The Madisonville City Council on Monday approved an alternative financing method to allow the city to start several much-needed infrastructure improvement projects.
The council approved publication of its intent to issue $1.75 million in certificates of obligation on a 4-0 vote. Council member Dale Kovacs was absent.
The certificate of obligation will be used for repairs to Lift Station 8 on the east side of town, and to begin the city’s project to replace current water meters with automated water meters.
Ben Rosenberg of U.S. Capital Advisors, the company that will facilitate the sale of the bonds, said the bonds are backed by tax revenue, but the city does have the option to repay them with either taxes or water department revenue.
“We looked at different options of financing from water board loans to bank loans, and I think (the certificates are) a solid approach,” Rosenberg said.
The city will provide notice to residents of Madisonville on the bond in lieu of a vote, he said.
The approval process also allows the city to do work on the projects earlier, and be reimbursed by the proceeds from the bonds.
Rosenberg said his firm will help with the sale, and seek the best possible rates for the city.
City Manager Camilla Viator told council members that Rosenberg is well-qualified to handle the sale.
Mayor Bill Parten said the issuance of COs is less expensive for the city, but Rosenberg said it was more middle-of-the-road in terms of cost, but was faster in the turnaround, as bonds issued through the Texas Water Board would take upwards of 6 months to turn around.
The city could conceivably see funds within 6-8 weeks.
Parten also said that this will let the city get started on projects quickly, as they were losing about 20 percent of revenue with the old water meters. The new meters will also allow the city to improve its billing and to monitor leaks and over usage.
“It helps us conserve water, but it also help us help our residents to not pay expensive water bills because of leaks,” Viator said.
The city also approved an agreement with the law firm of Germer PLLC, at a cost of about $30,000, for legal services in connection with the financing, and authorized city officials to negotiate a contract with PSI for installations of the new meters.
In a separate matter, the city approved an ordinance that would amend the zoning ordinance to add a pet grooming conditional use to its retail zone.