  If and when this occurs, the system would be under a boil water notice at a minimum, with the possibility of the contamination of the entire system and a risk of endangering public health. There are no longer enough “repairs” that can be done to correct this problem. A new pump station and additional elevated storage are the necessary improvements to eliminate this public safety concern.   Additional projects include work at the Palm Street Water Plant and pressure plane modifications that should also improve fire flow throughout the community.

  

Save the Date

The City of Huntsville will be hosting the State of the City Address on October 11 from 5:30-7:30 p.m. at the Walker County Storm Shelter (455 Texas SH 75 North). Be sure to join your City that evening to learn more about each proposition and the state of your City. We look forward to seeing you there!



Voting Information

Early Early Voting 
October 24-November 4, Walker County Annex (1301 Sam Houston Avenue, Suite 101) , 
8:00 a.m.—5:00 p.m. 
Extended voting from 7 a.m.—7 p.m. on Tuesday Oct. 25 and Nov. 1

Weekend Voting 
October 29-30 , 8 a.m. - 12 p.m. & 1p.m. - 5 p.m., Walker County Annex Only

Temporary Branch Early Voting 
Walker County Storm Shelter, October 24-28 , 8 a.m. - 5 p.m.  (Except only 1-5 p.m. on Thursday, October 27)
Extended voting from 7 a.m.– 7 p.m. on Oct. 25

Election Day
November 8,2016 - visit http://bit.ly/2aL1MTy to see all polling locations. 

Register to vote by October 11 (through Walker County Voter Registrar)! 
Follow this link to learn how! http://www.co.walker.tx.us/department/?fDD=24-0.