City greenlights debt as opposition to county bond mounts
PRESIDIO — At a special meeting on Monday night, Presidio’s City Council voted to pursue certificates of obligation to fund badly-needed maintenance equipment and property investments. Per the notice published in the newspaper, the city intends to seek financing up to $1.98 million for “vehicles and equipment … for the public works department” and property acquisitions that would expand City Hall and provide a new home for Presidio’s first responders. The legal notice also includes “the payment of contractual obligations for professional services” to consultants advising on the projects.
The council’s decision to take on debt marks a shift in the way the city of Presidio views its finances. For more than a decade, the city’s books were in crisis — it took time, money and grit to correct course after a series of failed and incomplete audits.
Now that the city is back on track, local leaders have an opportunity to think outside the box. “Oddly enough, having debt in a city is not actually a bad thing — it’s not like credit card debt,” Mayor John Ferguson explained at a council meeting last week. “This is very different, and having debt actually gives us the flexibility to set our tax rate where we need it.”
Each summer, municipalities, school boards and other local governments sit down to set their budget for the upcoming year. In order to finance that budget, they must also set tax rates, which have a few moving parts: there’s a maintenance and operations rate, which governs the day-to-day ins and outs from the city’s accounts, and the interest and sinking rate, which includes debt payments.
In a city like Presidio, where money is tight, there isn’t a lot of flexibility on the maintenance and operations side. Ferguson gave the example of the EMS department’s community paramedicine program, which offers a suite of home medical services to Presidio’s most vulnerable residents. The program has proven to be an overwhelming success story, and is beloved among its clients, but required the city to put up a large chunk of change in matching funds up front. “This past year, we had obligated $150,000 towards the program, and that was $150,000 that came straight out of the budget for one activity,” Ferguson explained. “That kind of money — when you’re looking at the picture of our whole budget — that’s a pretty big bite.”
Monday night’s vote simply authorized City Council to formally announce that they were going to seek certificates of obligation for certain projects, but the final amount and exact purchases have yet to be set in stone. Upgrades for the public works department could include new dump trucks, a grappler truck and a vacuum trailer; property investments could expand the footprint of City Hall and finally seal the deal on a long-discussed move for the city’s first responders and municipal court.
The final price tag for any of these investments could vary — advisor Thomas Lastrapes of Tijerina Financial Consulting provided mock-ups of a few different scenarios to city council, adjusting the potential bill if the city were to opt for used equipment instead of new or wanted to pursue plans with shorter-term payoffs. The $1.98 million figure quoted in the legal notice is the “most expensive scenario,” but could be whittled down if the city is able to strike deals along the way. “We tend to be conservative, so that’s what our scenarios are based on,” Lastrapes explained. “You could realistically buy all of your [items] new, pay for the bonds and remain under that ‘not-to-exceed’ amount.”
Council members will meet on Tuesday, September 16, to cast their final votes on the certificates of obligation. The vote will take place over the course of a regular City Council meeting, held at 6 p.m. at the Presidio Activities Center.
The announcement that the city intends to take on debt comes hot on the heels of an outcry against the county doing the same. At last week’s meeting, Council Member Fernando Juarez confirmed that a petition he’d circulated protesting the county’s intent to seek certificates of obligation for courthouse renovations and new equipment for the county’s road and bridge department had garnered enough support to trigger an election. (Details about that vote are forthcoming.)
Lastrapes said that Monday night’s vote was just the first step of many. “This is just the step to issue the Notice of Intent so we can get the ball rolling for y’all,” he explained.
