In addition to its new stormwater utility fee, Sherman is planning to issue $7 million in debt to fund stormwater projects needed in the city.
The Sherman City Council approved a resolution Monday authorizing the publication of a notice of its intention to issue $7 million in certificates of obligation and declaring its expectation to repay expenditures with proceeds of future debt. In a document prepared for the council, city staff said the funds would be used to improve flood control and take on projects that were identified in the 2013 Stormwater Master Plan.
“This will allow us to issue up to $7 million for stormwater projects only,” Director of Finance Mary Lawrence said. “There is a potential, the funding we may ask for quite a bit less than that. We’ve obtained some information about some very favorable financing we can get from the water development board on certain projects.”
Lawrence said up to half of the city’s planned stormwater projects might qualify for the favorable financing.
“It would save us potentially hundreds of thousands of dollars over the life of the debt because the terms are really that good,” she said. “We can’t fund all of the projects with the water development board debt but we do want to look into that and see if we can get a little bit more out of the stormwater fee.”
Lawrence then confirmed, after a question from council member Terrence Steele, that to repair all of the city’s stormwater projects would cost around $55 million.
“We’re just taking a little bite out of a $55 million issue we have here in Sherman with stormwater concerns,” Steele said. “One of the things that has happened is for decades now we have kicked this down the road. And I understand that people are concerned with fees, but if we continue to kick it down the road, that $55 million is going to continue to increase, more floods are going to happen, more people are going to lose their homes and lose their possessions.”
Among the projects expected to be undertaken are land acquisitions, detention ponds, drainage improvements and an update to the floodplain map.
City Manager Robby Hefton said the funds could also be used for increasing drainage capacities through culverts and similar projects. The certificates of obligation are expected to be issued and funded before the end of the year.
City staff said approximately $7 million in debt service will be provided from Sherman’s stormwater utility fee, with a secondary pledge coming from its ad valorem tax revenues. The stormwater utility fee was officially adopted by the city following a pair of public hearings allowed for it and the establishment of the stormwater utility program. Director of Engineering Clint Philpott said he expects the billing process for the new fee will likely begin toward the end of the year.
Two members of the public came forward to speak during that public hearing, one against the fee and one in favor of it.
“I just can’t see any sense of us adding another tax to our system,” Morris Salerno said to the council. “We’ve got plenty of taxes just like it is. You’re calling it a fee, but it’s not a fee. It’s a tax.”
Salerno said he was sure that the fee would be raised several times in the coming years. Fred Mask, who spoke to the council last month on behalf of Contemporary Drive residents who experienced flooding in August, spoke in favor of the stormwater utility fee Monday evening.
Fred Mask, who spoke to the council last month on behalf of Contemporary Drive residents who experienced flooding in August, spoke in favor of the stormwater utility fee Monday evening.
“I am one of the people who have been affected by 15 to 20 years of the city not maintaining the creeks and ditches,” Mask said. “This is the second time in 10 years that my family and I have lost everything.”
Mask said the Sherman residents who have been continuously impacted by flooding need the city to get involved with their problem.
“You guys have put it on the back burner for years,” Mask said. “Now you have an opportunity to make a difference to help some of the families that don’t have the necessary finances to just decide we’re not going to live here anymore. We need you to get involved.”
The proposed fee of $1 per month will be based on one equivalent residential unit, which works out to 3,400 square feet of impervious area. Customers with less than that amount of impervious area on their property will pay less than $1 and those with more will pay per equivalent residential unit that they have on their property. City staff estimate the fee will bring in $458,000 per year for infrastructure projects.
After the city experienced significant flooding last month, a number of Contemporary Drive residents attended the council’s Aug. 21 meeting to ask for help with their continued problems with stormwater runoff. At the time, Hefton said improvements to areas like Contemporary Drive would be among the first to utilize funds from the stormwater utility fund.
As he has done throughout the city’s budget process, council member Shawn Teamann voted against the ordinances to establish the stormwater utility fee, as well as the resolution giving notice of the city’s intention to issue debt.
“I’m not opposed to a program; I’m just opposed to the fee structure,” Teamann said. “For most folks, it’s going to cost $1 on your bill, but for some of our bigger users, it could be up to $1,000. I think we should maybe consider pulling back on some of our new development projects that we’re working on the west side of town and address some of the issues we currently have before we start working on new infrastructure.”
The certificates of obligation for the stormwater projects will be the second issuance of debt the city has done this year.
The city issued $18.8 million in certificates of obligation in March of this year to pay for work on city streets, bridges and the relocation of the city’s Blalock Park Fire Station. During the 2015-2016 fiscal year, the city issued $6.9 million in debt to fund the remodel of the Sherman Public Library and work on a number of street projects.
In April, Hefton told the council he expects Sherman will issue more debt during the 2017-2018 fiscal year to continue the city’s infrastructure and transportation programs. Documents provided to the council during its April budget planning meeting show an expected total of $16 million in debt to be issued for work on city streets and parks next year, though Hefton said that amount may ultimately change.