Council members consider issuing $30 million in debt to pay for multiple projects

Killeen Daily Herald
By Paul Bryant | Herald Staff
April 16, 2023

More than $30 million in certificates of obligation will be used to pay for several construction projects if Killeen City Council members approve issuing the debt.

“During the fiscal year 2023 budget process, City Council (members) deliberated the different options to address capital improvement projects,” according to a staff report from Judith Tangalin, the city’s executive director of finance. “On (Sept. 20, 2022), City Council provided a motion of direction to provide a financial forecast and future debt service capacity at a future meeting.”

Council members are expected to discuss issuing the certificates of obligation during a workshop on Tuesday.

City Manager Kent Cagle delivered that presentation on Nov. 15 during a workshop and offered the same data during a Jan. 9 meeting, telling council members that it could take as much as $232 million in bond debt over the next nine years to improve or build public buildings and other infrastructure.

The City Council has three options for funding renovations at or construction of Killeen public buildings — certificates of obligation, general obligation bonds and tax increment reinvestment zone revenue.

Municipal and county governments use tax increment financing “to pay for improvements that will draw private investment to an area,” according to the Texas comptroller’s website. It “redirects some of the (property tax) in a geographic area designated as a tax increment reinvestment zone (TIRZ) to pay for improvements in the zone.”

“My recommendation is that if the law doesn’t require you to do GO bonds — which have to be put out for a vote — that you don’t do it,” Cagle said in November. “You do it with COs. You don’t have to put debt for a fire station out to a vote.”

With certificates of obligation, Cagle has recommended the expansion of the parking lot at police headquarters in south Killeen and construction of a police evidence storage building, fixed-based operator building at Skylark Field, fleet services facility and parks maintenance facility, as well as park construction and renovation. Those projects, and issuance costs and contingency funds, total $32 million.

“The resolution authorizes proceeding with the issuance of certificates of obligation, identifies the allowable uses of the proceeds, limits the maximum principal amount to $32 million and directs a public notice of intent to be published,” the staff report shows. “The city should receive the funds from the issuance” on Aug. 2, 2023.

The possibility of issuing the certificates of obligation was also discussed during a workshop on March 30, when much of the same financial analysis and data presented last year was offered again.

General obligation bonds aren’t secured by municipal assets, whereas revenue bonds are backed by income generated from specific sources or projects.

“Local governments pay for public infrastructure projects by issuing long-term debt, either through COs or the more common general obligation (GO) bonds, which require voter approval, or through revenue bonds that must be backed by a specific revenue stream, sometimes generated by the project itself,” according to the Texas comptroller’s website. “Given their streamlined adoption process, COs can be particularly attractive when a local government wishes to, for example, take quick advantage of lower interest rates, purchase a newly available property or come into compliance with a federal or state regulation.”

Certificates of obligation are often used by cities, counties and health and hospital districts to pay for construction, demolition or restoration of buildings and equipment or materials for them, land acquisition and professional services related to those projects.

“COs often are associated with emergency spending, but their use isn’t restricted to such purposes,” the comptroller’s website shows. “They can be used to fund public works as part of standard local government operations.”

Projects the city may complete with general obligation bonds include construction of a new City Hall at a cost of about $66 million. The existing Killeen City Hall is on the National Register of Historic Places. Renovated for that purpose in 1993, the original Killeen High School was built in 1923 on a city block bound by Avenue E to the south, Root Avenue to the west, North College Street to the east and Avenue D to the north.

Other projects that may be funded with general obligation bonds include an animal quarantine facility, a southwest branch library, recreation and teen center, new park development and new roads.

Cagle has said that council members must vote by August on whether to call the bond election for November.

Other agenda items include:

Citizen petitions

Michael Fornino: “Civics, the council and the citizens.”

Consent agenda

Resolution accepting a Federal Aviation Administration Airport Infrastructure Grant for the design of security improvements at Killeen-Fort Hood Regional Airport.

Resolution approving a professional services agreement with Garver for design of security improvements at Killeen-Fort Hood Regional Airport for $120,900.

Resolution approving a fireworks display application at the Killeen Athletic Complex on July 1.

Resolution authorizing change orders with Silsbee Ford for $225,278.

Resolutions

Authorize an addendum for the Bell County Water Control and Improvement District No. 1 Lake Belton Plant Power Resilience Project for $431,789.

Securing a closed captioning system.

Approve a Tax Increment Reinvestment Zone agreement with CSW Killeen for reimbursement of infrastructure costs associated with development of Anthem Park for $12,741,099.

Ordinances

Amend the parkland dedication and development ordinance to provide exemptions.

Public hearings

Consider a request by Franklin Land Associates to rezone 2.34 acres from agricultural district to neighborhood business district with a conditional use permit east of State Highway 195 and north of the Lampasas River to allow for a single-tenant retail store no larger than 10,641 square feet.

Consider a request by Patrick Purifoy to rezone 6.43 acres from professional business district to professional business district with a conditional use permit to allow for a daycare at 3100 Little Nolan Road.

Consider a request by Mitchell & Associates to rezone 3638 Love Road from agricultural district to single-family residential district.

Consider an ordinance submitted by Franklin Land Associates to amend the future land use map from a public space designation to a residential mix designation for 3.7 acres east of Trimmier Road and north of Andalucia Lane.

Consider amending the demolition by neglect ordinance.

Consider amending an ordinance to change the Bell County dedicated tax rate for Tax Increment Reinvestment Zone No. 2.

Consider an ordinance readopting the youth curfew.

Consider an ordinance amending the fiscal year 2023 annual budget to adjust revenue and expenditure accounts in multiple funds.

Discussion items

Killeen Economic Development Corporation update.

Errors associated with properties in the Tax Increment Reinvestment Zone No. 2 that were not marked properly by the Bell County Tax Appraisal District.

Continue or dissolve the Crime Solutions Committee.

The meeting is scheduled for 5 p.m. at City Hall, 101 N. College St.