Lago Vista taxpayers face a $28.2 million sewer plant loan choice

Mayor Shane Saum wrote on Sept. 30 that the effect on utility rates cannot be set yet. He said existing utility debt, updated revenues, and added operating costs "still need to be incorporated or verified before determining any utility-rate impact."⁵ Both preliminary schedules are marked subject to change, and the records we reviewed show no choice of rate or type of debt.⁴ A draft motion from Mayor Pro Tem Norma Owen says any later action that needs approval "will return to Council."⁶

What is the state loan?

The loan would come from the Clean Water State Revolving Fund (CWSRF), a state program for wastewater projects. The Texas Water Development Board (TWDB) runs it and takes applications by invitation only. The board sets the interest rate a set percentage below a market rate, and loans can last up to 30 years.⁷ Its Oct. 2, 2026, rate memo lists 30-year rates of 2.91% to 3.56%, depending on credit rating and project type.⁸

The memo adds a 1.75% origination fee, which is a charge for setting up the loan.⁸ The program can also forgive part of a loan, which is called principal forgiveness, but only in set categories.⁷

What have we reported before?

Our story on an emergency lift station repair at the plant noted the state's invitation to apply for up to $28.2 million.³ Our debt story covered the plant's capacity and the $9,000,000 of plant construction the budget lists as "Future Funding."⁹ Our budget story covered the city's 2024 certificates of obligation, a kind of city debt repaid from a property tax with a small pledge of utility revenue.¹⁰ This story follows the loan itself, from the first try in 2024 to the Nov. 2 deadline.

How did this start?

On May 16, 2024, the City Council voted unanimously to pick the engineering firm Garver to design a plant upgrade to 1.5 million gallons a day (MGD). The city chose Garver through a request for qualifications (RFQ), a call for firms to show their experience. Council Member Paul Prince moved, and Council Member Shane Saum seconded.¹¹

Money came next. On Aug. 2, 2024, Saum, then a council member, started a thread on the council's public message board. He asked members to send comments to the state urging it to reconsider the city's wastewater projects. The city letter pasted into his post said the state had ranked a $28,200,000 plant project 56th and a $7,900,000 effluent pond project 57th.¹²

The letter said the city's projects were "not invited to submit a Full Application." It said the plant's permitted capacity is 1.0 MGD and that flows were "expected to reach 1.14 MGD by 2033." It added that "with limited bond capacity, finding alternative funding sources is crucial."¹²

Design work moved forward that December. On Dec. 5, 2024, the council approved a contract with Garver Engineering for the plant design, at no more than $2,821,902.¹³ Saum moved, and Mayor Pro Tem Rob Durbin seconded.^11,13 The minutes give no vote count for that item.¹³

What happened on the second try?

In 2025 the search for money reached Washington. On May 1, 2025, Rep. Michael McCaul asked the House Appropriations Committee for fiscal 2026 money for the "Lago Vista Wastewater Treatment and Collection System Expansion Project."¹⁴

The city also tried the state again, and its next priority list moved the project up.^12,15 That list, for the state's 2026 fiscal year, ranked the city's $28,200,000 plant project 23rd.¹⁵ An amended list moved it to 22nd.¹⁶ The listing said the project would "expand plant capacity from 1.0 MGD to 1.5 MGD."¹⁵

The listing also described "upgrading from Type 2 to Type 1 effluent," a higher grade of treated wastewater. That 2026 listing said these improvements would "increase reuse flexibility and reduce reliance on potable water supplies."¹⁵

Then the price came into question. On Oct. 2, 2025, Garver came back to the council asking for a contract amendment of up to $1,864,090 to keep designing.¹⁷ A Garver presenter said adding half a million gallons a day of capacity would cost about $29 million. The presenter said rebuilding the three process basins made the cost "closer to about 47 million."¹⁸

A council member whom the record does not identify called a $28 million project "a pretty heavy pill to swallow." The same speaker asked Garver, "do you feel like you did your due diligence." The speaker also said they did not want a deficient wastewater plant.¹⁹

Council Member Paul Roberts moved to have staff get a third-party opinion and bring it back, and Saum seconded. The minutes record the item as tabled, or set aside, 7 to 0. Mayor Kevin Sullivan and council members Rob Durbin, Saum, Adam Benefield, Norma Owen, Roberts, and Prince all voted for it. The records we reviewed do not show whether Garver's request returned to the council.¹⁷

Where does federal money fit in?

The federal request produced a result early in 2026.^20,21 On Jan. 6, 2026, Saum, by then the mayor, gave a government affairs update to the council.²² He said the appropriations bill "includes $750,000 for Lago Vista's wastewater expansion." He added that the amount does not pay for the whole project, and that "it'll go through the Water Development Board, through the State Revolving Fund."²¹

A Senate Appropriations Committee table of fiscal 2026 items lists the $750,000 for the city's wastewater project. It names McCaul as the requester and places the money in the Clean Water State Revolving Fund account.²⁰ On March 19, 2026, Saum told the council that staff "got submitted" both of the city's state revolving fund applications to the TWDB.^23,24

How did the city get invited?

On Sept. 2, 2026, the city received a letter from the TWDB, the agenda report Saum submitted for Oct. 1 says. The report says the letter found the city's plan eligible for up to $28.2 million for its "Lago Vista Dual Purpose Wastewater Treatment Plant Project." It says the city had to submit an intent to apply form by Oct. 2, and the completed application is due Nov. 2.³ The state's plan says a missed intent deadline means the board will bypass the project.⁷

The mayor shared the news the next day.²⁵ On Sept. 3, Saum told the council the city had moved into the round where it could submit a full application.²⁶ The minutes say he "stated that the City will submit an application."²⁵ He told residents "it's not a grant," and called it "the lowest interest loan that you could get."²⁶

He said the loan "could save the city millions of dollars" compared with regular bonds. He said the state route comes with strings attached, and that he thought the city's bond lawyers did not love it.²⁶

What happened at the Sept. 17 budget vote?

The loan came up again at the budget vote.^27,28 On Sept. 17, 2026, the council took up the ordinance adopting the 2026-27 budget.²⁷ Mayor Saum chaired and asked the council to set aside about $2.2 million left over from the 2024 certificates for a Type 1 effluent filter. He also asked the council to direct staff to put out a request for proposals to buy the filter.²⁸

When Saum asked Council Member Adam Benefield whether he would give that direction, Benefield answered, "Absolutely." A staff member raised a concern. The staff member said the state loan application "would have to be revised" and that a change "could hurt the scoring."²⁸

Saum said he did not believe that was true. He said taking the filter off the loan would turn a $28 million loan into a $26 million loan. The staff member said they wanted to show the council the effect before it fully committed.²⁸

The minutes say the council "also directed staff to proceed with moving to type 1 effluent." They record no separate vote on that direction in the part we reviewed. Interim City Manager Isaac Turner asked for more time to discuss the matter with staff and bring it back.²⁷

Owen moved to approve the budget ordinance, and Prince seconded. The budget passed 4 to 3 on a roll call. Owen, Prince, and council members Karen Van Ness and Jess Hall voted yes, and Saum, Benefield, and Council Member Amanda Chavarria voted no.²⁷

The adopted budget's capital improvement plan (CIP), the city's list of big projects, shows "WWTP Improvements" at $10,430,541. It pays for $1,430,541 of design work with $610,541 from earlier certificates and $820,000 from wastewater impact fees. It calls the amounts "planning level placeholders." It also says the work would keep "the plant's current permitted treatment capacity."⁹

What did council members say online?

Before the Oct. 1 meeting, the debate moved online. On Sept. 30, Owen started a council message board thread titled "TWDB CWSRF Application - Item IX.2 October 1, 2026." She wrote that she was for proceeding to "preserve our opportunity" for the funding. She also wanted the project and financing checked "before the City makes the subsequent decisions necessary to take on debt or proceed with construction."⁶

Her draft motion would authorize the city manager to submit the intent to apply for up to $28.2 million. It says it "does not constitute authorization to issue debt, close on financing, award construction contracts, or commence construction." She asked whether "a rate or revenue sufficiency analysis" was part of the work. She also asked for a schedule of existing utility debt.⁶

Saum replied that day that he supported the motion. He wrote that bond counsel and the city's financial advisor were "already involved." He said a preliminary analysis "shows encouraging utility coverage." He said the state's reviews "provide additional expertise and accountability that are particularly valuable to our small staff."⁵

He wrote that the TWDB route "has more bureaucratic pains and restrictions," but that residents are owed the state's expertise to get the work done right. He said the city should weigh whether "a smaller financing request or refined scope can meet our needs." He wrote that borrowing less does not automatically require rescoring, but that changes removing benefits behind the city's rating need TWDB confirmation. He pointed to a TWDB help program that offers selected utilities "up to $150,000 in professional services with no required local match."⁵

Prince wrote "Makes sense." Chavarria wrote on Oct. 1 that she supported Owen's post with Saum's recommendations.⁵

What happened on Oct. 1?

The item reached the full council the next day.³ The council met in regular session at 3 p.m. on Oct. 1, 2026, at 5803 Thunderbird.¹ Saum, who presided, submitted the loan item for the agenda. The packet said council and staff "need to discuss next steps, project scope and our overall potential funding strategy."³

Saum told the council the city was potentially moving forward in the process. A staff member said the city had submitted the letter of intent, and that staff had worried about meeting the deadline. The next step is a pre-meeting with the board in November on the project's scope. The staff member said staff had already asked the board for a date.²

Saum said the scope might differ from how the application began.² He said Freese and Nichols, the firm that did the city's master plans, was coming on board.^2,5 A speaker the record does not identify suggested staff give an update every other council meeting.²

Saum also said the council must still revisit the CIP. He said the application "doesn't necessarily commit us" to the loan.²

He added that the city has to do all it can "to keep that alive."² The draft minutes say the "Mayor states Council would like updates on the development of the application."¹ No one moved Owen's draft motion, and the council took no vote on the item.^1,2

The state's list for its 2027 fiscal year took effect the same day.⁷ It ranks the city's $28,200,000 project 32nd. It describes "leaking effluent ponds," "non-functional irrigation equipment," and "monitoring and reporting deficiencies." It also lists aging headworks and aeration systems, outdated disinfection facilities, and solids equipment with "frequent breakdowns."²⁹

It says the Type 1 effluent would be reused to irrigate public facilities.²⁹

The adopted budget's plan lists mechanical screening, grit removal, and solids dewatering among the improvements being evaluated.⁹ The 2027 listing does not mention expanding capacity from 1.0 MGD to 1.5 MGD.²⁹ A year earlier, the city's $28,200,000 plant request, under a different project number, had been described as that expansion.^15,29

Did the council authorize the filing?

The records we reviewed show no council vote on this intent to apply.^1,2 Owen's draft motion would have given the city manager that authority, but no one made the motion.^1,6 Saum wrote on Sept. 30 that the effort "represents approximately three years of work and Council resolutions supporting pursuit of TWDB funding."⁵

In 2025 the council approved a resolution on the city manager's authority over water funding paperwork.³⁰ On Feb. 6, 2025, it set aside that resolution so it could be reworded on the advice of City Attorney Brad Bullock. The delay also gave the city manager time to write a narrative for a federal funding letter. Saum moved, Owen seconded, and the vote was 6 to 0.³¹ On Feb. 20, 2025, it approved Resolution 25-2110 with an amendment, 7 to 0. The minutes describe it as "authorizing the City Manager to execute any letters, and supporting documents needed for water funding applications." Saum moved, and Council Member Paul Roberts seconded.³⁰

The draft in that meeting's packet lets the city manager "prepare, execute, or submit, as applicable, all necessary, letters, and supporting documents required for the City's water funding applications." It also lets the city manager take "any necessary actions to ensure the timely submission of funding applications." It requires the city manager to keep the council informed.³² We have not seen the signed version with the amendment.³⁰

The council took up the city's funding applications again after that. On March 6, 2025, it discussed drafts of the city's TWDB and federal funding applications, and the minutes say "No action taken."³³ On June 4, 2026, it directed staff to bring a potential TWDB application to the council for review. Those minutes do not say which TWDB loan or grant program the application was for.³⁴

On July 2, 2026, the council voted 5 to 0 for Resolution 26-2214. Owen moved, Prince seconded, and Owen, Prince, Saum, Chavarria, and Hall voted yes.³⁵ The resolution authorizes an application to the TWDB for up to $10,000,000 for water system improvements and repairs. It names then-City Manager Charles West as the city's representative. It does not mention the sewer plant or the $28.2 million loan.³⁶

Can city staff take the first step without a vote on it? State rules require the full application to include a resolution from the council. That resolution must ask for a set amount and name the person who will act for the city. That person must also swear that the decision to seek the money "was made in a public meeting held in accordance with the Open Meetings Act."³⁷ Those rules cover the full application, which is due Nov. 2, and they do not mention the intent form.^3,37

The state's plan requires the intent to apply by a deadline, but it does not say who must approve that form.⁷ The records we reviewed do not show whether staff relied on Resolution 25-2110 for that step, or who signed the form.¹ For the Nov. 2 application, we have found no council resolution so far that asks for the sewer loan amount, as the state rule requires.³⁶

What could it cost taxpayers?

The city's two preliminary schedules model borrowing the full $28,200,000. One uses certificates of obligation, and the other uses water and sewer system revenue bonds, which are debt repaid from system revenue.⁴

The certificate option assumes a 3.500% rate and payments from 2028 through 2057. Interest would total $17,596,017 of the $45,796,017 paid. The bond option assumes 3.800%, with interest of $19,344,597 and a total of $47,544,597. Both schedules are marked "Preliminary, subject to change."⁴

Less than $28.2 million would reach the plant. Under the certificate option, the project fund would be $27,545,287, with the rest going to costs of issuance and the TWDB fee. Under the bond option, it would be $26,743,823, with the rest going to those costs and a reserve deposit.⁴

The certificate schedule is titled for "Comb. Tax & Ltd. Pledge Revenue Certificates of Obligation," a pledge of both taxes and revenue.⁴ When the city sold certificates in 2024, the packet said they were payable from a property tax on all taxable property, plus a pledge of water and sewer revenue "not to exceed $1,000."¹⁰ The records we reviewed do not show which option the city will choose.⁴

Both schedules start from the city's audited figures for the year ended Sept. 30, 2025. They hold revenue at $10,526,580 a year and operating costs at $6,513,950. That leaves $4,012,630 a year for debt payments. Debt coverage compares that leftover revenue with the yearly payment, and the schedules show 2.62 for the certificates and 2.53 for the bonds.⁴

A first-year certificate payment of $1,529,192 equals about 38% of the $4,012,630. The schedules list no existing water and sewer debt payments.⁴ The 2026-27 budget also moves $1.6 million from the Utility Fund to cover debt payments "attributable to Utility Fund-related debt obligations."³⁸ Saum wrote that existing utility-supported debt, transfers, updated revenues, and added costs still need to be included.⁵

The 38% figure is our calculation from the city's schedule. It leaves out existing utility debt, so the share could be higher once that debt is counted.

The schedules assume rates of 3.5% and 3.8%, while the state's Oct. 2 memo lists 30-year rates of 2.91% to 3.56%.^4,8 The memo's table is headed for projects in the 2026 plan, and Lago Vista's project is on the 2027 list.^8,29 The records we reviewed do not say which rate the city would get.⁸

The $28,200,000 request has stayed the same on the state's lists for three fiscal years, 2025 through 2027, while the adopted budget plans $10,430,541 for the plant.^9,12,15,29 No record we found explains the gap, or shows whether the request was built from Garver's estimates.⁹ The records also do not show how the $750,000 federal grant would work alongside the loan.²⁰

Where does it stand now?

The city submitted its letter of intent on Oct. 1, and the application is due Nov. 2.^2,3 The council's next regular meeting is Oct. 15, 2026, at 2:30 p.m. The agenda lists the Oct. 1 minutes for approval and no item on the loan.³⁹ Owen's draft motion says any later decision that needs council approval will return to the council.⁶

How can I weigh in?

Anyone who wants to speak at the Oct. 15 meeting must submit a completed citizen participation form.³⁹ Owen's thread on the item can be read on the council message board.⁶

The short version

Lago Vista has until Nov. 2 to apply for a state loan of up to $28.2 million for its sewer plant.³ Staff sent the intent to apply on Oct. 1, and the council has not voted on the loan.^1,2 The city's preliminary schedules put repayment at $45,796,017 to $47,544,597 over 30 years.⁴ The request stayed at $28,200,000 while the state's description of the project changed from an expansion to rehabilitating and upgrading the existing plant.^15,29 The mayor wrote that the effect on water and sewer bills is not known yet.⁵

What we could not find

• The Sept. 2 TWDB letter, the intent to apply form, and the project information form for the current project (PIF 17728).
• The loan application itself or any draft of it.
• Why the project description moved from expansion to repair of the existing plant.
• Why the adopted budget shows $10,430,541 against a $28.2 million loan.
• How the $750,000 federal grant will be applied.
• Whether Garver's October 2025 design amendment returned to the council.
• The vote count on the Dec. 5, 2024, Garver design contract.
• The terms of the Freese and Nichols work.
• The city's credit rating, and whether the city qualifies for principal forgiveness.
• A rate study or any estimate of the effect on water and sewer bills.
• Whether the Type 1 filter plan changed the loan application.
• Who authorized staff to submit the intent to apply without a council vote on it, and who signed the form.
• Which council resolutions Saum meant.
• The signed Resolution 25-2110 with its Feb. 20, 2025, amendment.
• Whether the city attorney reviewed the filing before a council vote.
• The date of the November pre-application meeting.

What you can do

• Attend the Oct. 15, 2026, meeting at 2:30 p.m., or submit the citizen participation form to speak.³⁹
• Read the council message board thread on the loan.⁶
• File a Texas Public Information Act request on the city's records request page for the TWDB letter, the intent form, the application, and any rate study.⁴⁰
• In the same request, ask for the Freese and Nichols agreement, records of any later action on Garver's 2025 amendment, and records showing who authorized the intent to apply.⁴⁰
• Ask the TWDB for its project information form for PIF 17728, the city's project number on the state list.²⁹

If you have records on this, you can share them with us at /share-records. We protect your identity and publish the evidence when we can do so safely.