Sweeny to pay back loan following state transportation second-thought

SWEENY — Sometimes, a calculated risk does not pay off.

In a recent Sweeny City Council meeting, council members had to face the fact that they would have to pay back a loan they’d taken out without putting any of the money to good use.

The city took out a loan in anticipation of being selected for a transportation alternatives project by the Texas Department of Transportation. The project fell through, leaving the city with a financial burden and a need for alternative solutions.

“TxDOT reached out to me and had stated that they were very interested in funding the city of Sweeney for the transportation alternatives project,” City Manager Lindsay Koskiniemi said. “So what we had proposed to do is come back and do a 4-foot sidewalk in front of Sweeney High School, from Hackberry over to North Elm. That would have been actually two sidewalks, and what that would have achieved is putting a walking path all the way around the middle school and the high school.”

Following an accident involving a car and a pedestrian child a few years back, Sweeny had been looking for solutions to the lack of sidewalks, especially in areas where schoolchildren frequent.

The transportation alternative projects grant in question was only available to applicants that had the money upfront to pay for the projects they applied for. If their application were to be successfully accepted, the Department of Transportation would reimburse the applicant for up to 80 percent of the cost of the project, Koskiniemi said. Following Sweeny’s unsuccessful application for the grant in 2019, the state encouraged the city to reapply, guiding city staff on how to reformat the application for a higher likelihood of acceptance upon its next submission.

The tailoring and interest encouraged the city to take out the loan in anticipation of a successful application, Koskinemi said.

Despite tailoring the project to match the Department of Transportation's criteria, Sweeny’s $2 million project was rejected again in favor of other cities, Koskinemi said.

“What council has opted to do is pay the money back,” Koskinemi said. “What we found is that we've made more than enough interest through pool investment earnings to pay the loan back with our first interest payment due, that was approximately $58,000. That was made Dec. 1. However, there's a $45,000 origination fee.”

For now, Sweeny City Council has decided to hold on to the origination fee until the first principal payment is due in hopes the city will generate enough money to pay for it though interest revenue.

“What we're looking at doing instead, just so that we have more debt capacity and flexibility available to us, is we want to put it to the voters,” Koskinemi said. “So in May of 2025, we're looking at putting a general obligation bond on the ballot for voters to decide on. What we've found is that this water, the brown water issue, has been the most public problem that we've experienced at least since I've been here.”

The city's brown water problem, caused by aging metal pipes depositing elevated levels of manganese into the water, according to an update posted to Sweeny's website March 21, 2023. Following the Texas Commission on Environmental Quality's ruling the city should discontinue it's use of polisphosphate to treat water, Sweeny residents have seen an increase in colored water coming from their faucets. Although not harmful, it is unsightly. This has prompted the need for widespread line replacement and the implementation of a manganese filter to lighten the water’s color, Koskiniemi said.