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Funding for Water and Wastewater Projects Explained at Special City Council Meeting
Amid the startup of numerous high-cost infrastructure projects, City Manager Shawna Burkhart called a special city council meeting on Tuesday 2/18/2025 to provide updates on finances. “The city has to obviously issue more debt in the future to address these water and wastewater issues,” said Burkhart. She reviewed the different internal funding sources available for each project, which outside funding sources are in progress, and what upfront investments are required for loans and/or grant qualifications.
“The 2nd Well, the 2nd International Bridge, and Wastewater Upgrades,” Burkhart stated directly, “all three… we must fund.” The bridge is a potential source of revenue for the City of Del Rio, while the water and wastewater projects are emergency community health requirements. There have been many questions about the available funding for the 2nd International Bridge project and if instead that funding can be reappropriated to pay for the water and wastewater projects.
During Q&A, Councilperson Carmen Gutierrez asked Burkhart, “Any funding sources and anything that we have set aside for the bridge, which is the 2nd International bridge, is an enterprise fund and cannot be used on another enterprise fund such as water and wastewater, is that correct?” Burkhart responded, “Enterprise funds are determined by city council as to how those funds are to be used, but they are not normally intermingled.”
Elaborating on the available city funding per project, Burkhart said, “the city water system and wastewater system is its own enterprise fund. We do make transfers to the general fund… for just the cost of administration… there is a transfer there from the utility fund to the general fund, but that is simply for oversight and administration.” She went on to say, “The City’s 2nd International Bridge project or funding really has nothing to do with the city’s water and wastewater utility enterprise fund or its operations. These are two separate, completely different funding sources. The bridge and wastewater and water utility funds are very separate funding sources. They do not interact.”
Councilperson James DeReus chimed in to comment, “Six years previous, we basically used the enterprise fund as a slush-fund… right, it was kids in the candy store, oh we need more money, transfer it over...” He then referred to Burkhart and said, “In your experience here, we did not do that, but we have transferred millions of dollars, and every year I’ve asked questions about it. And in previous years we have transferred millions of dollars. I’m glad we are not being willy nilly about it anymore. But we have to realize that our rates on the utilities have been affected by subsidizing the general fund. That’s why the rates are what they are.”
Simultaneous to the 2nd Well, the 2nd International Bridge, and Wastewater Upgrades, Burkhart and the City are looking back through old finances to “reconcile intergovernmental fund transfers” from previous years. Burkhart addressed progress on the financial reconciliation audits for Fiscal Years (FY) 2023, 2024, and 2025. She listed off facts on their progress, stating that “in the last four months the city has completed and adopted the FY 2023 audit, but it still has much to address in the FY 24-25 audits.”
The city is applying for grants, and has been for several years, but, in the face of these emergency infrastructure investments, additional debt and loans are inevitable. Before the city can be approved for loans, Del Rio needs to prove that they can increase their revenue to cover the payments. Burkhart said the city needs “consistent revenue streams to cover the biannual debt payments.” The banks require proof that the city has enough revenue to repay the loans. “Unfortunately, there is no way around the fact that they must be paid back,” said Burkhart. The 2nd International Bridge and Economic Development are two of the city’s big potential revenue sources that could help repay loans to fix water and wastewater issues. But all new Del Rio development has been slowed by those very same water and wastewater issues.
“The key things are water in our community, and sewer, so let’s stay focused,” said Mayor Alvaro Arreola.
Time is needed for reconciliation, surveying, and estimating. Engineering and construction documents, etc., are needed to apply for larger loans and/or grants. Funding applications require proof that the project is feasible and all preparations complete. Studies, analysis, engineering documents, bid selections, and construction documents are a few examples of the requirements Burkhart shared. “We need funds more immediately,” said Burkhart. In the meantime, the city is taking on debt to cover costs.
“We will be pursuing shovel-ready projects, because only when those are shovel-ready, by their terminology, are we eligible for grants and loans and so please keep that in mind. I know master plans are not fun, studies are not fun, no one thinks they are a good use of our dollars. But when it comes to funding agencies, they look at those documents,” said Burkhart.
“Actually, we received today… I believe 2 years ago, Greg applied for a bank grant… and I believe that was received today… $500,000,” said Burkhart. She thanked Greg and his team for all their efforts. Public Works Director Gregory Velazquez stepped up to the podium and confirmed, “$500,000 is the initial 100% grant, we are looking at an additional 3-5 million which is another 100% grant.” 100% grant means no match required. $500,000 has been released to the City of Del Rio to be applied to Phase 1 of the wastewater upgrades. An even larger portion will be released once all qualifications are met for Phase 2 and 3. Velazquez is not done with grant applications yet. He said, “we continue to go after more grants.”
One way to raise funds for water and sewer projects is to raise water and sewer prices. When a question about utility rates was posed, Burkhart responded, “No, we are not sitting here tonight ready to make that decision because we have not quantified what it’s going to cost to issue debt, to address these issues, to see what the interest rates will be for each of these debt issuances, so all of that has to play into the rate structure.” She said, “it is a moving target at this moment, there is no way we can bring before you a utility rate with so many moving variables, so we hope to bring that to a close in the next 2 months.” Before they can make changes, they are first going to submit data to NewGen Strategies for analysis to generate an accurate utility rate. As a final option, Burkhart briefly stated that “interest payments may need to be subsidized by property tax to address issues of water and wastewater.”
An alternative type of loan that the city has investigated are called “swift funds.” Burkhart said, “We worked through, what are our priorities, because swift funds are fantastic low interest funds, and we have 3 projects [that are] eligible for funding for swift.” Eligible projects include the 2nd water well, water lines, and chlorine filter. Burkhart expressed interest in the swift loans because some of the eligible projects could lead to a reduction in operating costs. If Del Rio upgrades the filter technology, Burkhart says, “there would be significant savings.”
Burkhart summarized, “Honesty and transparency is what the city strives to provide to its citizens. The city’s goal is to provide a superior clean and consistent flow of water for the citizens of Del Rio, Laughlin Air Force Base, and those served in Val Verde County. In addition, the city’s goal is to also provide a superior wastewater system that accommodates existing homes and businesses as well as future growth. Any additional funding through outside sources can potentially lower water and sewer utility rates for those served… "We must consider maintenance and improvements to our current infrastructure for us to consider any future extensions of our city.”
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