The Amarillo City Council unanimously approved the issuance of roughly $30 million in certificates of obligation on Tuesday, paving the way for major street improvements and upgrades to the Colonies park.
Council members voted 5-0 to authorize the debt, which will fund street reconstruction, annual maintenance projects and park improvements tied to the Colonies Public Improvement District (PID).
The item had originally appeared on the council’s agenda for the Feb. 10 meeting, but city officials said it was not ready for approval at that time.
City leaders have been exploring ways to improve Amarillo’s long-term street maintenance planning. In 2023, the council suggested staff examine establishing an annual debt issuance dedicated to street maintenance and reconstruction. Officials said the approach would allow city staff to evaluate street conditions every year rather than the previous cycle of every three to five years.
At Tuesday’s meeting, city officials outlined how that strategy is taking shape.
Hooper explained that staff has developed 10-year program goals beginning with street condition assessments conducted each November. The city has also begun planning maintenance projects earlier in the cycle to better align with construction schedules.
“In other words, what you’re seeing in design right now that’s already fixing to get underway would be for next year, and we did the same thing a year ago to get ready for this year. Projects to be out for bid early enough to get plenty of interest from our contractors,” Hooper said.
The earlier planning schedule is designed to attract more contractor participation and ensure projects begin on time.
Hooper said contractors typically look to secure work by the spring in order to prepare crews and resources for the summer construction season, making early bidding important for competitive pricing and scheduling.
The city received bids for the debt issuance Tuesday morning, according to Steven Adams with Specialized Public Financial Inc., a municipal advising firm working with Amarillo.
Adams said the city sold the Certificates of Obligation at a 3.43% interest rate to TD Financial Products LLC.
The total issuance amounts to $29,280,024 and will be distributed across three primary projects.
About $16.17 million will fund a major reconstruction project along Osage Street from 34th Street to 58th Street. That portion of the debt will be financed with a 20-year amortization period.
Another $12 million will go toward next summer’s citywide street maintenance program. That portion will be financed with a 10-year amortization.
The remaining $1 million will fund improvements at the Colonies park. That debt will be amortized over 20 years and paid for by the PID through its own assessments rather than general city taxes.
Adams also explained how the debt could affect the city’s tax rate.
Property tax rates are calculated using two components: maintenance and operations (M&O) and interest and sinking (I&S). The M&O portion supports everyday city operations such as public safety services, employee salaries and supplies. The I&S portion funds payments on bonds and other long-term debts.
The percentages from both categories are combined to form the overall property tax rate charged per $100 of property valuation.
Adams said about $6 million in the city’s existing debt service is scheduled to roll off in 2028, which could help offset the financial impact of the new issuance.
In the 2027 tax year, the city could avoid raising the I&S tax rate tied to the new debt if it chooses—and is able—to subsidize the debt service using approximately $2.265 million in available debt service funds during the next budget cycle.
If the subsidy is not used, the estimated tax rate increase would be $0.0129. That would translate to about $12.88 in additional annual taxes for a home valued at $100,000.
Whether the city can apply that subsidy will not be determined until the upcoming budget process later this year.
Adams also noted that funds collected for debt service can grow over time due to interest earnings and late payment penalties.
“So you collect taxes based on what you’re going to pay on the I&S fund. Your taxes come in through mainly February, that money sits there until the following August. It earns interest, it used to not earn interest, but here lately, the short-term rates have gone up. There’s also, you collect penalties and interest that aren’t budgeted for late collections. Between the penalties, interest, interest on the late payments, and interest on the fund balance that builds up over time. And so it can only be used to pay debt,” Adams said.
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