City council receives good financial news on two fronts

By David May
editor@mineralwellsindex.com

Mineral Wells City Council members heard good news on two financial fronts Tuesday night.

One was that the city added about $500,000 to its reserve fund balance during the 2007-08 fiscal year.

While revenues, such as sales taxes, were strong during the year, they still fell about $230,000 short of projections. However, it appears the city spent about $730,000 less than budgeted.

Noting that the 2008 fiscal year’s numbers are not yet final, City Manager Lance Howerton noted that the approximately half-million dollar carryover into this year is on top of the city not expending about $1 million it planned to move over from its reserve funds to help pay for expenses and projects. That the city did not use any of those reserve funds is thanks to the city’s strong revenue performance during 2008.

Howerton said there were several reasons the city’s expenses were under budget during the last fiscal year. One was the that the buyout of properties on The Circle for flood mitigation did not take place in the last fiscal year, and the city did not perform aerial photography of the city for topographical mapping. Both of those expenses will take place in the current year and again are budgeted expenses.

The city manager was quite pleased to report the half-million dollar carryover.

“I think it’s all very positive, given the position of the national economy,” Howerton told council.

Also, Howerton noted to council the city has been notified that its ratings for general obligation and water and sewer bonds have been upgraded by national rating agency Standard & Poor’s. The city’s bond ratings in both categories improved not one, but two steps. The city’s rating for general obligation bonds improved from “A-” to “A+” while its rating for water and sewer bonds went from “BBB+” to “A.”

Bonds are instruments of financing large capital projects, typically with voter approval. General obligation bonds are used generally for projects such as new buildings or road construction. Water and sewer bonds are used for those kinds of projects.

What the improved ratings mean for the city is lower interest rates on borrowed capital project funds and more favorable interest from investors buying the bonds. Higher ratings reflect an entity’s ability to back and guarantee the bonds.

“When you go out to the market, we have an investment grade rating, and that’s real beneficial and we can get a lower interest rate and that’s real advantageous,” said Howerton.

He said the bond rating company looks at all aspects of a city, or the entity being graded, and its governing body in determining its rating.

“It’s a very comprehensive look at the community and the organization,” Howerton stated. “The look at the amount of growth, the fiscal policies in place, tax rates to be sure they are not too high. They look at the whole thing.”

Howerton said the city is no immediate plans to seek approval for general obligation bonds authorization. He said the Turkey Peak additional water reservoir project will require issuance of water and sewer bonds at some point in the future.

On Tuesday the council approved advertising for bids to demolish five structures – two commercial and three residential. One of the commercial demolitions on the current list is the former Head Start facility at Wolters Industrial Park. It was recently torched as part of fire personnel training.

The other is at 111 North Washington St., also at Wolters Industrial Park, taking down two portions of a building. Some of the demolition will involve asbestos containment and will require special procedures and disposal under the auspices of the Texas Department of Health.

The residential structures on the demolition list are:

• 1912 S.E. 20th St.

• 2606 S.W. 7th Ave.

• 604 Travis St.

Council will open the bids on Jan. 7 and plans to award the bid Jan. 20.

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