On May 9, 2009, the permanent residents of Rayburn County served by the Rayburn Country Municipal Utility District (the District) approved a resolution for a $5.5 million dollar Bond Issue.  Later in 2009 and in calendar year 2010, the District sought the support of the State Revolving Funds for the Drinking Water and Clean Water projects contained within the Bond Issue.  In both instances the District failed to compete successfully for this funding.  In October 2010 the District went to the Texas Water Development Board (TWDB) and commenced its application for financial support.  The application took an abnormally long time to be approved; from October 2010 to May 2011. 

 

This was due to the fact that the District has two sources for funding its debt service; both of which are approved by the office of the State Attorney General.  Most entities seeking funding from TWDB have only one source -  an Ad Valorem Tax on property within their District.  A large portion of our debt service is from Ad Valorem Taxes or taxes on both the property itself and the improvements thereon.  The other 40% comes from taxes on unimproved property whose owners receive a Special Benefit from the District due to availability of water and sewer or water alone to their property.  These taxes are relatively minor:  $45 per year for water alone or $100 for both water and sewer.  This was a concern for the TWDB and it took many agonizing months and detailed answers to many questions to make them understand that the Special Benefits Tax was a valid source for debt service.  There are more than 1500 lots that are subject to the Special Benefits Tax.  Your tax dollars, both Ad Valorem and Special Benefit Tax, can only be used for servicing the debt.  No tax money can be used for operational costs, administrative or personnel related financial matters.

The District broke the $5.5 million into two parts; one for $525,000 and the other for the remaining $4.975 million.  The backing for the $525,000 segment was sought through the Texas Commission on Environmental Quality (TCEQ) for several reasons.  First: It was quicker.  The entire process took 3-4 months before we had the funds to spend.  Second: We know that seeking the approval of the TWDB was far more complex and detailed.  This $525,000 allowed the District to purchase emergency equipment which was badly needed.  The District purchased a new backhoe, a mini track hoe, a lowboy trailer for hauling equipment, a sewer jet machine to clean out clogged sewer lines, a dump truck, a pickup truck, a generator for Water Well # 1 (the District received a $145,000 grant for a stand-by 250 KVA generator for Water Well # 2), a trailer-mounted generator to service all our other electrical outages including the sewer plant if the installed back-up generator fails and an equipment storage building to house the new equipment purchased.  The request list presented to TCEQ will be reconciled against the actual purchases and the estimates provided to insure the District adheres to the letter of the funding requests granted by TCEQ.  Any variance in the use of the TCEQ funds must be approved by TCEQ.  For example, when the District found that it had received stimulus grant funds for a standby emergency generator for Water Well # 2, the District requested to reallocate the TCEQ funds formerly designated for Water Well # 2 to Water Well # 1 which had not been funded in our original request.  Permission was granted by TCEQ and the District has now improved its capability to keep the water/sewer system running in the event of another emergency like Hurricane Rita.

As is the case in every construction loan, there are administrative costs.  Approximately $35,000 of the $525,000 loan will go for legal, financial and engineering fees.  Also, the interest charged to the District for this short-term loan (2 years) will amount to about $14,000.

For those customers who are wondering what the District has been doing with the taxes collected in 2009 and 2010 – the District has a $358,000 note payment due in September 2011 on the 15th of the month and has the final payment on the $525,000 note due September 15, 2012; plus the interest on the $4.975 million Bond which will total $414,000.

The District Board is acting as a good steward of the funds with which you have entrusted it.

The larger sum of the Bond money will encompass a variety of projects with the lion’s share going to just two improvements:  the new sewer plant and the rehabilitation of the old plant and the installation of the ozone treatment systems at Water Wells # 1 and # 2.  All of us will be happy to see the ozone systems installed and the significant improvement in the water.

We will keep you informed of the status of our application for funding support from the TWDB.  As of this date our paper work has all been submitted and is under review by the TWDB.  The review completion and the availability of funds are expected in late September or early October 2011.

Thank you for your patience.T