What is a bond program? How does it work?
In order to pay for large capital (construction) projects, cities sell bonds and use the money to pay for the projects. Bonds are sold to investors (bondholders) who are looking for a stable return in the future on the money they invest today. The City promises to repay the bondholders, with interest, over a specific time period (often 20 years). The length of time it takes to repay the bondholders means that we make sure that the bonds align with the project’s life span, like roads, parks, and buildings. The bond repayment is funded through property taxes the City receives. Bonds are just one way to pay for capital projects. Cities also use other forms of taxes (like sales taxes), or other types of fees (like water service fees) to pay for large construction projects. Bond programs must be approved by voters. The City of Arlington typically puts a new bond program forth to the voters every three to five years.
Will this bond program raise my taxes?
No. The 2014 Proposed Bond Program is a five-year, $236 million program. The City carefully analyzes the capacity it has to issue debt from year to year without increasing the tax rate. In this program, the City determined its total debt capacity (the amount of debt it can take out for projects) over five years to be $236 million. Factors that influence debt capacity include how much debt the City currently has, how much the City is paying back every year (retiring debt), changes in taxable value of property in the City and the amount of the overall tax rate that goes toward paying debt. By analyzing these factors, the City can design a program that will only issue debt that can be repaid without any tax rate increase.
What projects are slated for the program?
To see proposed projects, check the 2014 Bond Project Map.
Which streets are included in the residential rebuild program?
This bond program includes a little over $40 million that will go toward rebuilding the residential streets in Arlington that are in the worst condition. The City has specialized equipment that scans roadways to determine their condition. From that data, a map has been created that shows the condition index or the ‘score’ of each roadway. You can access that map here: link to map. The residential rebuild program is intended to address streets that have a score of 50 or below. In addition, to minimize disruption to residents and to make sure construction is done in an efficient manner, the Public Works and Transportation Department coordinates with the Water Utilities Department to replace roadways at the same time that water lines are being rebuilt. This coordination occurs on an ongoing basis and is intended to maximize cost savings and efficiency. As such, the City does not have a specific list or order of residential roadway projects that will occur in this proposed bond program. Rather, if passed, the City will take advantage of project coordination to make decisions on where residential streets will be reconstructed as we move through the program.
How will this program affect the City’s debt levels?
The City’s financial policies constrain the total debt level. The City’s financial policies concerning debt include:
- The City’s net debt as a percentage of our assessed valuation (property tax value) is always under 2%.
- The City’s debt service expenditures (debt repayments) as a percentage of our total expenditures never exceed 20%.
- The City’s tax-supported debt per capita remains under $1,060.
- The term of the debt (the life of the bond) never exceeds the life of the roadway or facility being constructed.
The proposed $236 million bond program stays within these targets. Currently the City’s bond ratings are at the highest levels in our history. Bond ratings are a measure of how the financial world sees the City as an investment risk. Our ratings are reflective of our fiscal management.
Where can I find more information about the City’s budget and finances?
All of the City’s budget and financial information, including bond ratings, can be found on our website at http://www.arlington-tx.gov/budget/.
When will these projects be constructed?
The bond program is intended to last for five years. If the bond program is approved by voters, the City anticipates selling the first debt from this program in 2016. From there, each year a portion of debt will be issued in the form of bonds. The program is slated to be finished by 2021. The majority of construction will happen during this window as well. A schedule will be developed should voters approve the proposition.
How were these specific projects selected to be part of the bond program?
The process to put together a package of projects began in late 2013 when city department staff reviewed master plans, assessed needs, reviewed citizen input and reviewed recommendations from boards and commissions such as the Parks and Recreation Board and developed a list of high-priority projects. At the same time, the City Council appointed a Citizens’ Bond Committee, made up of 19 citizens. The Citizens’ Bond Committee met over a dozen times between March and May 2014 to gather information about each proposed project and further prioritize the list. As part of their process, they listened to presentations of proposed projects, went on a tour of project locations and held two public open houses to receive feedback. In May, P&Z considered the package and recommended the proposed projects to City Council. City Council then spent the summer deliberating on the project list. The City Council accepted and approved the CBC’s recommendations and decided to add a fifth year to the proposed bond program. With that fifth year of funding, the City Council added several additional roadway projects. The amounts identified for each project are estimated amounts and the City of Arlington may reallocate the amounts among the various projects listed or substitute other projects of a similar nature in accordance with the respective bond proposition. In August, the City Council voted to call the election for November 2014.
When is the election?
The General Election is November 4, 2014. Early voting takes place October 20-31, 2014.