City secures financing for future multimillion-dollar sanitary sewer system

Wednesday, September 09, 2020

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Seguin, TX, USA / Seguin Today

Darren Dunn

 

(Seguin) — The Seguin City Council moved forward recently with its plans to seek financing for a $184 million upgrade to the city’s sanitary sewer system. 

The massive wastewater project would consolidate the city’s two wastewater treatment plants into one centralized plant that would then be housed at the city’s Geronimo Creek Wastewater Treatment Facility. The move would allow the city to close its sewer treatment facility on Walnut Creek, located near the city’s downtown. That plant has long been considered a nuisance by many because of its close proximity to homes, Starcke Park and downtown Seguin. 

Duane Westerman, of SAMCO Capital Markets, serves as the city’s financial advisor. Westerman explained what the council was being asked to consider during Tuesday’s meeting.

“This item is the first official action to move forward with an application to the Texas Water Development Board for the wastewater treatment plant project that you have been working on for quite some time. This is the same project. It hasn’t changed from what was presented to you before. It was approximately $184 million. You might have seen in the resolution that the number was higher at $197 million. This is an application to start the process and that application needs to be a number that it will not exceed. So in addition to the $184 million approximately that we had in the last presentation — that includes a possibility of the reuse  project which was around $11 million and then there’s also — to go through the water development board, if we go through it, there would be a loan origination fee of 1.75 percent so this number is a maximum number that includes all possibilities,” said Westerman.

Westerman says there are a number of benefits to the city in choosing to go with this financing option. He says there could be substantial savings when it comes to the amount of debt that the city will be required to pay.

“That loan origination fee, if you recall from some of the previous discussions allows us to get this loan which is a subsidized loan from the water development board at much lower interest rates so that 1.75 percent which on a $184 million is in the $3 million range — that savings on that interest over the life of borrowing that money for the wastewater treatment plant could be as much as $100 million so it’s well worth the dollars for that consideration,” said Westerman.
Westerman says this is just the beginning of the financing application process. He says if it is eventually approved and funded by the Texas Water Development Board, then that offer would have to come back and be approved by the Seguin City Council. 

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Category: Development, news, City Council

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