Pearland City Council will have the ability to fund specific debt for 30 years

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Members of Pearland City Council will now have the option of financing debt issued in the form of bond certificates for up to 30 years. (Andy Yanez / Community Impact Journal)

Members of Pearland City Council will now have the option of financing debt issued in the form of bond certificates for a term of up to 30 years. This means that larger fixed assets such as city buildings, facilities and utility projects with a useful life of more than 20 years may have debt associated with them up to 30 years. The debt certificate does not require the approval of the voters.

At a November 22 meeting, city council unanimously approved a resolution to change the city’s comprehensive financial management policy statement, meaning that debt issued as a bond certificate should generally have a maturity set at 20 years, but the city council will have the option of extending the term of the bond certificate to 30 years.

“This gives the city more flexibility, helps us manage the tax rate and debt as different projects come along,” said Pearland financial advisor John Robuck.

Despite unanimous approval, not all board members were in favor of the details of the resolution. City council had three options to adopt regarding bond certificate funding, one of which included a 30-year option that would have forced all major capital projects with a useful life greater than 30 years to be funded. for 30 years.

In a 4-2 vote, city council members voted in favor of the amendment that was passed. Council members Alex Kamkar and Woody Owens voted against the amendment to the resolution that was passed, but both voted in favor of the resolution later in the meeting.

“I’m trying to put together something that is a bit more taxpayer friendly,” Kamkar said.

In the documents on the agenda, city staff put together two examples of the difference between 20-year, 25-year and 30-year funding.

Using the bond certificate offered in 2022, the cost of it is $ 16.4 million, which over the 20 years will accumulate $ 7.88 million in interest. This adds up to about $ 1.22 million in debt service per year. Under a 30-year financial plan, the $ 16.4 million bond certificate accumulates $ 12.2 million in interest, but the annual average debt service drops to $ 962,693.

Kamkar wanted city council to approve the amendment option that would have made longer projects with a useful life greater than 30 years to be funded in a 30-year plan.

“Between drainage, parks, facilities, streets all these good things … this number [cost of unfunded projects the city plans to finance] is $ 437 million. It’s really close to half a billion dollars. … and a lot of that is going to be on [certificate of obligations]”Kamkar said.” I’m just saying for the taxpayer who will have to foot the bill on this, let’s just structure this a little more taxpayer friendly. “

With the City Council amendment adopted, any project that could be funded for 30 years must first be approved by Council.

“I think so [City] The Council has to issue a 30-year debt, it has to do it very, very carefully and very strategically and [make] of course because it’s a lot of money, ”Pearland Mayor Kevin Cole said. “Four and a half million [dollars] it’s a lot of money and maybe it’s the same taxpayer paying for it, someone today as well as [in] 30 years.”


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