The finance officer's role in a bond election.

Author:Brown, Jennifer

Most cities regularly issue some form of tax-backed debt, and getting authorization from voters to pursue bond projects is typically a necessary step in the process. But sometimes a bond election is out of the ordinary, such as when the city of Sugar Land, Texas, went to the voters in November 2013 for general obligation bond approval--only the second bond election in the city's 54-year history, and 14 years since the last bond election.

Three propositions were on the ballot, totaling $50 million:

* $18.54 million for a community sports park

* $21.30 million for the Brazos River park and festival site

* $10.16 million for hike and bike trails

Election results were mixed: Voters approved propositions two and three, but proposition one narrowly failed.


Sugar Land is a vibrant, diverse community of approximately 87,000 residents located near Houston, Texas. Residents are proud of the quality of life that the city provides, and many use parks and trails in the evenings and weekends to relax with families and friends. Despite the importance of park projects, the city has struggled to identify a consistent source of funding for them over the last decade. As the city ages, parks tend to be viewed as a "want" rather than a "need" in the community, with infrastructure and public safety needs taking priority for capital dollars, particularly in the area of street and drainage rehabilitation.

The city has a history of lowering its tax rate, which limits the city's capacity to fund capital projects. In 2010, the city council's financial policies provided for an increase of just 3 percent increase in property tax revenues--barely enough to keep up with the cost of inflation, much less fund a park bond program. Debt capacity was generated by declining debt service schedules and growth in assessed valuation as the city developed.

Long-range financial planning showed that the tax, combined with an estimated 3 percent annual growth in tax revenue and declining debt service payments on existing debt, could support infrastructure needs such as significant street reconstruction and drainage improvements. The funding model did not indicate adequate capacity for quality-of-life projects, however, relegating them to the unfunded project list in the five-year capital plan.

To fund the quality-of-life projects the community had become accustomed to, city leaders decided to go to the voters for approval of a specific funding source. The elected leadership initially identified four major park projects to be considered, estimated at $50 million in total.


The issue was part of the city council's fiscal 2012-16 annual budget and five-year capital improvement program (CIP) discussion. The CIP included a list of projects that had no source of funding, mostly park projects. The only projects approved for funding were those that could be accomplished without affecting the tax rate and without going to the voters for approval.

The challenge to staff for the next year was identifying debt capacity so the government could consider funding projects through a potential general obligation bond election. In determining how much debt capacity...

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