Page 324 - CityofWataugaAdoptedBudgetFY25

DEBT SERVICE

Water and Sewer Certificates of Obligation
Debt Service Fund

The Water and Sewer Certificates of Obligation Debt Service fund is used to account for
Certificates of Obligation whose principal and interest are payable from earnings of the
City of Watauga's Water and Sewer Enterprise Fund.

The original debt in the amount of $11,370,000 was used to purchase the Water and
Sewer system from the City of North Richland Hills in October 1996, to build the
necessary infrastructure, including an elevated water tank, and to purchase the
necessary equipment in order to efficiently run the utility system. In July of 2001, City
engineers, along with the firm of Knowlton - English - Flowers, Inc., produced a Capital
Improvement Plan. Over $2.8 million in water and wastewater needs where detailed in
this plan. Due to the urgency of some of these needs, the City issued revenues bonds
during FY2001-2002 to fund $1.7 million of these projects and the remaining projects
were completed on a pay-as-you-go basis. Due to low interest rates, the City was able
to refund the 1996 Certificates (years 2008 - 2016) in FY2004-2005 for significant
savings.

In July 2011, the City issued $7,365,000 of Combination Tax and Limited Pledge
Revenue Certificates of Obligation. Of this amount, $2,780,000 is payable from and
secured by a lien on the net revenues of the City’s utility system, and the remaining
$4,585,000 is funded by ad valorem taxes. These bonds financed heavy equipment for
water and sewer operations, and various improvements to the utility system. This
issuance was refunded in November 2020, resulting in an interest savings of $84,000
for the remaining bonds.

In July 2012, the City issued $7,730,000 of Combination Tax and Limited Pledge
Revenue Certificates of Obligation. These bonds financed Water and Sewer Projects
that have been completed. Due to low interest rates, the City was able to refund the
certificates in October 2021 for a significant savings of $419,775 for the remaining
bonds..

In FY2016-2017, $1.2 million of the Utility Fund debt service dropped off due to the
final payment being made in FY2015-2016 for the debt service associated with the
purchase of the Water system from North Richland Hills. In the summer of 2017, the
City Council considered and approved additional utility project infrastructure funding by
issuing certificates of obligation in the amount of $7.325 million. These funds were
received in August 2017 and provided funding for several water and sewer projects
identified in the City’s 5-year Capital Improvements Project plan.

An $8.490 million Combination Tax and Limited Pledge Revenue Certificates of
Obligation was issued in August 2019. $8.065 million of the issuance was dedicated
to water sewer projects and to fund capital equipment and the remaining amount will

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