The Killeen City Council is considering making an amendment to its current budget to allow for a $5 million upfront payment on a new water treatment facility.

Martie Simpson, city finance director, said the upfront capital contribution will save the city money.

“The interest rates we’re getting are fairly low,” she said. “Paying $5 million upfront will help (the city). We’re not earning any money while our money is in the bank, but we pay more money when we go to the bond market to issue debt. So we will save the city more money.”

By putting $5 million upfront, the city will have to borrow less money when it acquires a bond to fund the treatment plant, which will accrue less interest.

Simpson said at a previous workshop meeting that staff consulted with the city’s financial advisers, and it was determined that the best option for the city was to put in an initial capital outlay for the water treatment plant on Stillhouse Hollow Lake after looking at the city’s water and sewer fund balance.

“We’re not in a capitalized interest situation because the water and sewer fund is extremely healthy,” she said.

Capitalized interest is interest incurred during the time it takes to have the facility in full operation.

Simpson said the city’s total debt service is a little more than $87 million, which includes existing debt and the debt

that will come into play once the city enters negotiations regarding the new treatment plant.

The council approved an agreement with Bell County Water Control and Improvement District No. 1 in February for the financing, design and construction of a water treatment plant on Stillhouse Hollow Lake.

The agreement amended the city’s existing contract with WCID-1, giving it an additional 10 million gallons of treated water per day, which is projected to meet the city’s growing water needs for the next two decades.

It adds to the city’s current 32 million gallons per day from Belton Lake.

The council will formally vote on the issue at Tuesday’s regular meeting. | 254-501-7555

Contact Natalie Stewart at or 254-501-7555

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