By Mason W. Canales
Killeen Daily Herald
Eight Central Texas cities have accumulated about $638 million in debt to help provide services, utilities and roads during more than a decade of sustained regional population increases.
"I think growth absolutely grows your indebtedness when your are trying to keep up with infrastructure," said Glenn Morrison, interim city manager for Killeen.
Killeen has used voter-approved bonds and other loans to build facilities; improve, expand and create roadways; install sewer and water lines; and provide other major infrastructure installments.
Similar bond-funded projects have taken place in Harker Heights and Lampasas, said two city finance directors, Carol Boberg of Lampasas and Alberta Barrett of Harker Heights.
In Harker Heights, recent projects include the rehabilitation of Indian Trail, Harker Heights Community Park, the police station, Purser Family Park, the
library, the activities center and the Pet Adoption Center.
Lampasas has used bonds to fund water, sewer and electric system improvements, said Boberg. Its most recent loan is funding a fire truck, a new fire station and other facility and utility projects.
Killeen acquired most of its debt in 2002 when residents approved a $69 million bond for new city structures, such as the police station that was completed in May 2010 and Lions Club Park in 2008, said Morrison. Money still remains from that bond for future projects.
The city's debt also spiked when it decided to take on two road projects that were awarded Texas Department of Transportation pass-through financing - or the repayment of construction cost. The projects are the Rosewood Drive extension to U.S. Highway 190 and the State Highway 195 and Loop 201 overpass.
While Killeen borrowed about $40 million to complete the projects, the city will be repaid the construction cost, said Morrison, who noted that the city's financing speeded up the much-needed roadwork.
Harker Heights' oldest bonds are from 2003, said Barrett. With the funds the city paid for improvements to Mountain Lion Trail, the police station completed in 2007, water storage tank renovations and other utility projects.
In reports taken in October, Killeen had the most debt, about $183 million, among the eight cities examined, according the Texas Bond Review Board.
"We see the amount that we have as manageable, and it is an amount that we are comfortable with," said Morrison. "However, any community would like to have the least amount of debt possible."
Morrison said Standard and Poors, a financial credit rating business, considers that Killeen is managing its money, including debt, well. The company has given the city a double A rating, which means the city has a very strong capacity to meet its financial commitments.
Temple is the second most-indebted city in the region, followed by Copperas Cove, Harker Heights and Belton. Lampasas, Nolanville and Kempner had the least amount of debt. If the three small cities were combined, the total debt was less than $9 million.
Harker Heights, Belton, Temple, Lampasas and Copperas Cove all had similar financial ratings to Killeen from Standard and Poors, according to the company's website.
Examining municipal indebtedness by per capita rates, Copperas Cove is highest, with more than $3,000 in debt for each person living in the city, according the state review board. City officials did not respond to media inquiries about its debt.
Harker Heights has nearly $1,900 in debt per person, making it second to Copperas Cove. Nolanville had the lowest per capita debt, about $359 per person.
"(Harker Heights) is very conservative with what is in the best interest of the city, and what the city has the ability to pay back," said Barrett. "We don't want to do it too early. We don't want to borrow more than we need."
In Killeen, the city will take short-term debt for equipment and fleet, said Morrison, while infrastructure and facility projects will be a longer term debt of 20 or 25 years.
For example, he said, "If the council approved 30 vehicles (for the police department) that would be a three-year note, (and) we would issue debt for those."
In Harker Heights, Barrett said the city tries to budget equipment and vehicles into its general operations budget, but when expensive vehicles are needed, such as a sewer vacuum truck, the city leases them until it owns them.
Lampasas' last bond was a 25-year loan and included the purchase of several large vehicles for parks and recreation and the fire and public works departments.
Ability to borrow
Barrett said Harker Heights could borrow far more than it has based on financial laws and regulations governing municipal debt limits.
"We are so far beneath it," said Barrett, noting the city could borrow an estimated 10 percent of its property values, or about $196 million. "The number is kind of astronomical."
When cities consider acquiring debt, Morrison said they should finance "only the amount you can sustain and afford."
"With our growth rate, I think our city is doing very well with managing its debt and accounting for that," he said. "Our finance staff and our financial analysis would alert us if we are going in the wrong direction."
But there is another side of debt management as well: refinancing. Morrison said cities need to watch their current debt and the market to make sure they refinance some of their older debt properly.
Lampasas, Copperas Cove and Harker Heights have all refinanced loans within the last couple of months. Morrison said investigating the refinancing of some bonds might be among the first action taken by the Killeen City Council once the May 12 election restores its quorum.
Contact Mason W. Canales at email@example.com or (254) 501-7474.
By the numbers: Central Texas cities take on debt
City County Principal owed Interest owed Total debt
Killeen Bell $182,750,000 $102,896,546 $285,646,546
Temple Bell $118,335,000 $40,809,675 $159,144,675
Copperas Cove Coryell $97,460,000 $23,929,466 $121,389,466
Harker Heights Bell $50,625,000 $20,586,999 $71,211,999
Belton Bell $18,045,000 $5,283,588 $23,328,588
Lampasas Lampasas $6,680,000 $2,502,471 $9,182,471
Nolanville Bell $1,530,000 $729,383 $2,259,383
Kempner Lampasas $497,000 $62,543 $559,543
Austin Travis-Williamson $1,163,802,994 $417,005,882 $1,580,808,876
Waco McLennan $319,155,000 $140,438,647 $459,593,647
Source: Texas Bond Review Board
Central Texas debt per capita
City Population Debt Per Capita
Copperas Cove 32,032 $3,042.58
Waco 124,805 $2,557.23
Harker Heights 26,700 $1,896.07
Temple 66,102 $1,790.19
Austin 790,390 $1,472.44
Killeen 127,921 $1,428.62
Lampasas 6,681 $999.85
Belton 18,216 $990.61
Kempner 1,089 $456.38
Nolanville 4,259 $359.24
Source: Texas Bond Review Board
2011-12 Property tax rates
City & Operations Sinking Total
Killeen 54.734 19.546 74.28
Harker Heights 50.24 17.46 67.7
Copperas Cove 54.48 21.91 76.39
Temple 32.4 24.39 56.79
Belton 54.05 11.35 65.4
Lampasas 31.4081 8.1137 39.5218
Nolanville 34.54 12.4 46.94
Kempner 12.09 13.43 25.52
Source: County Tax Appraisal Districts