Council votes to take ownership of T-bar pipeline

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Midland City Council voted Tuesday to own and manage the pipeline and other assets responsible for delivering water from the T-Bar Ranch in Winkler County to the City of Midland.

The vote also calls for a bond issue to pay off and cancel the debt of Midland County Freshwater Supply District No. 1.

The total issue size for the City of Midland, Texas Refunding Bonds, Series 2022 is a maximum amount of $290 million. Costs incidental to the sale of the bonds will be paid from the proceeds of the bonds, according to the city.

Carl Craigo, director of public services, told the Reporter-Telegram that this was not new debt but a refinancing of debt that is currently not in the city’s name but is being paid. by customers in the City of Midland.


The pipeline was built nearly 10 years ago, following one of the worst droughts in the city’s history. Coincidentally, the city is going through another dry spell with less than 1 inch of rain since the beginning of October.

“This ordinance provides for the delegation of authority to the pricing agent, city manager or chief financial officer, allowing the city to be able to complete the transaction once all legal arrangements are in order, and the flexibility to market and price the redeem bonds when market conditions are favorable,” the city wrote in an agenda document. “The duration of the delegation of power provided for by the order is one year to issue the bonds.”

The Midland County Freshwater Supply District was created to construct the 59-mile pipeline from Winkler County. The outstanding debt of current obligations is $251.32 million.

One of the reasons for the city’s actions is that the freshwater supply district’s annual debt service is expected to increase by $13 million in 2030, bringing the total annual water-related debt service from the city to $30.3 million. Next year, the city says, debt service is expected to increase by another $6 million, bringing the city’s total annual water-related debt service again to $36.6 million. . City officials have said debt service will remain there until 2037.

The impact on Midland residents of such an increase would have been a “precipitous” increase in the water rate, council members said at the meeting.

Reimbursement/restructuring of the neighborhood’s debt would, according to the city:

  • extend the overall repayment term by 10 years,
  • increase annual debt service from $7 million in 2030 to $24.3 million,
  • eliminate any further increase in annual debt service
  • extend the repayment period until 2050.

The city also noted that it could wait to refinance, but if interest rates increased, the city would face the same or greater annual and overall costs than the current repayment.

City officials told council it was best for the city to own the infrastructure. One reason is that the city could then add pipeline connections for business development and city growth in far west Midland or west of State Highway 158. City leaders said the city faces higher costs in both directions and users can expect higher fares. way. They said refinancing could cut that increase in half.

The addition of T-Bar debt will bring the city’s total payments on its bonds and bond certificates to more than $500 million. The Texas Bond Review Board says on its website that the city entered this fiscal year with $369.982 million in total payments ($257.1 million in principal and $112.822 million in interest payments).

The same website showed Midland County Freshwater Supply District No. 1 with $409 million in total payments as of the end of fiscal year 2021. This total included $219.461 million in principal payments and $190.358 millions of dollars in interest payments.

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