STAFF REPORT

KYLE — More than nine months after voters agreed to borrow $36 million to fund long-delayed reconstruction of five overburdened and deteriorating roadways, the Kyle City Council on Tuesday handed $3.5 million in contracts to five engineering firms hired to design the projects.

After the package won lopsided approval at the ballot box last May, the municipal government sold $5.5 million in general obligation bonds in August to raise seed money for the multi-year undertaking. Kyle officials intend to engineer and design the five roads simultaneously and then build one project a year for the next five years, borrowing money incrementally along the way.

“We realize that our residents have trusted us with investing $36 million dollars of their money to make the much needed improvements in their roads and we are committed to making every dollar count,” said Kyle Mayor Lucy Johnson, who has less than two months remaining in office and has said she sees the infrastructure investment as a key achievement of her administration. Johnson declined to seek a third term in May’s municipal election.

The projects — reconstruction of Burleson, Lehman, Goforth, and Bunton Roads as well as the extension of Marketplace Avenue to Burleson — carry hefty price tags averaging about $6 million per mile. Anticipated costs are driven upward by the need to replace five low-water crossings with bridges; the addition of sidewalks along at least one side of each road segment; and other catch-up work necessary to remake narrow, rickety rural roads into three- and four-lane major arterials suited for the rapidly suburbanizing city, officials have said in trying to alleviate sticker shock.

If the city of Kyle ends up borrowing all $36 million, the total cost for the five roads is estimated at as much as $51.9 million during the course of paying off 20-year notes. The final bottom line will vary, depending on interest rates and whether the city picks up state or federal transportation funding to offset the cost to local taxpayers.

Under a worst-case scenario for the city — if neither property nor sales tax revenue increase for the next half-decade — debt payments on $36 million could add 20.75 cents to Kyle’s property tax rate by 2019. With an ad valorem rate of 54.83 cents per $100 in property value, Kyle already has the highest property tax rate of any municipality in Hays County, although San Marcos is not far behind at 53.02 cents. (The next-highest is Buda at 29.79 cents.) However, if Kyle’s revenue streams continue to flow ever more swiftly each year — even if average growth slows by as much as 25 percent — tax rates would increase by a comparably modest 5.23 cents per $100 over the next five years, according to financial models prepared by Kyle’s bond advisor.

Already, budget-conscious council members and residents seem to have some cause to be heartened: Engineering costs came in comfortably under budget. When voters approved the bond package in May 2013, the combined engineering and design for all five projects was estimated at $5.2 million, 32.7 percent more than $3.5 million in contracts awarded by the city council this week.

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Maps + Engineering Summary on Kyle road projects [pdf]

Firms engaged to engineer Kyle road bond projects

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COVER: PHOTO by MIKE RASTIELLO