On a 3-1 vote in favor, with Councilman Jason Knight, Place 2 objecting, and Councilman Joe Dominguez, Place 3 absent, the Aransas Pass City Council Monday night, February 12th, cleared a path forward to borrow up to $16 million towards construction of this new Fire Department headquarters building and renovation of the Police Headquarters to follow. By authorizing a Certi_cate of Obligation, the municipal leadership was able to get a loan without placing the measure on a public ballot in the form of a bond request, angering many taxpayers. (Courtesy: City of Aransas Pass)
Despite the objections of some taxpayers, the Aransas Pass City Council voted 3-1 Monday night, February 12th, in favor of a Certificate of Obligation – as it’s known – to borrow $16 million towards construction of a new Fire Department headquarters, with a portion of the funding earmarked to renovate and expand police headquarters as well. Since last Fall, the city has been working with a representative of SAMCO Capital Markets, Inc., an Austinbased firm that is handling the transaction.
Citizens who voiced their opinions since late 2023 have demanded the issue should have been placed on a ballot for public vote, such as a bond measure, but elected officials skirted that process through channels afforded under Texas law. Normally, Certificates of Obligation – or ‘C.O.’s – are an instrument for emergency use, such as a need to borrow funds immediately following a catastrophic emergency. But that was not applicable in this instance, among the many reasons the government’s actions created such a furor, one that could possibly be cited in the results of this year’s coming election, Saturday May 4th. Councilman Vickie Abrego, Place 4, is up for reelection and she was one of the three councilmembers who voted in favor of the loan. Mayor Ram Gomez, and Mayor Pro Tempore and Councilman Carrie Scruggs, Place 1, were the others. Jason Knight, Place 2, is also seeking reelection and voted no. Councilman Joe Dominguez, Place 3, was absent.
SAMCO’s representative started with some reassuring news for council members, and that was to report the city’s ability to seek financing was “AA-minus”, based on Standard & Poors (S&P) bond ratings. It means the issuer – the city – is deemed financially sound and has adequate revenues and cash reserves to pay its debts and the risk of default is low.
Among the eight bids SAMCO received, TD Securities in New York City was the lowest, willing to finance the C.O. at a rate of 3.63-percent interest. To pay that in full will cost Aransas Pass $22, 984,000, or, $6,984,000 more than the value of the loan itself, payable over 20 years.
Anticipating negative reaction from many who attended last Monday’s meeting, Councilman Scruggs, and Mayor Gomez both went on the offensive, defending the city’s prerogative.
“Property taxes as a result of this bond will not be increased,” Scruggs assured detractors, explaining it was San Patricio County’s decision should they go up, something the city council had no authority to overrule.
Mayor Gomez reminded the audience that Hurricane Harvey in August 2017 proved devastating to the city, destroying the homes of an estimated 700 residents who didn’t all rebuild. Since then, the tax rolls have added at least the same number of new homes, “and then some,” he emphasized. And, he added, since much of the Harbor City’s revenue is generated from utility connections, each new residence added means that income source keeps getting bigger.
City Manager Gary Edwards also stated that, in time, the municipality has been able to enhance property values through infrastructure upgrades, and the government’s ability to borrow as a result has also risen exponentially. It was one more point of contention that underlined why improvements to the city’s public safety services were needed now.
“We have moved forward with the City of Aransas Pass,” Gomez said, “and we need to think about the safety of our citizens.”
Gomez, known to speak passionately on certain topics, increasingly raised the volume of his voice as he expressed his points of view on the topic. He reiterated that sales tax revenues have increased since Harvey, and the SAMCO representative’s assessment clearly underscored that the municipal coffers were rated highly, so the loan amount requested was already backed by lenders willing to take a risk on the city’s stable finances.
“It’s for the citizens of Aransas Pass!” Gomez, almost shouting, defended the planned expenditures, countering any suggestion the construction projects had any political undertone.
“Look at the fire we just had!” he exclaimed, referring to the Aransas County brush fire Sunday, February 11th, that occurred along a portion of the Hwy. 35 Bypass and near the border with Aransas Pass and burned at least 100 acres. The city’s fire department was committed to providing mutual aid. Gomez felt compelled to use that as another example for supporting the C.O. because the city’s First Responders needed the taxpayer’s support, warning such fire emergencies have occurred within city limits, too.
In response, another speaker argued that if the City Council was acting in the best interest of its citizens, then why are they taking the public’s ability to choose from them by refusing to place the issue on a ballot? The remark won applause.
Again, the SAMCO representative took to the podium, explaining all the history of the legislation that established the C.O. program in Texas, and how it could be applied by local government in both emergency and non-emergency settings. He acknowledged the reasons elected leaders choose this route might be deemed “controversial” by some. But he also advised that this financing method saved a municipality an estimated $20,000 in expenses that would have to be spent – at minimum - if a ballot measure was required.
“What’s the rush?” a woman from the audience stood at a podium in the center of the Council Chambers and asked a simple question. “What’s the rush?” she inquired further, asking why this issue couldn’t wait until the May election and come before a vote of the citizens?
“Amen” was heard in the room.
Edwards responded that interest rates could rise further the longer the government waited to request the funding.
“It could also go down,” the citizen justified. But her argument was for naught, and when she asked the council, “What other options did you look at?” other than a fromthe- ground-up new building for the fire department, Councilman Scruggs admitted, “We didn’t look at any other options. We didn’t need other options.” The woman turned around, frustrated, and returned to her seat.
The City Manager returned to the topic of cost, since it was a repetitive issue that troubled several people who testified against the expenditure of so many millions of dollars. Edwards contended that had the project been launched years earlier it might not have been so expensive, but labor and materials all cost more thanks to inflation and is likely to keep rising, at least for the foreseeable future.
“It’s just absurd the increases we are seeing compared to just a few years ago,” Edwards remarked.
A breakthrough in the back-and-forth debate came when the city’s financial advisor explained that if any funding remained from the $16-million-dollar loan that wasn’t used for the fire or police construction projects, it could be applied to infrastructure improvements, likes streets or drainage. The caveat being what the bids came in at for the priority work at the forefront. “Value engineering,” Edwards added, could also shave costs off the fire and police projects once each move to the design phase, noting that artist renderings many people have viewed of what each building could look like are very preliminary images.
“That’s going to be our opportunity to bring down the cost,” Edwards said, discussing how actual engineering design could help reduce expenditures significantly.
Some were not appeased, though, returning to a point of contention that taxpayers should still have the right to vote on the measure, yes or no.
More than an hour into the meeting, new interim City Attorney Carlos Valdez interjected, admonishing the Mayor.
“A little more order,” he advised Gomez was needed in managing the proceedings, Valdez contending that so many discussions and arguments unrelated to the specific agenda item before the full council had led the focus astray.
“You’ve set out rules of decorum,” as well as time limits for the public to speak, Valdez reminded Gomez, “none of which have been followed today,” he expressed, exasperated.
“This is the only way to get public business done,” Valdez said. “Let the public speak,” he counseled the elected leaders, asking those same officials not to respond, the practice – evident during this gathering – just creating further debate.
“Once they’re done, they’ve spoken,” the attorney stated, “then it’s up to the council, one by one, (and) you either vote it up or down,” Valez reminded council members of procedure.
“That’s the end.” The only dissenting vote among the four came from Councilman Knight who reserved his comments on the topic until others had spoken. Abrego, who sat at the opposite end, didn’t discuss the Certificate of Obligation, or utter a word during the debate, but sat stoically listening.
“The citizens deserve the protection from fire and police,” Knight began, “and no one in this room or this town is against either one of them,” he added. “But the people are the one’s paying the bills,” he continued, “so the right thing to do would be to table this, get it prepped for a bond election, and let the people vote on it.”
Knight followed up by submitting a motion towards that goal, but neither of his three colleagues on the council would agree to offer to second it, and his campaign for a ballot measure fizzled.
“The motions dies,” City Secertary Mary Juarez delivered the blunt assessment.
Abrego finally spoke, supplanting Knight’s motion with her own, asking that the city enter into an agreement to assume $16 million in debt. It was approved, 3-1.
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