Item B - Transportation Funding - Laserfiche WebLink

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Estimated Tax Rate Estimated Cost to Net Direct Debt as a per $1000 of AV Average Taxpayer % of RMV* FY08 $0.14 $24 0.57% FY13 $0.20 $41 0.74% FY18 $0.25 $59 0.38% FY23 $0.17 $46 0.15% FY28 $0.08 $26 0.03% FY33 $0.03 $12 - FY36 (last year) $0.01 $3 - Average Over the Life of the Issues $0.15 $36 - *Includes projected issuance of $6.79 million for Civic Center amenities, $30 million for Parks, Recreation and Open Spaces, and $70 million for City Hall. As can be seen in the chart, the tax rate and cost to the average taxpayer would increase over time as the four bond issues were sold, and then decrease as the debt is paid off. The peak payment would occur in FY14 at about $62 for the average household. Simi- larly, the net direct debt as a percent of real market value would increase to a peak of 0.99% in FY09, which is just barely under the debt policy limit of 1.00%, and then would decrease as debt payments are made. Other Bonding Alternatives At the September 27 Council work session, the idea of issuing revenue bonds was also mentioned. In order to issue revenue bonds, the City would have to have an available revenue source to repay the bonds, such as an increased gas tax, TSMF or other source. It has been suggested that it might be prudent to issue revenue bonds as a way to either (i) speed up the volume of projects completed in a given period of time; or (ii) legally con- strain future Councils from making changes in the kinds of projects the new revenue source is used to fund. Staff analyzed the possibility of using revenue bonds backed by any new revenue source to try to decrease the backlog faster. For that analysis, staff compared a revenue stream used to complete projects on a pay-as-you-go basis versus a revenue stream that is par- tially used to pay debt service on revenue bonds. At the end of 15 years, the backlog using pay-as-you-go was about $4 million less than the backlog if the revenues were used to repay bonds. This means that issuing revenue bonds to reduce the backlog faster would not work from a financial perspective over a 15-year period because some of the revenues would be used to pay interest and bond issuance costs instead of paying for preservation projects. Additionally, given the constraints on the actual amount of pro- jects that could conceivably be completed in a given year by staff and the construction community and the community's intolerance for having too many streets under construc- tion at any given time, it is unlikely that an extremely accelerated program (for example, doing all the repair work within five years) would be successful. The other reason mentioned for issuing revenue bonds for transportation projects was that some people thought this method might legally prevent future City Councils from chang- ing the use of the revenue to back the bonds. This is not true because of the practicalities of issuing bonds. Although one source of revenue may be pledged to repay bonds, it is