The Copperas Cove city council reviewed the pass through financing process for a U.S. Highway 190 bypass at a workshop Tuesday, detailing the program that could be the only chance to get the bypass off the ground.
The council ultimately approved the financing application at its regular meeting after lengthy discussion during the workshop.
Before authorizing City Manager Andrea Gardner to submit the financing application at the regular meeting, city officials met with Gary Kimball, president of Specialized Public Finance Inc., to discuss the fine points of the program and the exact dollar amounts involved.
This project would create a reliever route at U.S. 190 west of Farm-to-Market 2657 to the east side of Copperas Cove, diverting traffic from the congested stretch of U.S. 190 that bisects the city.
The bypass would be two lanes wide with interchanges at each end and one access point at Old Copperas Cove Road and Farm-to-Market 3046. The bypass would have room for two more lanes in the future.
If the application, due May 11, is approved, the Texas Department of Transportation would reimburse the city for about $8 million of the total cost of the project with payments beginning one year after construction is complete.
The reimbursement payments are calculated using the length of the project, an unknown reimbursement rate and the number of vehicles using the bypass per day. According to estimates, the minimum mileage-based reimbursement rates would be about $376,983 per year, for 19 years beginning in 2015.
"That is the one item we won't know what that is, unless and until, we are approved and we begin the negotiations for the rate," Gardner said. "The more vehicles you have travel the roadway, the sooner you're going to get paid back for that debt."
Kimball said the agreement specifies a minimum payment TxDOT is required to make the year after completion, regardless of the traffic counts.
"That is determined before you ever issue the bonds to start the project," he said. "You know exactly what the minimum payment is going to be from TxDOT for any given year."
There is also a maximum payment that would come if the traffic counts exceed the projected amount, meaning the city could be repaid sooner than the 20-year bond period.
About $42 million of the total $55 million cost would be paid by Category 3 state funding that the Killeen-Temple Metropolitan Planning Organization tentatively reserved from TxDOT during a meeting in Austin on Feb. 10. The maximum pass through financing, about 82 percent of the total cost, comes to $49.86 million.
The city would contribute $5.4 million plus interest on the debt, plus the net effect of a tax increment reinvestment zone implemented by the county and sales tax revenue.
Kimball said TxDOT will be responsible for mainly for the construction cost, while the city will carry the weight of financing costs.
"(TxDOT will) give you what amounts to about 90 percent of the project cost back over no more than a 20-year period, but you've got to come up with your 10 percent construction cost match and carry the financing in the interim," Kimball said.
Pass-through financing was created by the 78th Texas Legislature in 2003 to help communities fund the upfront costs of state highway construction projects.
If the application is approved, the city plans to issue the debt for construction in November.