El Paso City Council OKs use of $93 million non-voter approved debt for projects

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Snapshot of the El Paso City Council meeting on Monday night.

EL PASO, Texas (KTSM) — The El Paso City Council intends on using $93 million in non-voter approved debt to finance various capital improvement projects and to help ongoing quality of life initiatives.

The council voted unanimously late on Monday night to make changes to fiscal policy after discussing the city’s future financial challenges over the next several years. At hand are a number of cost increases due to challenges from the global pandemic and the deferment of various projects last year.

The council voted to move capital interest gains over $12 million to projects needing more funding among changes in fiscal policy.

And, with a second vote, the council voted 6-2 to let the public know the city intends to issue $93 million in certificates of obligation. City Reps. Joe Molinar and Claudia Rodriguez voted against the measure.

An introduction of the ordinance allowing the city to go to the bond market will be introduced in April, according to city officials.

“I know that debt can be scary,” said District 5 City Rep. Isabel Salcido. “But based on the very strong financial situation, I am confident that issuing this debt in the form of these bonds will not harm the city’s financial well-being.”

Certificates of obligation are used by local governments to fund public projects and are a form of debt that does not need to be approved by voters, according to the comptroller of Texas’ website. They are often associated with emergency spending but are not limited to it.

In El Paso, the use of certificates of obligation has drawn criticism due to concerns about how the debt can last for years without voter say.

Monday’s discussion also covered the city manager’s ability to authorize moving up to $1 million in and out of approved projects and start a new one up to $500,000 if it is consistent with approved programs.

Brian Kennedy, a local attorney and CEO of the El Paso Sports Commission, called into the meeting and was critical of certificates of obligation and of the council’s consideration to allow the city manager’s office to move around such large amounts of funds.

“This isn’t efficiency, it’s a bit of an abdication of city council responsibility,” he said. “The voters didn’t vote for the city manager to make $1 million decisions. They voted for City Council to do that.”

The spending relates to nine bond and capital improvement plans created to better the city’s services and maintain existing structures. Numerous city assets have aged and the area continues to grow, creating a need to increase spending.

Initial proposals show the city intends to spend at least $141.3 million from funds, including debt, and available cash in 2021. Most of the funds come from debt for initiatives like the 2012 Street Infrastructure plan, the 2018 Capital plan, 2019 Capital plan and 2019 Public Safety Bond.

City Manager Tommy Gonzalez said much of what the debt will go to is to pay for commitments made by previous councils to streets and matches with the Metropolitan Planning Organization.

“This isn’t what we want to do,” he said. “This is what you want to do, council. This is what you’ve instructed us to do. I just want to be clear about that.”

The listed uses for the debt include improvements to streets, bridges, sidewalks, ADA accessibility, traffic signals, lighting, signage, museum, cultural center projects, site demolition and technologic installations.

A refinancing aspect to the city’s vote on Monday anticipates some savings that will offset costs, officials say. Robert Cortinas, the city’s chief financial officer, said the changes in fiscal policy for 2021 will not have an effect on the tax rate.

District 1 City Rep. Peter Svarzbein said the funding priorities identified by the city clearly show they will be helpful to the public. He said the projects deal with “wants and needs.”

“I can tell you first hand that our office receives almost every month pretty terse, and I am using the word terse loosely, emails from constituents speaking very plainly about the utter disrepair of Schuster,” Svarzbein said. “That was a project that was scheduled to go. It was deferred because of COVID. It’s a project that I share with my colleague from District 8 and I can’t speak for her, but I know that for our office. It’s something we hear a lot about.”

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