A potential general obligation bond program lists 34 projects valued at approximately $172 million for Scottsdale City Council members to consider.
Scottsdale City Council discussed establishing a general obligation bond program during a work study session Monday, March 2 at City Hall, 3939 N. Drinkwater Blvd.
The 34 potential projects outlined in March 2 staff report involve renovation or expansion in several different areas including public safety, transportation, and parks and recreation.
City officials say Scottsdale City Council could be deciding to pursue a general obligation bond program on a 2015 ballot.
When the programs typically used to fund these projects fall short, municipal bonds are considered as a way to finance long-term projects with long-term funding, explained Scottsdale City Engineer Derek Earle in a March 5 phone interview.
Municipal bonds allow government entities to secure funds for city projects. General obligation bonds, like the ones being considered, are then paid for over a series of years with city property taxes.
If the bond passes, taxpayers can expect to see an increase of about $20 per year for each $100,000 of assessed valuation on their home by the Maricopa County Assessor’s Office, Mr. Earle estimated.
Bonds of this sort always require voter approval, Mr. Earle said. When placed on a ballot, the 34 projects will be organized into “questions,” and each question put up to voter approval.
Rather than voting for each project individually, voters will act on groups of projects. This reduces the cost of election, a cost estimated at $500,000, according to the staff report.
City staff compiled the list of 34 potential projects based on a 2013 bond program, identifying which projects still require attention, and two updates on the capital improvement program, a list compiled by city departments detailing capital needs.
According to Mr. Earle, the general obligation program put before city council focuses on the city’s “key needs in terms of repair.”
“Investing in the assets that the city owns, re-investing in those and maintaining them at a high value, is a re-investment in the city and your own home,” Mr. Earl explained.
If all 34 projects on the potential list are approved by city council, the bond will be worth approximately $172 million states the staff report.
The city won’t borrow all of the approved funding at once, instead issuing small bonds as needed, Mr. Earle explained. Bonds can be issued for any length of time, but are typically designed to be paid for within 25 years, he continued.
“Scottsdale has the highest bond ratings available,” reported Mr. Earle, explaining the city holds AAA ratings from all three rating agencies. “We have the most favorable bond ratings, so we get the most favorable interest rates.”
Cities are rated based on the risk level for investors; a credit rating. The higher a city’s rating, the less interest it pays on the bond.
The last comparable bond in Scottsdale was issued in 2000 for a sum of $358 million, Mr. Earle recalled. The last two bonds for election in Scottsdale, in 2010 and 2013, were turned down by voters.
Ms. Walker is a freelance journalist under contract with the North Valley Office of Independent Newsmedia Inc. USA