With New Blood on Dallas City Council, Municipal Bonds Should Get Another Look
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It’s true: municipal bonds can help Dallas catch up on long-neglected infrastructure upgrades and repairs, but they can make projects cost more in the long run. (Photo: Luis Tamayo via flickr)
By Ashley Stanley
Special Contributor
City Council members were briefed last week about the Citizens Bond Task Force’s and city staff’s recommendations for an $800 million bond program that will appear on November’s ballot.
Stop what you are doing and ask yourself this question: “Do I know what a municipal bond is?” Allow me a minute or two to explain what they are and how they work in layman’s terms.
Employee wages, public safety (police & fire), maintenance and supplies for water and sewer facilities, as well as utilities and insurance for public facilities, are just a handful of costs incurred by municipalities for the benefit of its residents. Municipalities fund these budgeted line items with residents’ tax payments and income from grants and revenue sharing with other governments. The problem is that expenses and income vary from year to year. Sales taxes can slump during periods, and government income can be sporadic. Property taxes come in the year following their assessment, although property tax revenues continue to increase.
Dallas’ aging infrastructure could require a significant infusion of municipal bond money, but should we keep a closer watch on city resources? (Photo: David Hale Smith via flickr)
Municipal bonds help cities pay for infrastructure, buildings, and maintenance that have been neglected for years, or in many cases, decades. The interest rate is determined by the city’s credit rating and current bond market. The city’s credit rating? Our credit rating has been lowered in recent years because of the police and fire pension crisis and condition of our infrastructure.
Now you know why better (much better) city leadership is so important. And how it affects your property values.
As citizens, our pocket books bear the brunt of poor leadership. The only money any government has to spend comes from its citizens. Which reminds me, did you protest your property taxes this year? Any homeowner or property owner can protest, even if their taxes did not go up. I hope you did, because our best defense against poor city staff’s decisions is to protest the highest tax rate we’ve ever experienced, and it’s quickly growing.
The bond program is an instrument cities use to finance major capital projects like schools, highways, and sewer systems. Or in Dallas’ case, streets, parks and trails, flood protection and storm drainage, critical facilities, economic development, and housing.
Sounds like we have a promising future, right? Wrong. And here is why.
If you know me, it comes as no surprise I believe Mayor Mike Rawlings is not the leader Dallas needs. And the jury is still out on our new city manager, T.C. Broadnax. I am not a journalist or a political strategist, and I’ve never claimed to have insider information while hiding behind a pseudonym like Wylie H. Dallas. I am just an active and concerned citizen. I live and work in District 14, represented by Philip Kingston on the Dallas City Council. What I know from being an engaged community member is we have a voice when we show up.
Dallas city council members were briefed last week about the Citizens Bond Task Force’s and city staff’s recommendations.
But wait! Didn’t Rawlings’ horseshoe suffer a huge upset over the weekend with a run-off election? Indeed, yes! Districts 6, 7, and 8 have a new representative in each seat, along with a change District 4 from the regular election in May. The run-offs were a game changer for Dallas. So most of the information collected from the citizen town hall meetings to the task force, which was ultimately thrown out because city staff thinks they know better, fell on deaf ears. Three of those Council Members are history.
Council member Carolyn Arnold will be replaced by returning former council member Dwaine Caraway. Before her departure, she repeatedly said in the council briefing that we need to consider “people over property.” Her district represents southern Dallas, and she wanted it to be known her focus is always on her constituents versus property values like her colleagues in north Dallas. She will now transition into a citizen’s voice. But what will Caraway’s platform be? Caraway was supported by police and fire, if that is an indication.
City manager Broadnax explained during the bond briefing that every $10 million in bond funds costs the city approximately $1 million in debt service annually over 20 years. So that means an $800 million bond program will actually cost taxpayers around $1.6 billion. Ouch. Wouldn’t it behoove us as taxpayers who will pay for this mega amount of financed money to become more active and, may I be so bold to say, aware? We owe it to ourselves to lean in to the city’s efforts to create a better Dallas that doesn’t break the bank. Or us.
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I just read Wick Allison of D Magazine suggested agenda for a New Dallas:
1. Tear Down I-345 & reap the windfall
2. Build Trinity Park
3. Reform DART or leave it
4. Take Fair Park
Forget all of these. November bonds should be for street maintenance only. My 50 year old street is nearly impassable
Before we become too congratulatory to Mr. Allison, let’s not forget that he was beholden to old Dallas real estate and the most powerful oligarchs who are pushing the Trinity Tollway and Fair Park plan. Let’s hope his epiphany (http://bit.ly/2svgDK7) was first and foremost about conviction, not just redistributing his bets on the young, forward-thinking turks of Dallas real estate.
Agreed. However, $800 million is a lot of dough for street maintenance only. Based on what I’ve seen as a recommendation from the Citizens Task Force, streets will have anywhere from $15 – $30 million per district. Although we shall see what the city staff comes up with when they circle back around to new council members later this summer.
I read it quickly, but I THINK he means goals, not necessarily using bond money for it. The Trinity park is paid for. The money is sitting somewhere waiting for Godot I guess and I sure as hec hope it hasn’t disappeared.
1. Tear Down I-345…. interesting idea, but I want to know much more.
2. Build Trinity Park, no tollroad, using monies already allocated
3. Reform the BEEJESUS out of DART or ditch it!!! No need to do that with bond dollars…
4. Fair Park must be privatized but taxpayers should not pay for it. State Fair contract needs a do-over
5. Devote bulk of Nov. bonds to streets and critical infrastructure, such as flood control and prevention. Watch my ex-opponent — he wants to sink it into parks!
So far I have not seen reasons to privatize Fair Park.
If it is privatized, it is designed to the tastes/choices of someone who does not give citizens a voice in what is done with our largest park in Dallas to date. Is it not for the pleasure of the citizens of Dallas?
Is privatizing Fair Park a way of saving money? If so it is the same as giving it away for two generations.
Why not do what San Diego did with Balboa Park? That would allow the privatizers to offer to implement a specific concept with one bldg at a time.
Citizens can agree or disagree with that plan. The privatizer would have to pay the city for upkeep so that the bldg is not handed back to the city in dilapidated condition after 10, 20, or 30 years.
Agree. Privatizing Fair Park would be a terrible idea. If you really want to dispose of it as a city asset, then you should be selling parts of it off to developers until it is small enough to cash flow positive, not giving it away to a private ownership group when it has next to no active incremental revenue sources and a shifty lead tenant.
So Dallas is a worldwide laughingstock owing in part to the incomprehensible failure of the city council in its oversight of the police and fire pension fund pursuant to its budgetary responsibilities and we are going to let
the same people go anywhere near a $800 million financial decision? To even consider a bond issue the council members would seem to have to believe the logical impossibility that their financial acumen could in some way override the higher pension-failure-induced interest rates that would be due on the bonds owing to their own financial incompetence.
True. But let us not forget the brilliant Standing Wave! Paid $4 million for, will cost $7 million to remove. I cannot believe our city leaders thought this was even remotely a good idea:
“At a cost of $4 million, seven years ago the city threw tons of concrete, broken rock and steel cabling into the Trinity River a mile and a half southeast of downtown to create artificial rapids for kayakers. The idea had been around for several years but not at all in the form it took when it was finally built.
Consultants who know about this kind of thing had sold the city some rough designs showing what you’d have to do to create a Colorado Rocky Mountain kayak experience on the bottom of a manmade Corps of Engineers floodway occupied by a big, muddy Texas prairie river. What would you have to do? A lot.
The original design called for creating a parallel universe next to the river, basically taking water out of the river and pouring it into a manmade, off-channel stream flowing through a park with fake elevations, kind of like a commercial water park.”
http://www.dallasobserver.com/news/dallas-finally-to-cough-up-2-million-to-fix-trinity-standing-wave-9495043
Amazingly, there are actually parallels between the kayak debacle and the pension fiasco. In both cases, consultants pointed to shining successes – the OKC boathouse district and the Ivy League
endowments – and managed to sell the city officials on superficially similar projects which did not embody any substance whatsoever. Most maddeningly, instead of taking some responsibility for the multi-billion dollar pension insanity, your opponent actually used it against you for your refusal to demonize the first responder rank and file who had already been cheated to hell by a system that your opponent oversaw.
You put it into words perfectly! He villainized the first responders, those poor guys and gals who get up, go to work every day and clean up the messiness of our lives — accidents, suicides, shootings, adults acting like children. And he oversaw the system screwing them, helping his friend Chief Brown to get out and get his DROP while the gettin’ was good. (I have heard, not confirmed, that he even directed the actuarial work to a company with one of his family members on it.) And yes, my “ex” also approved the Standing Wave then said Mary Suhm made him do it. The orchestration of the pension debacle and the solution a week after the election was hard to overcome, but I am so happy at what happened Saturday. I can smell the Lestoil in the air at City hall!
Kudos to the author for contributing a well crafted, informative piece. Clearly it would appear that municipal bonds are an expensive method of providing sorely needed revenue for the projects listed and others. What seemed to be missing was an alternative. Not only that, the author advocates that all of us property owners make every effort to reduce our taxes, thus further shrinking the city’s budget/revenue. So my question is, what other alternatives are there? It’s easy to complain and far more difficult to provide solutions. And finally, I’m not familiar with the author’s previous writings so am not aware of the reasons for disdain for Mayor Rawlings. In my opinion he has been a superb mayor in more ways than space allows to list.
Larry, you are the best! We have to look at spending carefully, and perhaps sell off some assets. I believe Houston is doing this now. As for Mayor Rawlings, when I wasn’t looking closely I thought he was the cat’s meow. Now I do not, but I think he is misguided. I’m sure Ashley will fill us in on her reasons, and let’s get together soon!.
during the bond briefing that every $10 million in bond funds costs the city approximately $1 million in debt service annually over 20 years.
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This is highly dependent upon interest rates, which are dependent upon city credit rating. To achieve these rates that TC mentions, Dallas would be paying around 8% on their bonds. That’s a ridiculous rate, and can be laid directly at the feet of the Dallas City Council and city planners for being horrific managers of city money. It also puts Dallas in a tough position of issuing any more debt over the next 20 years, which is an issue because new bond issues generally come once ever 7-10 years.
To compare, Plano issued $220 million in bonds and expects to pay $100m in interest over 20 years, or a 50% lower rate than Dallas.
We need to start a “Put it back” campaign. Bring Gen. Lee statue back to Lee park. “Put it back.Then we voteon a bond package. No statue, no bond package.
The two issues are absolutely related. The Lee family put up half of the initial $90000 for the statue and related improvements and are entitled to specific performance or their money back. Who wants to lend money to a city that not only steals in broad daylight but also in doing so maims a revered city landmark that, at least in part, was designed to highlight one of this country’s most notorious property crimes. I suggest that the city apologize to the Lees, restore the statue, and follow the example of the Southern Bell Telephone company which used to include an engraving of Stone Mountain on their bond certificates. Fancy certificates with an engraving of the Lee statue would likely become collector’s items and sell at a lower coupon, especially if the city challenged us to put up or shut up if we really wanted the statue back.