vOTE FOR MAYOR AND CITY COUNCIL - EARLY VOTING NOW - ELECTION DAY IS SATURDAY MAY, 7
vOTE FOR MAYOR AND CITY COUNCIL - EARLY VOTING NOW - ELECTION DAY IS SATURDAY MAY, 7
Bond Proposal Petition Backgrounder
The City of Elgin wanted to finance our 5 Year Capital Plan with Certificate of Obligation (CO) bonds which DO NOT require voter approval.
In contrast, General Obligation (GO) Bonds are capital improvement bonds voted on by registered voters. Current CO proposals would push Elgin's debt obligations up to $25.9 million. VoteElgin.com and The Concerned Citizens of Elgin circulated a petition titled Citizens of Elgin Petition for Vote on Certificate of Obligation Bond Proposal.
The petition stated that "The registered voters of the City of Elgin are requesting an election be called to approve the proposed 2021 Certificate of Obligation bonds totaling nearly $25 million."
The result of our petition drive was addressed in a letter from City Manager Tom Mattis and ACM/Chief Financial Officer to Mayor Ron Ramerez and the City Council on May 18, 2021. You can read the letter and our response to it below. The views and opinions expressed on voteelgin.com are those of the authors and do not necessarily reflect all of the contributors' official policies or positions.
Date: May 18, 2021
To: Mayor and City Council Subject: 2021 Certificates of Obligation Program
From: Thomas L. Mattis City Manager & Charles L. Cunningham ACM/Chief Financial Officer
In response to a threatened petition that could possibly force a ballot issue, the City Council directed a change in the 2021 Certificates of Obligation Program at its meeting last night, reducing the project list and funding amount to approximately $14.8M.
While no such petition has been filed nor determined to be legally compliant, state law certainly compromises the City Council’s decision-making as it relates to this situation. It is important, however, to document for the record the adverse conditions – and increased costs – that will result from this situation for the City and its taxpayers:
a) Not funding the proposed parks projects, matching funds for pending major sidewalks projects, a new/renovated Elgin Police Station, the County Line Phase 1 reconstruction project, and the City Hall Annex will clearly have a negative impact on city operations, services, and employee morale.
Response to a)
It would be more fiscally responsible to reduce office space overhead instead of acquiring or building more. We have proven in this pandemic we can work from home and still handle the business of the city.
In fact, The City of Elgin pushed out the Elgin Food Pantry (EFP) to sell the building where they were located. The EFP was promised a location at 2020 Depot St. This location was cut from the 2021 CO Bond proposal at the April 20, 2021 meeting.
No one from the City even contacted the EFP that they would no longer have a location to house the pantry. When members of the EFP contacted the City Manager Tom Mattis they were told they would not have a location due to VoteElgin.Com petition which encouraged the City Council to strip down the 2021 CO Bond.
We believe, Tom Mattis never intended to keep his word because this project was cut in document referenced below on page 16. The sale of this property fell through. Why isn’t the Elgin Food Pantry being allowed to move back in? https://www.elgintx.com/AgendaCenter/ViewFile/Item/2946?fileID=11724
b) If more than one issue is sold, cost of issuance is likely to result in $200-300,000 in additional costs. Such issuance costs include required services such as Bond Counsel, Underwriter’s Discount, Ratings, Paying/Escrow Agent, Redemption Fees and Bond Insurance.
c) Delaying part of the issue will likely result in having to pay a higher interest rate on the bonds. Most economists are predicting higher interest rates in the future due to inflationary pressures currently trending. Even a 1% increase will result in a significant cost increase to taxpayers.
Response to b) and c)
By seeking $14.4 M instead of the nearly $25M, the city reduced their expenses on this bond issuance. Per the Bond Attorney Chris Allen at the May 18, 2021 City Council Meeting, the lower issuance improved the City’s Bond Rating and interest rate allowing the City to “aggressively enter the market.” With the over subscription on purchasing the bonds, the City was able to get the full $14.4 million for $12.3 million saving the city $2M over the 25 year life of the bond.
Mr. Allen also stipulated he expected interest rates to barely rise over the next couple of years.
d) Calculation of the debt portion of the property tax rate must be made on existing debt which will now lower the rate in the FY21-22 Annual Budget. However, at such time as future bonds are issued to fund the General Government projects, the tax rate will have to be increased substantially.
Response to d)
With property values rising substantially, the city should not need to raise taxes for several years thus buying themselves time to court business and industry to shore up our sales tax income.
e) The impact on the bond market’s response to multiple bond issues in a short period of time cannot help but be somewhat negative. Bond investors make the best decisions when there are few, if any, distractions related to sizing the issue or concerns about the volatility of the sellers.
Response to e)
Multiple Bond issuances will be negative. This is completely contradictory to what the Bond Attorney Chris Allen stated and can be watched here at the 20:50 time mark. https://www.youtube.com/watch?v=uggioTMR9I4&t=1028s
f) Not moving forward with the County Line Rd. Project puts at risk the City’s agreement with private developers to pay for major costs of this project. The loss of funding could also eliminate any leverage with TxDOT or Travis County to receive funding support for the next 2 phases of the project. The staff focus of the 2021 CO Program was to proceed with a pro-active response to capital improvement needs. All of the projects as originally proposed eventually will be done by the City. The proposed plan would have helped to address those needs before it became a “crisis management” situation – which will occur if the City waits 2-3 years to start on any of those projects.
Response to f)
We stand to lose money on the County Line Rd expansion. This is not true because the City of Elgin has at least 3 and half years to start this project. In fact, they should be asking the voters to approve the entire project with all 3 phases. The HWY 290 and County Line road intersection should be the first phase. Widening County Line Rd by the High School all the way to Eagles Landing is a stopgap.
All that traffic will still funnel to a single lane that will be controlled by the light at Hwy 290 and County Line Rd. Without a right turn lane onto Hwy 290, this increased traffic will jam up from Hwy 290 light to County Line Rd and FM1100 light. When you add in Neidig Elementary traffic to this mix, it will become a traffic snarl.
In closing, we unequivocally stand by our original recommendation as proposed for the 2021 Certificates of Obligation Program as the correct path for city operations and finances moving forward at this time; while at the same time recognizing that Council’s decision-making ability has been greatly compromised by state law and the alleged petition.
-- Thomas L. Mattis City Manager & Charles L. Cunningham ACM/Chief Financial Officer
Our response to "In Closing"
Most citizens agree with the proposals and support them. What most citizen’s do not agree with is high-handed government, acting without the support and consent of the taxpayers. The City of Elgin and the Elgin City Council have a duty and obligation to inform the citizens of their plans and to ask for us to vote so they may act on them. Abraham Lincoln at the Gettysburg address stated, “that a government of the people, by the people, for the people, shall not perish from this earth.” Our City Council and City Government needs to heed these words and remember why they were duly elected and who they serve.
--- Response content written by Stephanie McBurney Lippke June 23, 2021
The citizens of Elgin want to vote on bond issues, and the City Manager and Finance Director are insulted we kept them from spending our money without our voices being heard.
The City Council refused to bring these bond items to the voters to vote.
This is why we went door to door talking to and updating the voters of Elgin. We did not present this legal and binding petition due to the fact we could not wait any longer on the Sewage Treatment Plant issues.
This had become an emergent situation due to failure to start the project in 2016 with the $6.3 million allocated for the project and the tremendous housing growth Elgin has been experiencing. We would like to thank the voters in Elgin for signing our petition and we will continue to strive to keep you informed on the issues and up-to-date on the actions of the Elgin City Council and City Manager.
Note: Our responses appear in italics