TWDB approves Cottonwood Shores loan request
The Texas Water Development Board (TWDB) on Thursday, Nov. 17, approved by resolution financial assistance in the amount of $1,395,000 from the Drinking Water State Revolving Fund to the city of Cottonwood Shores.
The city will use the assistance to finance the rehabilitation and expansion of a water treatment plant. Cottonwood Shores could save approximately $212,000 over the life of the loan by using the Drinking Water State Revolving Fund.
The financial assistance will allow the city to finance the planning, design, and construction costs of the project. When complete, the water treatment plant will be able to treat 1 million gallons per day. The plant to provide water through 547 connections to more than 1,158 citizens is proposed to take the city far into the future with safe drinking water from Lake LBJ.
When the Cottonwood Shores City Council met Thursday night, Nov. 17, it anticipated of approval of the $1.39 million TWDB assistance loan. Approval was based not only on the need to replace the aging plant, but also based on its “2A” rating on the city's “strong” ability to pay back the loan.
“The utility system produces net revenues of 3.69 times the annual debt service requirements for the first year of principal repayment,” reads the staff recommendation. “This higher coverage level indicates greater flexibility to withstand unforeseen expenses while still assuring repayment of debt.”
It goes on to say that, overall, the city has been able to retain 17 percent of cash reserves since 2011. The water utility maintains liquidity with cash and short-term investments equivalent to 72 days of operating expenses.
The city’s average median household income of $43,750 is 82 percent of the median for the state overall. The median household income results in a high household cost factor of 2.99 percent, which is above the industry benchmark of 2 percent of the median household income for water and wastewater service. A cost factor of 1.25 percent or below is ideal and above 2.5 percent is considered high.
A $275,000 Community Development Block Grant (CDBG) will offset some of the cost of the new plant.
The TWDB is the state agency charged with collecting and disseminating water-related data, assisting with regional planning and preparing the state water plan for the development of the state’s water resources. The TWDB administers cost-effective financial assistance programs for the construction of water supply, wastewater treatment, flood control, and agricultural water conservation projects.
