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19 - BOND ELECTIONItem No. 19 memorandum TO: Mayor & City Council FROM: John Godwin, City Manager SUBJECT: BOND ELECTION DATE: February 27, 2017 BACKGROUND: Cities must be careful not to use public funds to promote any particular vote in a bond election. However, we generally do have an obligation to inform and educate voters and taxpayers on what the propositions are, and why they have come forward to a vote. STATUS OF ISSUE: For the 2013 bond election, I prepared two information pieces to help educate voters. The first was a bullet -point type document meant to be a quick reference for the council, city staff, and others to convey accurate, factual information about that bond issue. The second was a mailer that we sent out citywide to help voters know exactly what the proposition was and how it would be paid for. I have updated both pieces for the May 6 election, and have attached drafts for council discussion and use. (These are the same documents I emailed you on February 24.) BUDGET: NA. RECOMMENDATION: Discuss, and provide direction to staff. MAY 2017 BOND ELECTION Some clarifications: • In the last 12 years, the city tax rate went down six times, from 69.500 to 50.195 (or by 27.77 %). • Only about 19.8% of most people's total property tax bills go to the city; the rest goes to Lamar County, PJC, and the school districts. • In 2013 the city council authorized a bond election for water & sewer improvements, which over- whelmingly approved the sale of up to $45 million in general obligation bonds. • The city sold $35 million of these bonds in 2013, and $9 million in 2016. Debt on utilities projects is paid by water & sewer bills, not taxes. • The city council could sell certificates of obligation with no input from citizens. • Instead they want local citizens to vote and decide for themselves. Do we need it? • The city owns and maintains nearly 174 miles of city streets (this does not include state highways within the city that are maintained by TXDOT). • We budget $518,000 per year for materials for street maintenance and repair; our total annual Street Division budget is $1.5 million. But many of our streets are so old they need to be completely replaced, not just repaired; current funding only maintains our streets, it does not improve or replace them. • The city owns and operates 21 parks, some of which include equipment that is out of date and potentially unsafe (some of which has already been taken out of service). Priority for improvements and equipment replacement are in Oak, Wade, and Williams Parks, though funds may be expended in other public parks where most needed to ensure safety and promote usage. Can we afford it? • Interest rates remain very low by historic standards, so this is an excellent time to issue debt. • Paris Junior College's tax rate will be decreasing at a higher rate than the city proposes to raise its rates, so total rates will actually go down for Paris taxpayers. • The city can sell $10 million in new debt to pay for this important work, and Paris property owners will still pay a lower total tax bill. • The average home price in Paris is about $76,300, so a five cent city tax rate increase would cost the average homeowner $38.15 per year in city taxes; but remember that owner's total tax bill would still go down by about $36.09 because of the decrease in the PJC rate. What streets will be done? PROJECTS LENGTH TOTAL PROJECT DISTRICT Church, Hearne to Clarksville 3700' 2,106,277 5 33 SE, Lamar to Clarksville 4300' 3,049,455 6,7 24 SE, Clarksville to Lamar 2750' 1,475,910 5,6 Collegiate, Lamar to Clarksville 3545' 382,568 6 Graham, 3rd to RR 2700' 1,914,750 2,4 6th, Pine Bluff to Evergreen 7045' 75,348 1, 3, 5 7NW, Graham to Center 4960' 405,090 2,4 17NE, Clarksville to Pine Bluff 2400' 1,288,058 1,5 3rd SE, Sherman to Provine 4200' 612,518 5 1st SE, Kaufman to Pine Bluff 1500' 218,768 5 8th, Pine Bluff to 0. Jeff 6700' 469,009 1, 3, 5 12th, Pine Bluff to 0. Jeff 6700' 469,009 1, 3, 5 E Cherry, 25 NE to 20 NE 1915' 134,059 1,6 Clement, Loop to Main 5235' 397,005 1 7 SW, Washington to Bonham 2685' 187,950 2 Washington, 7th SW to 19th SW 4145' 423,150 2,3 Fitzhugh, Pine Bluff to Hickory 4100' 956,708 1 Graham, RR to 19th NW 2700' 1,914,750 2,5 Why these streets, who chose them, and what will be done? • Using work order history, field staff input, knowledge of subgrades, etc. city staff developed a ranked list of those roads most needing work. These may or may not be the bumpiest or ugliest roads, but they are roads that have reached or exceeded their useful lives. • In developing this list we emphasized collector streets instead of residential ones, because they are the most used streets in Paris (outside of highways). In this way we will impact the most drivers. • These will not be one - size - fits -all projects. Some will be what are called mill & overlay, which is a cheaper alternative for roads with good subgrades. For others, an entire new road must be built, almost from scratch. • Many of these projects will also include drainage improvements, since city streets are a vital part of our overall drainage system. • Some of the streets will be undergoing utility line replacements, which should be done before paving work, to help prevent future pavement failures due to leaky pipes. • A few of these streets will also receive sidewalk replacements. • The estimated cost of these roads exceeds the proposed bond amount, so every street will likely not be done. We will start at the top of the list and perform work until there is no more funding available. The list rank could be slightly changed, and if conditions in the field change, projects could be deleted or added; this is a plan only, not a guarantee. Other: • Bond funds may only be spent on capital projects or purchases; operating and maintenance expenses, including patching and chip seal overlay of streets, are not eligible. • By law, the projects must be competitively and publicly bid. • By law, bond money may only be used for its stated purpose— streets and parks in this case. • If work occurs, we will likely use two or more engineering firms to do the road designs. • The issuance of general obligation (GO) bonds may occur only after a successful public election. • Voter - approved bonds may be sold all at once or in multiple years. • Cities are generally required to spend bond sale proceeds within three years of issuance. • Cities may not spend public funds to promote a Yes vote in a GO bond election, but can and should educate voters on the purpose of the bond proposition(s), and encourage citizens to vote. • A single cent on the ad valorem tax roll currently equals approximately $144,000 in city revenues. CITY of PARIS BOND ELECTION Facts You Need To Know On Saturday, May 6, Paris citizens will be asked to vote For or Against the sale of $9.5 million in bonds to re -build local streets, and $500,000 for park improvements. Background • The city owns and maintains approximately 174 miles of city streets. • The proposed street bonds will be used to rebuild collector streets that are most in need of replacement due to deterioration, traffic counts, frequency of repairs, and the condition of the base under the pavement. • The proposed park bonds will be used to replace outdated and dangerous park equipment, and complete other park improvements. How would the bonds be paid for? • The city would increase its property tax rate by approximately 5 cents per $100 of valuation. • This increase would still leave the tax rate lower than it was only a few years ago, since the city rate has been decreased six times in the last 12 years. • Because Paris Junior College will be reducing its tax rate, the total tax rate paid by Paris property owners will actually go down. Who would manage the work? • Once work begins, we will use multiple professional engineering firms to design and manage the street work. • By law, the projects must be competitively and publicly bid. • Park work will be done by parks vendors and city staff. • Bond money may only be used for its stated purpose— streets and parks in this case. VOTING The following language will appear on your ballot. You will be asked to vote For or Against. "Shall the City Council of the City of Paris, Texas, be authorized to issue the bonds of the City ... in the aggregate principal amount of $9,500,000 ... for the purpose of constructing, improving, extending, expanding, upgrading and developing streets and roads, bridges and intersections including utility relocation, landscaping, sidewalks, traffic safety and operational improvements, the purchase of any necessary right -of -way, drainage and other related costs, and shall the City Council be authorized to levy and cause to be assessed and collected annual ad valorem taxes in an amount sufficient to pay the annual interest on the bonds and provide a sinking fund to pay the bonds at maturity? " "Shall the City Council of the City of Paris, Texas, be authorized to issue the bonds of the City ... in the aggregate principal amount of $500,000 ... for the purpose of improving and equipping parks, trails and recreational facilities, and shall the City Council be authorized to levy and cause to be assessed and collected annual ad valorem taxes in an amount sufficient to pay the annual interest on the bonds and provide a sinking fund to pay the bonds at maturity ?" Early voting If you wish to vote early, you may do so from April 24 through May 2, except no early voting will be held on Saturdays and Sundays. On April 24 -25, early voting by personal appearance will be from 8:00 a.m. to 8:00 p.m. On April 26 -28, and May 1 -2, early voting by personal appearance shall be from 8:00 a.m. to 5:00 p.m. Early voting will occur at the Lamar County Courthouse Annex. Election Dav Regular voting occurs Saturday, May 6, from 7:00 a.m. to 7:00 p.m. Where to Vote on Election Dav If you live in Council Places 3, 4, 5, 6, or 7, you will vote in the Old County Courtroom of the Lamar County Courthouse Annex, located at 231 Lamar Avenue. If you live in Council Places 1 or 2, you will vote at the Red River Valley Fairgrounds Event Center, 1875 Fitzhugh. You may also vote by mail. To do so, request a ballot from: Tricia Johnson; Lamar County Elections Administrator; 231 Lamar Avenue; Paris, Texas 75460.