In the next few weeks, El Paso City Council will receive a report on what it would take to complete the $475 million quality of life bond program approved in 2012 in 10 years instead of 15 as now planned.
Westside city Rep. Ann Morgan Lilly said she was under the impression since 2012 that it was a 10-year program, and only found out recently that plans call for completing the projects in 15 years as a way to keep taxes down.“I was surprised, and I don’t know how it happened,” Lilly said. “I am very serious about going back and seeing if we can’t work out a 10-year schedule.”
She said she first learned about the 15-year schedule during a budget report by the city’s interim chief financial office, Mark Sutter.
Now, some council members want to see if the project schedule can be changed to a 10-year program, though that would probably mean raising taxes higher than expected to pay for the bonds.
Sutter said he will try to answer that question in a report to council in two weeks.
El Paso’s former city manager, Joyce Wilson, said she never thought and is unaware of any firm plan to get though the very ambitious series of projects in 10 years. Wilson questions whether it can be done.
“We always said it would be a 10- to 15-year program,” she said Friday. “There was no effort to slow it down because of the (tax) rate.”
Sutter said he doesn’t know the history of the issue but that a 15-year plan for the bond projects was already in place when he took over after the city’s former CFO, Carmen Arrieta-Candelaria, left in early July.
“I don’t really know how and when it came about or how the discussion went for a 10-year rollout to something longer,” he said. “All I know is when I stepped into my position, it was already scheduled out for that length of time.”
He said he understands the reason for the change was to spread the sale of bonds that pay for the bond projects over a longer period of time to prevent any shocking increases in the city’s property tax rate.
That tax rate is 69.9 cents per $100 valuation. Of that, 24.5 cents is dedicated to debt service and making annual bond payments. And that will generate $3.5 million this fiscal year to cover the bond payments, but it will go up in coming years to cover higher payments as bonds for the quality of life projects are sold.
In addition to the new quality of life bonds, the city will also be paying on $210 million in certificate of obligation the city will sell over a decade for street improvements. And then there’s the $29 million in certificates of obligation the city sold to cover the costs of moving City Hall operations when the old City Hall came down to make way for the new Triple-A ballpark.
All together, that comes to $614 million of long-term debt, in addition to the bond debt the city has from the past. The city always planned to spread the bond sales out over a period of years as other debt is retired to keep down the annual payments and the tax rate.
The city has a 30-cent ceiling on the debt service rate, and raising it would require a vote by City Council.
When asked if that would be a reason for pushing the bond projects out to 15 years, Sutter said, “I think you hit the nail on the head.”
At the council’s final budget briefing in July, Sutter said he provided a summary that referred to the 15-year horizon.
“It became obvious as I was talking to them that the quality of life project rollout was longer than they had anticipated,” he said. “So, of course, they asked where this came from.
“Basically, I was the messenger.”
Recently, council members asked what it would take to complete all the bond projects in 10 years as originally planned.
“I would like to see how much the debt service rate would increase if we move toward the 10-year implementation plan,” said District 3 City Rep. Emma Acosta.
Her concern, she said, is that with inflation and rising costs, there won’t be enough bond money in later years to pay for the final projects.
They could well include the bond election’s three signature projects: the multi-purpose facility, a children’s museum and a Hispanic cultural center.
“The longer we wait ... the smaller the facilities will be,” Acosta said.
Email El Paso Inc. reporter David Crowder at firstname.lastname@example.org or call (915) 534-4422, ext. 122 and (915) 630-6622.