1 1 2 3 4 KERR COUNTY COMMISSIONERS' COURT 5 Special Session 6 Tuesday, April 19, 2016 7 11:30 a.m. 8 Commissioners' Courtroom 9 Kerr County Courthouse 10 Kerrville, Texas 78028 11 12 13 14 15 16 17 18 19 20 21 22 23 PRESENT: TOM POLLARD, Kerr County Judge H. A. "BUSTER" BALDWIN, Commissioner Pct. 1 24 TOM MOSER, Commissioner Pct. 2 JONATHAN LETZ, Commissioner Pct. 3 25 BOB REEVES, Commissioner Pct. 4 2 1 I-N-D-E-X 2 NO. PAGE 3 1.1 Consider, discuss and take appropriate 3 action on Order Authorizing Publication 4 of Notice of Intention to Issue Certificates of Obligation to Finance 5 Construction and Equipping of a New Wastewater System to Provide Wastewater 6 Service to Center Point and Surrounding Areas in Eastern Kerr County. 7 Adjournment 17 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3 1 THE COURT: All right. It's April 19th, 2 2016, it's about 11:33 a.m., and this is a 3 Commissioners' Court meeting that has one item on the 4 agenda, consideration agenda, and it's 1.1, consider 5 discuss and take appropriate action on order authorizing 6 publication of notice of intention to issue certificates 7 of obligation to finance construction and equipping of a 8 new wastewater system to provide wastewater service to 9 Center Point and surrounding areas in Eastern Kerr 10 County. Commissioner Moser and Letz. 11 COMMISSIONER MOSER: I would yield to my 12 esteemed Commissioner Number 3. 13 JUDGE POLLARD: Esteemed? Esteemed or 14 steamed? 15 COMMISSIONER MOSER: Esteemed. He was 16 steamed earlier, but he's esteemed now. 17 COMMISSIONER LETZ: As I mentioned at our 18 meeting last week, there will be a number of special 19 agenda items and some may require special meetings like 20 this one does to get us in line for the closing of our 21 contracts with the State Water Development Board for the 22 financing of the wastewater system. 23 This is the first one, this is just a notice 24 that we are -- we intend to issue CO's, the -- I don't 25 have the backup right in front of me, but the CO amount 4 1 is this information in the backup was prepared by Tom 2 Spurgeon, our counsel in coordination with water 3 development board attorney Joe Reynolds and Dusty 4 Traylor, our financial adviser, that the amount that we 5 are noticed is $5,295,000.00 to fund the project. And 6 that's out of about roughly 33 million that we're going 7 to get in the first phase. So it's you know a small 8 amount that we're issuing the CO's for. Well, not a 9 very small amount, a relatively small portion of the 10 whole project. 11 Anyway, but this is just our notice of 12 intent to do that. There will be and there is in the 13 documentation, it's a pledge of ad valorem taxes as well 14 and there's also some language in the notice about 15 County parks. I just talked to Tom Spurgeon about that, 16 and it's just a legal requirement. Counties have one of 17 the few areas we have authority to raise revenue from, 18 other than ad valorem taxes is through our County park 19 system, it's not going to be used to pay back the funds, 20 but it's just a legal requirement why that language is 21 included, from what Tom Spurgeon just told me. 22 But anyway, this is not issuing, this is 23 just a notice that we intend to do it. And I think the 24 date is May 23rd is when we would actually issue the 25 CO's, or short of that process. I make motion to 5 1 approve the notice of intent to issue. 2 COMMISSIONER MOSER: Second. 3 JUDGE POLLARD: Been moved and seconded by 4 Commissioner -- moved by Commissioner Letz, seconded by 5 Commissioner Moser, and give notice of intent as set 6 forth in the agenda package for this to occur on what, 7 May 23rd? 8 COMMISSIONER LETZ: I think May 23rd is the 9 day, is that not correct? 10 MRS. DOSS: Uh-huh. 11 JUDGE POLLARD:. That's what's in the 12 documents here. All is fully set forth in the agenda. 13 Now, is there any further discussion or comment? 14 COMMISSIONER MOSER: Yeah, I'd like to make 15 a comment if I would -- may. CO's are a mechanism by 16 which County government can acquire secure funds. I'm 17 not really in favor of CO when we can do it with a bond, 18 but I think this is something really to make a point of. 19 Here is the opportunity for the County to get as 20 Commissioner Letz said 33 million dollars, something in 21 that is the type of project we're talking about. And if 22 we don't act on this now, the Water Development Board 23 will not have those fund available to us. So if we were 24 to go out for a bond, and put it up to election, that 25 money would go away. So this is something that it's 6 1 a -- I look at it as a necessary way to do it. We could 2 probably get some other ways to get the money, but this 3 is the best way to do it with the CO. So I'm all for 4 this a hundred percent. And I hope the public 5 understands why this mechanism is good. So -- 6 JUDGE POLLARD: It's a timing thing, as a 7 result of making the money available. 8 COMMISSIONER MOSER: Right. And the plan is 9 to have the services provided to the people who will use 10 those sewer system to pay back that bond, and so 11 therefore it will not be put at risk ad valorem taxes 12 and perhaps assets the County has, but the plan is to 13 pay all that back with the fees from the sewer services. 14 JUDGE POLLARD: Reimbursement type action. 15 COMMISSIONER MOSER: Right. Anyway I just 16 think that's important for the public to know that. 17 COMMISSIONER BALDWIN: One of my questions 18 is the reimbursement part of it and these fees, that the 19 user will pay. Now, if I remember right there is the -- 20 what is it MUD in Comfort or water district or -- 21 COMMISSIONER LETZ: Water Improvement 22 District. 23 COMMISSIONER BALDWIN: What? 24 COMMISSIONER LETZ: Water Improvement 25 District. 7 1 COMMISSIONER BALDWIN: As well as us that's 2 involved in some of that, so how do those fees -- how do 3 the reimbursement fees get back into the County cost, 4 how does that work? 5 COMMISSIONER LETZ: The -- and we're still 6 working on the, you know, the exact formula because we 7 don't know the dollars and the debt and the interest 8 rates and all that, but the way it will work, there will 9 be a maintenance and operation part of the annual or of 10 the monthly bill of the residents get, and they'll also 11 be a capital expenditure fee. 12 Our residents in Kerr County will pay a 13 hundred percent of the capital portion, which is the -- 14 pay the 5.295 million dollars. And then the residents 15 in Kendall County will continue to pay whatever their 16 current debt load is. 17 COMMISSIONER BALDWIN: I see. 18 COMMISSIONER LETZ: Part of that. And then 19 the maintenance and operation pretty much looks like it 20 will be equal across the whole thing. So the WCID will 21 collect the money, and then send it back monthly to Kerr 22 County. 23 COMMISSIONER BALDWIN: I see okay. Good. 24 COMMISSIONER REEVES: And how long before 25 it's complete the -- will we be having to pay out of tax 8 1 dollars? 2 COMMISSIONER LETZ: It is my understanding 3 is that it's interest only paid back until the project 4 is complete and generate revenue. Brenda and I have 5 talked a little bit about that. I don't know if she got 6 a further answer, but based on really rough numbers, 7 look in the neighborhood of probably two hundred 8 thousand a year. Assuming a three-year construction 9 phase. That we would -- that would be built into the 10 capital recovery as well. But we would be basically 11 floating that for about a three year period. 12 COMMISSIONER REEVES: So the two hundred 13 thousand if I understood what you're saying, and I know 14 that's an estimate, we would have to be paying that 15 interest during construction out of tax dollars? 16 COMMISSIONER LETZ: Yes. 17 COMMISSIONER REEVES: Then once everybody's 18 online we would start receiving -- 19 COMMISSIONER LETZ: Revenue. 20 COMMISSIONER REEVES: -- some revenue to 21 offset that two hundred thousand as well as debt 22 service. 23 COMMISSIONER LETZ: Correct. 24 COMMISSIONER MOSER: It's not everybody 25 online, we'll start making connections -- 9 1 COMMISSIONER REEVES: As they get online. 2 COMMISSIONER MOSER: Right, right. 3 COMMISSIONER LETZ: And it's possible, you 4 know, and Brenda and I talked about it, about this, 5 because it's being phased a little bit. And they -- I 6 mean, you know, there's some of that -- that's the 7 overall, I guess how it works. Westwood probably is 8 going to be the first dense area that's going to be 9 hooked up. They'll be hooked up before the line ever 10 gets to Center Point. 11 So you know they'll be some revenue coming 12 in probably in the year, year and a half. I'm not sure 13 exactly how it all breaks out as to when we have to 14 start paying the principal back to the water development 15 board, that's a question we really need to work on with 16 Dusty a little bit and that's good question between now 17 and the 23rd to know. 18 Part of the thing that's confusing a little 19 bit is that it's being -- this CO issue is for two 20 project numbers under the State revolving fund. One is 21 the easement acquisition that's going on right now, and 22 the other one is the construction. There's also as part 23 of those two, there's a large loan forgiveness portion 24 of about oh ten million, I think, loan forgiveness out 25 of that. And then there's an EDAP function or EDAP 10 1 portion that's about ten or 11 million. Multiple 2 projects. 3 COMMISSIONER MOSER: Yeah. EDAP'S 14 and 4 the other one's 12. 5 COMMISSIONER LETZ: 14, 12. So there's 6 being financed. So I'm not sure, you know, exactly how 7 the repayment structure is set up. 8 COMMISSIONER MOSER: And it's also -- and 9 that's a good question, Bob. It's a question of you 10 know, construction, when people are -- but it would 11 be -- it'd be nice to have a cash flow analysis on this 12 thing, just as an estimate. It's going to have to 13 change, you know, because we're not -- there will be 14 hick ups in the construction phase for sure. But we'll 15 at least get some first order estimate of what that cash 16 flow looks like. 17 COMMISSIONER REEVES: You think we could get 18 something like that before May? 19 COMMISSIONER MOSER: Well, it's like Brenda 20 and I talked about the other day, you know, you get -- 21 you need a 30 minute answer, you get a 30 minute 22 response, okay. You need a two week, yeah. I think we 23 could do something like that. We could get first order, 24 yeah. 25 COMMISSIONER LETZ: I think what we can do 11 1 we can look at the current construction schedule and the 2 hookups as that would go, and then how the revenue comes 3 in and then we can also find out on the repaying of when 4 the principal repayment starts. 5 COMMISSIONER MOSER: Sure, we should be able 6 to do that by the 23rd. 7 COMMISSIONER REEVES: As you said that in 8 order to get 30 million or whatever number -- 9 COMMISSIONER LETZ: 33. 10 COMMISSIONER REEVES: 33 million with this 11 type of financing and what it will provide down the road 12 just to protect what's -- what we have running through 13 all of Kerr County and that being the river. This is 14 something that needs to be done, but we would like to 15 see -- you know, obviously we, for the public's 16 understanding of how we're looking at it. 17 COMMISSIONER MOSER: And I think that's a 18 really key point to make, is we've gotta grab hold of 19 this money while it's available. And this is something 20 that -- 21 JUDGE POLLARD: Meaning it's grant money. 22 COMMISSIONER MOSER: Right. It's grant 23 money. Part of it's grant money, part of it's a loan. 24 But it's something Bill Williams and Jonathan began 25 years and years ago. 12 1 COMMISSIONER LETZ: Bill Williams. 2 COMMISSIONER MOSER: Ten years ago or so. 3 So this has been a long time coming. So when the -- 4 when the golden ring comes around you better grab it. 5 COMMISSIONER BALDWIN: Golden ring. 6 COMMISSIONER MOSER: That's on the -- you 7 didn't ride merry go rounds when you were a kid. 8 COMMISSIONER BALDWIN: Way too busy. 9 JUDGE POLLARD: All right. Let's back up 10 just a little bit. There's a motion on the floor, but I 11 see that the -- that it requires a roll call vote, and 12 so first there has to be a roll call as to who's present 13 by each Commissioner and the County Judge. 14 COMMISSIONER BALDWIN: Wait a minute. Where 15 do you see that? 16 JUDGE POLLARD: Well, it's in the proposed 17 form in the certificate. Over on this here, this form 18 right here.(Indicating.) It's a certificate out of the 19 clerk's office that all of this occurred. And we gotta 20 have a roll call first and then have a vote. Each 21 Commissioner recorded what his vote is, okay. All 22 right. 23 So Commissioner 1, are you here? 24 COMMISSIONER BALDWIN: I'm here. 25 JUDGE POLLARD: Commissioner 2, you here? 13 1 COMMISSIONER MOSER: I'm here. 2 JUDGE POLLARD: County Judge Tom Pollard, 3 I'm here. 4 Commissioner 3, you here? 5 COMMISSIONER LETZ: Yes, Sir. 6 JUDGE POLLARD: Commissioner 4, you here? 7 COMMISSIONER REEVES: Yes, Sir. 8 JUDGE POLLARD: Now, on the motion that's on 9 the floor, those in favor of the motion signify by 10 raising your right hands. 11 JUDGE POLLARD: I've got to vote, too. 12 COMMISSIONER BALDWIN: Judge, I've got a 13 couple more questions I'd like to ask. 14 JUDGE POLLARD: Before -- 15 COMMISSIONER BALDWIN: Yeah. 16 JUDGE POLLARD: -- we vote? Okay, go ahead. 17 COMMISSIONER BALDWIN: So shall we wipe out 18 that vote? 19 JUDGE POLLARD: Yes. Yes. 20 COMMISSIONER BALDWIN: Just back to the fee 21 thing. And we're going to be reimbursed to be able to 22 pay off a large amount of money by hookups and the fees 23 that those people -- the monthly fee. 24 COMMISSIONER LETZ: Yes. 25 COMMISSIONER BALDWIN: Do we have any -- I 14 1 can't get that in my mind of being -- that being enough 2 money to pay off a loan like this. 3 COMMISSIONER LETZ: We originally -- 4 originally being several years ago when the analysis was 5 done based nine hundred hookups which was still a good 6 number, and that's not counting the commercial hookups, 7 and at that point it was assumed that we were going to 8 end up spending about -- borrowing about -- or the CO be 9 about ten million dollars. It was the monthly capital 10 charge was about 60 dollars. The amount that we are 11 borrowing is half or 40 percent less, somewhere in that 12 range, so the cost -- the capital cost of the monthly 13 fee we're now looking at probably somewhere in the 30 to 14 40 dollar range. And that is not out of line for sewer 15 rates. 16 COMMISSIONER MOSER: And that would be like 17 about for that, that would be like 30 thousand dollars a 18 month if you had 9 hundred connections. 30 thousand a 19 month, so that's three hundred sixty thousand a year. 20 COMMISSIONER BALDWIN: Pretty good income. 21 COMMISSIONER MOSER: Right, right. 22 COMMISSIONER BALDWIN: And have we completed 23 purchasing the easement acquisition part of it? 24 COMMISSIONER LETZ: No, we have not. That's 25 undergoing and part of this is -- part of it and we can 15 1 close on this prior to completion, but we cannot receive 2 any funds until all the easement acquisitions are 3 complete. 4 COMMISSIONER BALDWIN: I see. 5 COMMISSIONER MOSER: And of this total 6 amount about six hundred thousand dollars is in the 7 budget for easement acquisition. 8 COMMISSIONER BALDWIN: Have we purchased 9 some? 10 COMMISSIONER MOSER: In the process thereof. 11 COMMISSIONER LETZ: We're not purchasing -- 12 we are endeavoring to have all the easements donated. 13 And we will purchase -- the plan is to purchase the 14 property for the lift station, is what we would like to 15 own. 16 COMMISSIONER BALDWIN: Well, I can tell you 17 that being involved in this Kerrville South functions 18 for several years, this is one of those better projects 19 that a Commissioners' Court can do for their County, and 20 that is to take all these homes off the septic tanks. 21 I remember back in the olden days when we 22 first started talking about all these things, how in the 23 Texas Hill Country, how under a septic tank the rocks 24 sometimes have large cracks and septic tank would fail 25 and it would just run right into the drinking water, and 16 1 you don't even know it. This eliminates all of that 2 stuff. And it eliminates it running into the Guadalupe 3 River, etc. etc. etc., so it's such a great project. I 4 don't think that the amount of money is a part of the 5 conversation. 6 I was just concerned about how if we're 7 going to be reimbursed for something how it's going to 8 happen, and kind of concerned about the time frame, but 9 that's okay. 10 JUDGE POLLARD: All right. 11 COMMISSIONER BALDWIN: Judge, I'm ready to 12 vote. 13 JUDGE POLLARD: I'm glad. 14 COMMISSIONER BALDWIN: I don't know what's 15 taking y'all so long. 16 JUDGE POLLARD: All right. I'll just take 17 one each, each Commissioner and myself individually. 18 Then Mr. Baldwin how do you vote? 19 COMMISSIONER BALDWIN: I vote aye. 20 JUDGE POLLARD: Aye. Mr. Moser. 21 COMMISSIONER MOSER: Aye. 22 JUDGE POLLARD: I vote aye. 23 COMMISSIONER LETZ: Aye. 24 JUDGE POLLARD: Aye. 25 COMMISSIONER REEVES: Aye. 17 1 JUDGE POLLARD: All right, it's unanimous 2 all five of us, all four Commissioners and the County 3 Judge have voted aye, and there have been no abstentions 4 because everybody's been present so the County Clerk can 5 fill the certificate out, and that it was done. And 6 this is to authorize the notice of intent as required by 7 law. 8 All right, is there anything -- any further 9 discussion? Anything further before the Commissioners' 10 Court? 11 There being none, we're adjourned. Thank 12 you. 13 * * * * * * 14 15 16 17 18 19 20 21 22 23 24 25 18 1 STATE OF TEXAS * 2 COUNTY OF KERR * 3 I, DEBRA ELLEN GIFFORD, the Official 4 Certified Shorthand Reporter in and for the Kerr County 5 Commissioners' Court, do hereby certify that the above 6 and foregoing pages contain and comprise a true and 7 correct transcription of the proceedings had in the 8 above-entitled Commissioners' Court. 9 Dated this the 27th day of April, A.D. 2016. 10 11 /s/DEBRA ELLEN GIFFORD Certified Shorthand Reporter 12 No. 953 Expiration Date 12/31/2016 13 14 * * * * * * 15 16 17 18 19 20 21 22 23 24 25