The Odessa City Council on Tuesday voted 6-1 to approve using certificates of obligation to pay for the $95 million rehabilitation of the city’s water treatment plant.
Council members Detra White, Mari Willis, Tom Sprawls, Steve Thompson, Denise Swanner and Mark Matta voted for the COs during Tuesday’s work session. Mayor Javier Joven casted the lone dissenting vote.
Prior to council’s vote, Joven said he agreed that the water treatment plant improvements were needed, but would be voting “no” on principle.
“During my campaign (for mayor) I said I would be against debt without citizen’s having a voice,” Joven said. “I will stay consistent and vote ‘no.’”
Matta and Swanner also said they would have preferred a citywide vote on the issue, but agreed plant improvements were needed.
“I have always been in favor of the water treatment rehabilitation,” Matta said. “The water treatment plant needs to be revamped.”
Matta criticized previous council members for failing to address the aging plant’s growing disrepair.
“Former council members didn’t address the problem,” Matta said. “Now we are here because of inaction by the former council; now here we are in an emergency situation.”
The council’s vote came just days after the Ector County Elections Office threw out a petition effort by the Ector County GOP to force a citywide vote on the funding of the water treatment plant’s rehabilitation.
On Friday, the county’s elections office announced that the petition had failed because only 2,155 out of 3,245 signatures submitted by the local GOP group were found to be valid. A minimum of 2,923 signatures were needed to place a bond issue on the November ballot.
“While the petition fell short, we learned a lot about it, and we’ll know what do next time,” local GOP Treasurer Jeff Russell told the council.
Russell pointed out that the creation of COs was prompted by the devastation of Hurricane Harvey. The original intent was to provide municipalities devastated by the hurricane with a way to obtain funding quicker to respond to emergencies, Russell said. Since then, a growing number of municipalities have “abused” the original intent by using COs to avoid seeking voter approval on non-emergency projects.
“I think the whole mechanism has been abused,” Russell said.
Joven acknowledged that how the project would be funded had resulted in a contentious battle among council and between council and the GOP group.
“Through it all I took extra care to make sure people were heard,” Joven said.
City administrators have said the 60-year-old water treatment plant is in dire need of repairs and upgrading, and warn the system could fail at any time, potentially leaving thousands of Odessans without water.
The rehabilitation project will include extensive upgrades to the current plants electrical and computer systems, chemical feed and filter systems and chemical storage facility, Public Works Director Tom Kerr has previously told the council.
Assistant City Manager of Administrative Affairs Cindy Muncy told the council that the next step is to get the city’s official credit ratings back and to seek buyers of the COs. The process should be completed by the first part of October, Muncy said.
City administrators are predicting the interest rate for the COs will not exceed 2.95 percent, Muncy said. The $95 million debt will be paid over 30 years.
Muncy said the debt will be repaid primarily with water and sewer funds, but on the city’s application for the COs they indicate that property taxes could also be used.
The inclusion of property taxes was to attract a lower interest rate, but the city does not intend to use property taxes to repay the COs, Muncy said.
Muncy said it’s likely that the city will increase residents’ month water rates to help repay the CO debt. She estimated the increase will be $3.68 per 5,000 gallons.
Council and administrators met early Tuesday morning to begin discussing the city’s 2021-22 operating budget. No action was taken, but council did discuss several proposed budget items.
City Manager Michael Marrero asked the council to consider giving all city staff a 4 percent cost-of-living pay increase for 2021-22. He noted that due to COVID-19 and financial unpredictably the pandemic posed, no raises were given in 2020. Normally, employees receive an annual 3 percent raise.
Council members Willis and Thompson briefly lobbied for a 5 percent employee raise. Mayor Joven urged the council to stick with the slightly more conservative 4 percent proposal made by city administrators.
Muncy said the council could return later in the upcoming fiscal year and increase the raise to 5 percent if the city looks financially healthy.
Council will meet several more times publicly to discuss and review next year’s proposed budget before voting to adopt it.