Tag Archives: Austin bonds

Would You Vote For $600 Million In City Bond Projects – Every Year For Five Years In A Row?

By Bill Oakey, December 6, 2017

Think of our city as one big extended family. That family has to look out for each of its members. Now, put that into context with your own family. The holiday shopping season is now underway. Your inbox overflows with tempting cyber-this and hyper-that offers. All you have to do is type in your credit card number and click…

But somewhere in the pit of your stomach, you know it’s not quite that simple. Your family has to stay within a budget. You and your spouse, the kids, and the other folks on your shopping list  can only have what your family can afford. Unless, that is, you are reckless enough to pile on the debt and t refuse to take it seriously.

In 2014, Austin voters faced a billion dollar bond election for one sliver of a citywide urban rail system. We were told then that it would double the City’s outstanding debt. We voted against those bonds for several reasons, even though many of us support rail in a general transportation plan. So, here we are three years later. The City’s Bond Election Review Task Force really is considering $3 billion in bond-funded projects over the next five years.

Look at the big picture here. Where does that leave Travis County? What about AISD, ACC and Central Health? And where does it keave us as taxpayers? The City Budget is so tight that its share of our property taxes are in danger of doubling in nine years. And with new debt on top of that, it could be even worse.

I was a little rough on AISD in a recent blog posting. When their CFO reached out to me, I softened just a little, and requested a meeting to talk things over. Wish me luck as I try to convince AISD to stay very close to their low estimate on the cost to refurbish their new headquarters building.

Let’s try to end this on a brighter note. County Judge Sarah Eckhardt gets it. In fact, here’s how she painted the picture when we discussed the long list of “needs” that our local governments think they have to have. She said this, “If you load too many ornaments on the Christmas tree, it will topple over.” Then she graciously accepted the challenge to work with the City, starting early next year on a “Go Big” on affordability initiative. I have since received some positive signals from City Council members.

Enjoy the holidays with your family. But don’t click too many of those online offers without remembering your wallet!

Musical Accompaniment for This Blog Piece

1. “Grandma Got Run Over By a Reindeer” – Elmo & Patsy
2. “Christmas In Jail” – Asleep at the Wheel
3. “I Want a Hippopotamus for Christmas” – Gayla Peevey
4. “Nuttin’ for Christmas” – Barry Gordon
5. “The Twelve Gifts of Christmas” – Allan Sherman
6. “Monster Holiday” – Lon Chaney
7. “All I Want for Christmas Is My Two Front Teeth” – Spike Jones
8. “I Saw Mommy Kissing Santa Claus” – Jimmy Boyd

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Taxpayers Rejoice! Rail Bonds Trounced By 14 Points!

By Bill Oakey – November 5, 2014

We did it! The people have spoken and now we can celebrate! We just defeated the largest tax increase in Austin history! Congratulations to all of you who voted and thanks for all of your efforts…

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The final tally was 57.2% against and 42.8% for. That is a difference of 14.4 percentage points, a resounding victory by any measure! If you would like to see a breakdown by precinct of how the rail bond votes were cast, check out this report:

Travis County Results By Precinct

Click on the image below to see a City-generated map of the precincts and their percentage of support for the rail bonds:

Urban Rail Precinct Map

Notice the numerous bright red areas where the bonds failed by over 65%. The highest margin that I have found so far is in Southwest Precinct 363, where the bonds failed by 76.36%. There are many lessons that our civic leaders and a long list of insiders from various organizations can learn from this experience. First among them could not be more basic…

Listen to the people!

When over 70 candidates for the City Council precincts began talking with their constituents early in the campaign, most of them learned quickly that public sentiment was against the cost and against the route for this rail plan. However, community involvement was never considered to be a major part of the planning process by the City Council, Capital Metro, or Project Connect. Instead, they relied on the strong arm tactics of developers and other downtown special interests to tell them what was best for all of us. But coming on the heals of a massive tax increase to allow U.T. to build the only tax supported medical school in the history of the nation, voters have made their position abundantly clear – Enough is enough!

Now What’s Next for Project Connect?

That is a very good question. The gang that couldn’t shoot straight never did connect with the public. Hordes of people were not clamoring to take a train ride from East Riverside to Highland Mall. So, now what will happen to all of the staff bureaucrats who have been planning, reporting, compiling and otherwise pontificating on the future of light rail in Austin? Will they disband their operations and turn off the spending spigot? Or will they simply take a break and then get back down to business?

After all, we had the ROMA consultant report on rail almost a decade ago. I shudder to think how many tens of millions of dollars have already been poured down the rat hole for this failed route for a rail system. It was 9.5 miles to be a “first phase” of a citywide system. We would have exhausted our City bonding capacity to pay for it. And yet no one ever publicly talked about how much it would cost to build and maintain a citywide system. It would probably be safe to assume that the planning and building cost alone would be at least $10 billion and possibly much more. The Portland rail system that is so often highly touted got its start in the 1980’s when building costs were infinitely less expensive.

And We Have One More Taxpayer Victory to Celebrate!

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The ACC proposition to raise the cap on the tax rate went down to defeat last night! This is wonderful news. It is helpful to recognize that ACC has been raising taxes above the rollback rate on a regular basis. Now they should get the message that taxpayers have reached their limit. Remember that little thing called affordability? And besides, property appraisals will continue to increase until the inevitable bust at the end of the boom. So, ACC will have plenty of tax revenue coming in.

For the rest of the City Council members heading into a runoff on December 16th, please remember this. The people have let their voices ring loud and clear. Affordability is the number one issue. You will not be able to sit back and coast along on the time-worn mantras and cliches that have paved the path to victory in earlier elections. Let the debates begin, and may the best affordability candidate win in each of the remaining districts!

About the Impending Rail Bond Failure – What Is The Big Picture?

By Bill Oakey – October 30, 2014

In the closing days before the City election, I thought it would be interesting to assess the likely defeat of the massively expensive rail bond proposition and put the issue into perspective. Other than a few “old guard” political insiders and actual members of the pro-rail PAC’s, I have not met a single voter who has told me they were voting for the bonds. What’s up with that and what can we learn from this experience? My analysis is divided into several categories.

Desperate Campaign Tactics

If you are a regular reader of this blog, you should know by now that I am not a card-carrying Tea Party member. (Far from it!) And I certainly don’t take my marching orders from the Koch Brothers. When the Let’s Go Austin PAC started using the Tea Party/Koch brothers tagline, most of Austin let out a collective chuckle. This suggestion is so absurd that it hardly deserves a response. The implication is that all self-respecting “liberal progressives” should open up their wallets and jump happily onto the rail bandwagon. After all, “We’ve got to start somewhere.” Right?

The problem here is that the approach taken by the pro-bond supporters is extremely simplistic, outdated and completely misplaced. Their appeal of course is to the supposedly united “Democratic Neighborhood/Environmental Coalition.” This amorphous group is assumed to be on call and ready at any time to accept whatever message the Old Guard wishes to thrust upon them.

The truth is much more complicated. There are numerous splits among Austin progressives these days, and they cut across all age groups, ethnicities and income levels. We need only look at the newly formed alliances that have come into play in the district City Council races to see that all of us are not joined at the hip. However, the dusty old 1980’s era tactic of calling upon the Old Guard to sell this flawed plan has been put into play. We were expected to embrace the smiles on the glossy faces of Kirk Watson and Lloyd Doggett and fall right into line behind them.

Nope!

Who’s Ready to Take That First Trip From East Riverside to Highland Mall?

It will be several years before the rail line is ready to roll if voters approve the bonds. But one of the big nails in the coffin of the supporters is of course the chosen route. The billion dollar plus price tag for 9.5 miles of rail tells voters that any investment in a citywide system would be astronomically expensive. So, most voters want to see the most bang for their buck. The so-called “first phase” simply doesn’t provide that. Even the Daily Texan student newspaper at U.T. endorsed the opposition in this election.

But if you just can’t wait to take a train ride from East Riverside and Grover (one of the most exciting intersections in Austin) to Highland Mall and the Airport Corridor (one of the hippest and most vibrant sections of Austin), well get in line. Project Connect would probably be delighted to take a list of names of people who want to be first to step aboard hat train.

But the Sierra Club Endorsed the Bonds. Doesn’t That Mean That You Should Vote Yes?

Not hardly. The “Sierra Club” as a whole did not even get a chance to discuss the complex issues involved in the urban rail plan. There were no meetings where anyone from the numerous anti-bond organizations were invited to come and speak. In fact, the entire endorsement decision was delegated to one member of the executive board. Then the rest of the board simply rubber stamped it.

If the Bonds Are About to Fail, Then What Went Wrong?

Many of the players involved suffered from big credibility problems. The City Council knew there were huge credibility issues with Capital Metro. That’s why they dreamed up the “Project Connect” moniker as a new brand to sell the rail plan. But most voters understand that even though the bonds are appearing on the City ballot, Capital Metro would manage the rail system and pay for the operational costs. In recent years Cap Metro has been riddled with debt, mostly related to costs of the Red Line commuter rail. Bus routes and the frequencies of stops have suffered since the Red Line began. And the only time the Red Line fills up is during the morning and evening rush periods.

Another major credibility problem is Mayor Lee Leffingwell and most of his cohorts on the current City Council. They have shown that they never met a spending opportunity that they didn’t like. Budget surpluses are burned up as quickly as they arrive, and there are no guidelines and no citizen input during the process. Mr. Leffingwell and Company have bowed down to the special interests over and over again, leaving Austin with a clogged and congested transportation system and an affordability problem so severe that thousands of families are being priced out of the City.

But the Fliers In the Mail Say That Urban Rail Will Wipe Out Traffic Congestion. What About That?

The level of population density along the proposed route is so low that a major “economic development” effort would be needed to boost that density. Failure to achieve the required ridership levels would jeopardize the Federal funding for the rail. So, just think about that for a minute. If the developers can succeed in packing in enough new residents from California and elsewhere into big box, high rent luxury apartment units, maybe they can achieve the density required. But if they do, think of all those new people with cars. All of those cars would more than offset any supposed congestion relief.

If the Plan Is Flawed and the Route Is Not Popular, How Did Our Local Leaders Miss the Mark?

That’s the easiest question of all to answer. Public input was never intended to be part of the equation. The East Riverside portion of the plan was set in stone as far back as 2003. You can find references to it in the Downtown Austin Plan. An even better place to look for the history of Austin urban rail is the Austin Chronicle. Just do a search for “Austin rail” and you will find tons of archives that give the history in fascinating detail.

The Let’s Go Austin folks will continuously parrot the line that the choice of route was arrived at through “data-driven” analysis. A much more appropriate d-word would be “developer-driven.”  One mind-blowing sentence in one article in the Austin Chronicle archives tells the whole story of how rail and high density development go hand in hand. On the night several years ago when the City Council voted to adopt the East Riverside Corridor Master Plan, the Planning Commission made an 11th hour appeal. They begged the City Council to keep neighborhood compatibility standards in the new master plan. Below are the actual words from this article in the Chronicle dated March 5, 2010.

“The mayor and council members rebuffed a last-minute recommendation from the Planning Commission to apply the usual compatibility standards (which limit height near houses) in the master plan; that could have gutted the density necessary for the new rail transit line at the heart of the plan.” Once the plan was adopted, low-cost student housing units were bulldozed and a development frenzy got underway. The gentrification of East Riverside became inevitable.

Fast forward to late 2013 when the Project Connect “information sessions” and “open houses” got underway. The public was never invited to fully engage in the process and help determine where they wanted to invest their tax dollars in a new urban rail system. The special interests had already made that decision years before.

So, What Can the New City Council Do to Pick Up the Transportation Pieces After the Rail Bonds Fail?

How about this for a good start…Try listening to the people!

Rail And Road Bond Taxpayer Impact – A Chart Of The Numbers

By Bill Oakey – July 30, 2014

We know now that the $1 billion package of urban rail and road bonds would raise the debt portion of our City of Austin property taxes by 6 cents.  Between 2015 and 2020, that rate would increase from .1151 to .1751.  As you discuss this epic boondoggle with your family and friends, and urge them to vote against it in November, you can use the chart below to show them the taxpayer impact on their homes.

Since many readers of this blog have complained that their tax appraisals have increased dramatically in the past few years, I decided to build the chart using annual appraisal increases of both 5% and 10%.  The appraisals range from a starting point of $200,000 to $500,000. The chart makes it easy to see that the cumulative level of tax and appraisal increases that Austin is currently experiencing is simply not sustainable.  If all of the estimated tax increases for the various taxing entities were built into a single chart, I shudder to think how ominous it would look! So, for now, let’s just examine the taxpayer impact of the rail and road bonds.

Click the link below to see the chart.

Property Tax Impact of Rail & Road Bonds

Rail Bond Vote Would Bring Historic Tax Increase

By Bill Oakey – July 30, 2014

If anyone thinks the property tax impact of an annual City Council budget battle is something to worry about, please consider this.  For the last two years, the budget discussions have centered around changing the City’s tax rate by a tiny fraction of one penny.  That’s because our tax appraisals have skyrocketed, meaning that even a zero change in the tax rate would yield a considerable tax increase.

Well, make sure you are sitting down when you read this.  If voters approve the $1 billion urban rail and road bond package in November, they can say hello to a 6 cent increase in the property tax rate over the next five years.  The sobering details are contained in a City document called “General Obligation Bond Capacity Analysis.”  You can read it here.

What Would Happen to Our Bond Debt If the Rail Bonds Pass?

That’s an easy question to answer.  It would flat out double!  Our current general obligation debt, made up of previous bond votes for roads, parks, libraries, open space, and housing stands at about $1 billion.  So, in one fell swoop we would double our debt by voting for the rail and road package.  And the worse part is that it would do essentially nothing to relieve traffic congestion for most existing residents.

In fact, Austin won’t even come close to attaining the ridership levels needed for Federal funding for the urban rail line unless we reach extremely optimistic, massive growth projections. The developers pushing for the rail line from Riverside to Highland Mall would need to convince voters of the “miracle” in economic development potential that the project would bring. And yet, as one Austin American-Statesman reader wrote to the editor recently, “Well, thank goodness they are building a line from Riverside to Highland Mall, because I travel between those two points all the time. SAID NO ONE EVER!”

What the City Report Says About Taxes, the Debt and Our Bond Rating

Here is a snapshot of some of the report’s most significant facts and conclusions:

1. Our current general obligation debt is about $1 billion.

2. We still have an additional $425 million in 2006-2013 bonds left to issue.

3. The City estimates that another $425 million will be needed in a separate bond election in 2018, on top of the $1 billion in rail and road bonds to be voted on this November.

4. In order to preserve our AAA bond rating, we would need to raise property taxes by 6 cents between 2015 and 2020 if all of the bonds pass.

5. Not only would the property tax rate increase by 6 cents, but the City estimates that property tax appraisals will jump by over 25%!  Their example shows a $200,000 home being assessed at $255,000 by 2020.  So, the tax impact would multiply exponentially.

Don’t Forget About All the Other Tax Increases!

None of the above estimates include the back to back tax increases for the main part of the City Budget, plus utility rate increases and add-on fees, and taxes for AISD, Travis County, ACC, and Central Health.  And don’t forget that ACC will be asking for a $386 million dollar bond package this November as well.

So, as long as your career is rocking along with huge pay raises every six months or so, or your retirement income is zooming past inflation and leaving you with extra piles of cash, then you can easily afford to vote for the rail bonds.  But if you’re like the vast majority whose income is flat or even decreasing, then make sure you pass this information along to your friends and ask them to cast a resounding NO vote in November.