Council approves $2.2 million for infrastructure
Teague City Council members authorized the sale of $2.2 million in certificates of obligation to finance construction of infrastructure expansion and improvements along Highway 84 East, while meeting in session on Thursday evening, August 23rd.
The proposal will accomplish two goals including allowing the city to meet its legal and contractual obligations to property owners in the area annexed into the city limits in 2003 by providing full municipal services and providing an area that has both a favorable location and city services for future economic development.
To make the proposal work, the city has joined in with the Teague Economic Development Corporation, which will contribute $400,000 to the project. The $400,000, which will be borrowed from Prosperity Bank and deposited in a separate account with the city, will be used to make all the interest and principal payments until February 2015. The city will assume responsibility for the bond payments beginning with the February 2015 payment.
All the Certificates of Obligation will be sold to Prosperity Bank in what is commonly known as a ?private placement? bond sale. The bonds will be repaid over a 20-year period at a fixed interest rate of 3.75%. In order to properly collateralize the bank?s investment, the city also adopted a tax levy that would, if necessary, raise revenues through property taxes to make the bond payments.
City Administrator Vince DiMaggio emphasized that the adoption of a tax levy does not mean the city will raise property taxes immediately, or ever. But it does give the City Council permission to raise a sufficient amount of additional revenue to cover the bond payments if revenues are at any time are insufficient to cover those payments.
The risk involved in the issuance of the bonds is that the city is planning for the area in which the services are being expanded along Hwy. 84 to be developed within the next 3-5 years, so the additional sales taxes collected will be the primary source of repayment of the bonds.
Total cost of interest to issue the $2.2 million in certificates of obligation at 3.75 percent over a 20-year period is $860,444.
In other action taken at the meeting, council members approved a change in the city?s employee health care plan by a 5-0 vote. Council members approved a motion to change from Texas Municipal League based health insurance underwritten by United Healthcare to insurance provided by Blue Cross/Blue Shield of Texas.
City Administrator DiMaggio informed council that he recently received notice from TML that premiums would increase from $428.66 to $497 per month for each city employee, costing the city an additional $21,500 per year in health care premiums. After analyzing numerous options from various companies with slightly higher deductibles to achieve lower premiums, staff selected a plan from Blue Cross/Blue Shield of Texas. Key points include a $30/$55/$100 office visit co-pay; a $3,000 per year employee deductible; and a four-tiered prescription drug benefit for $438 per employee per month.
Council members also approved a healthcare premium cap of $450, meaning if the city?s employee healthcare plan premiums rise and exceed $450 per month, the employee would be required to make up the difference through payroll deductions in the future. It was noted at the meeting that the Teague ISD has a similar healthcare cap in the amount of $275.
Two changes in the City Code dealing with the City Administrator were also approved during the meeting. The first change removes the provision for a 1-year term in office since the city administrator is covered by an employment agreement with the council, which specifically sets a term. The second change gives the City Administrator the authority for appointing, promoting, suspending and when necessary terminiating city employees. The City Attorney, City Secretary, and Chief of Police are not covered by this provision as they are Municipal Officers and may only be removed by the Board of Aldermen. The motion to approved the changes passed by a 3-2 vote with Alderman Huffman, Steed and Nickleberry voting for and Aldermen Hargis and Gibson voting against.