By ANDY SEVILLA
Kyle city leaders approved a $2 million lump sum payment to Hays County to cover the city’s share of improvements to Dacy Lane, despite having a seven-year repayment plan in place.
Finance Director Perwez Moheet told council members at the May 6 city council meeting that the full reimbursement would save Kyle close to $500,000 in interest costs.
With the lump sum payment, which Hays County agreed to in late April, the city would override the seven-year repayment plan set to begin later this year, and in turn would realize $455,430.83 in cost savings.
“Kyle’s partnership with Hays County is extremely important to the future of our community’s transportation infrastructure,” said Kyle Mayor Lucy Johnson. “By repaying our debt to the county early the city council proved our commitment to that partnership, along with saving tax payers nearly $500,000 in interest payments.”
Per a Dec. 18, 2012, amendment to the city and county inter-local agreement, which confirmed the city’s share of the improvements — 24.39 percent of the total cost —city staff negotiated a seven-year payment plan, with the first payment due Aug. 24.
Though the contract was approved in 2012, the city deferred their first payment until 2014, allowing time for city staff to develop an alternate funding source in an effort to avoid paying interest fees, identified at 3.89 percent per year, Moheet told the Hays Free Press.
At the time of the Dacy Lane improvements, the city had recently committed to and approved a funding plan for reimbursing Hays County $4.5 million for the FM 150 improvement project, Moheet said.
Kyle and the county agreed to improve Dacy Lane by widening the roadway to three lanes width and to a county road standard as part of economic development incentives to attract Seton Medical Center Hays, according to the interlocal agreement.
Kyle assumed part of the construction cost after requesting the county to widen and improve the Dacy Lane to a four-lane, curb-and-gutter, urban-arterial roadway, the agreement states. Additionally, Dacy Lane was to be straightened north of Goforth Road to facilitate safety and mobility of traffic, including emergency vehicles associated with the hospital.
The city’s $1,935,868.93 lump sum payment to Hays County will come from accumulated lot fees for road improvements and from accumulated interest income in Certificates of Obligation debt approved in 2007.
The lump sum payment however, will have no effect on the city’s overall debt, which is close to $100 million including interest. Moheet said the interlocal agreement is considered a contractual liability, similar to other short-term payables, and as such did not increase or decrease Kyle’s outstanding bond debt.
Presently, Kyle has $70.885 million in principal debt, and $27.372 million in interest costs. Moheet said Kyle is scheduled to make a $2.538 million payment on the city’s debt on Aug. 15.
