Why Does Georgetown Sell Bonds Without Voter Approval?


Since filing to run for city council, numerous groups have let me know how frustrated they are with lack of transparency, or even response, on issues important to them. The Airport Concerned Citizens [ACC] are not only concerned about airport operations, they are bothered by how the city finances airport operations. Yet the city is quite comfortable with borrowing money without voter approval.

At the Sun City Current Issues Group forum, John Hesser stated that airport operations was one of the bright spots of city management, and that it was putting more into the general fund than it was taking out. In the peculiar world of government financing, that sleight of hand is possible because debt can be passed off as income. That is what happens when the city issues Certificates of Obligation Bonds, whose proceeds can flow into the general fund. Of course, the city is obligated to pay off the bonds, so using bonds that way is like a person making $50,000 a year borrowing $50,000, then claiming their income was $100,000!

At the next council meeting, they will review approval of $22 million in obligations that will not be put to voters. Of that, $5 million is earmarked for a parking garage whose major benefactor will be the Wish Well House, a development that was approved by council over the objection of HARC. While the city claims the airport entity is putting money into the general fund, it is asking for a loan of $465,000
for a capital improvement project. What is that about?

The following pages are from item P in the upcoming City Council Meeting to be held on April 23, 2019. Note there are two types of bonds, one secured by property taxes (Ad Valorem Tax) and the other by revenues of city entities. Of course, taxpayers are ultimately responsible for both because we own the pledging entities.


ITEM SUMMARY:

This item is to approve the sale of certificates of obligation for the following purposes:
20 Year Bonds – COs (net proceeds)

  • Blue Hole Parking Expansion/Sidewalk $100,000
  • Downtown Parking Expansion $350,000
  • Downtown Parking Garage $2,500,000
  • Fire Station 6 $5,200,000
  • Fire Station 7 $6,250,000
  • Neighborhood Park Development $250,000
  • VFW Parking Lot Addition $175,000

15 Year Bonds – COs (net proceeds)

  • Self-Contained Breathing Apparatus Replacement $290,000

11 Year Bonds – COs (net proceeds)

  • Public Safety Vehicles $1,025,000

10 Year Bonds – COs (net proceeds)

  • Public Safety Vehicles $119,5006 Year Bonds – COs (net proceeds)
  • Public Safety Vehicles $623,500

5 Year Bonds – COs (net proceeds)

  • Public Safety Radio Replacement $500,000

1 Year Bonds – COs (net proceeds)

  • Fire Station 1 & 3 – Improvement Assessment $30,000

Subtotal – Tax Supported Certificates of Obligation $17,413,000

 

20 Year Bonds – Self-supporting COs (net proceeds)

  • Airport CIP $465,000
  • Downtown Parking Garage – TIRZ $2,500,000
  • Stormwater CIP $500,000
  • Solid Waste & Recycling Transfer Station – Design $1,000,000

8 Year Bonds – COs (net proceeds)

  • Stormwater Street Sweeper $280,000

Subtotal-Self Supported Certificates of Obligation $4,745,000
Estimated Issuance Costs $250,000
Total Certificates of Obligation $22,408,000

Actual interest rates for this debt issue will not be determined until just prior to the reading of the ordinance at the Council meeting on April 23, 2019. The City will receive the proceeds May 16, 2019. Please note all ordinances will be approved and effective on First Reading in accordance with Section 1201.028, Texas Government Code.

FINANCIAL IMPACT:

There is no anticipated change to the Interest & Sinking portion of the tax rate due to this bond issue. The actual impact will be finalized in July 2019, once the Assessed Property Valuation is certified and the 2020 Tax Rate is set.

SUBMITTED BY:

Leigh Wallace, Finance Director