Scottsdale City Council likely to get GO bond proposal moving

Scottsdale residents as soon as this November could be voting on a general obligation bond program city leaders say is needed to pay for tired infrastructure. (Independent Newsmedia/Terrance Thornton)

Scottsdale residents as soon as this November could be voting on a general obligation bond program city leaders say is needed to pay for tired infrastructure. (Independent Newsmedia/Terrance Thornton)

Members of Scottsdale City Council say the pursuit of a general obligation bond program is imminent as infrastructure — particularly municipal structures and roadways — are in need of reinvestment.

But since Scottsdale voters soundly rejected the last two consecutive bond proposals, council members know it won’t be easy convincing them to accept yet another version.

The city has drafted a potential general obligation bond program that lists 34 projects valued at approximately $172 million.

Scottsdale City Council members are expected to discuss when and if the measure will appear on a November 2015 or 2016 ballot during a 5 p.m. work study discussion Tuesday, April 21 at City Hall, 3939 N. Drinkwater Blvd.

One Scottsdale resident agrees with the notion that a bond might be needed — but says the current package up for discussion April 21 carries too much water for superficial projects.

In 2013, Scottsdale voters rejected both the proposed $212.1 million bond package and franchise agreement with EPCOR Water Arizona Inc. and Chaparral City Water Company.

That bond package included 39 projects presented in four categories: Parks, libraries and community services; public safety; neighborhood flood control; and transportation and streets.

Several council members blame a divided — and somewhat lackadaisical — council for failing to convince the public that passing the bond would have been in the city’s best interest.

This time around, they are eager to build a consensus on a new bond measure.

The city of Scottsdale today carries $619 million in outstanding general obligation bonds, of which $331 million is supported by preserve sales taxes and with $288 million supported by property taxes, according to Scottsdale Finance Director Lee Guillory.

The city has about $3.5 billion in assets, according to numbers reported last month by city staff.

“State statute allows the city to have up to $1.25 billion of general obligation bonds outstanding so Scottsdale is well below the state statute limit,” Ms. Guillory said in an April 14 written response to e-mailed questions.

Most bonds are taken into the open market, have some type of maturity of age spanning decades and are accompanied by interest rates ranging from 3 to 7 percent, typically.

When a general obligation bond is levied, homeowners pick up the tab, known within civic hallways as debt-service, oftentimes through a secondary-property tax.

Not one size fits all

Scottsdale resident John Washington says the current proposal is too big and contains too much unnecessary spending.

John Washington

John Washington

“It makes sense to borrow money for initial construction of infrastructure, or for extraordinary repairs that could not have been anticipated,” he said in an April 14 e-mail. “However, funding for ordinary infrastructure maintenance and replacement should be carefully planned and budgeted. It should be funded from revenues, not by borrowing.”

Mr. Washington is the editor of Scottsdale Trails, a local website dedicated to the local politics of Scottsdale.

“Bonding is borrowing. Borrowed money has to be repaid. In this case, the bonds will be repaid by us — the property owners in the city — via increases in our property taxes,” he pointed out on the nature of general obligation bonds.

“It always costs more to borrow than to plan ahead and budget properly. But for the last 10 to 15 years, the mayor and city council — including one David Smith, who was the city treasurer for several years — have done an abysmal job of planning and budgeting.”

Mr. Washington contends Scottsdale residents have the second largest tax burden among cities in the Valley.

“All that time, they’ve given away subsidies to their cronies as fast as they can, including forgiving (and then funding) tens of millions of dollars worth of neglected maintenance for the PGA-leased TPC golf course, and the Phil Mickelson-leased McDowell Mountain Golf; $4 million every year to a private cultural arts management business that has a no-bid, 20-year city contract; and hundreds of thousands of dollars in subsidies to promote polo matches for Mayor Jim Lane’s campaign PR manager.”

Mr. Washington says he wants to see a real discussion at the council level on the topic of wasteful spending.

“Given infrastructure needs that have accumulated from years of neglect, is bonding a necessity?” he said. “Not without proof that the borrowed money won’t simply allow the mayor and council to continue their wasteful crony capitalism.”

Bond, Scottsdale bond

Scottsdale Councilman David Smith says the April 21 work study discussion is meant to determine scope and timing of another municipal bond pitch to the community.

David Smith

David Smith

“My urging is that it will be November of this year,” he said in an April 14 phone interview. “The needs are urgent, No. 1. And, No. 2, I don’t want it to be clouded by any other local elections coming in 2016.”

Councilman Smith says he, too, wants to create consensus among the council.

“We had two councilmen rowing backwards and the other five didn’t even get their rows in the water, as I like to say,” he said of issues surrounding the rejected 2013 bond proposal.

“A couple of council members actively and vigorously campaigned against it. I think that was a poor strategy. I just don’t think that you throw the city under the bus, you go get a new council. That is essentially, what we did last election.”

Councilman Smith contends the municipality needs the money for failing infrastructure.

“There is a desperate need for reinvestment. It makes sense in terms of protecting property values. It is a very modest cost for the homeowners,” he said. “If there are councilmembers that are against it, I guess it will come down to who is yelling the loudest.”

Scottsdale Councilwoman Kathy Littlefield, who took office this past January, says the bond program needs to be cut down to size.

Kathy Littlefield

Kathy Littlefield

“It is better than the previous one, but it is (still) too much,” she said in an April 14 phone interview.

“But I am not against putting a bond package to bring in front of the citizens for a vote. I am not against doing that.”

But she is against the same bell being rung twice, Councilwoman Littlefield says.

“It’s funny, since I have gotten in, I see how it works. It’s like water over rock. Water will wear away until you get what you want. A lot of these projects were on the last bond package. Actually, most of them were. Why are we putting on stuff that the citizens drove into the ground?”

Councilwoman Littlefield says she wants to develop a line-item bond package no more than $150 million, with any project over $5 million getting its own vote.

“Can we build a dog park for just $500,000?” she said of million-dollar parks projects presented in the 34-project pitch.

“I think we need to have the funding for the improvements of the roads. But do we need roundabouts or two-lane roundabouts?”

She wants necessity to drive the bonding conversation, Councilwoman Littlefield says.

“I want the bond issues to be for the things that we can’t do any other way,” she explained. “The economy is turning around but a lot of people are still hurting. We need to have a little consideration for where our citizens are coming from.”

Scottsdale Councilwoman Linda Milhaven echoes those sentiments.

“The way I am going to look at is, what are the things that manage our fading infrastructure,” she said in an April 14 phone interview.

“I think what will come from the work study discussion is some agreement on what projects are important and necessary.”

Compromise is Councilwoman Milhaven’s mission, she says.

“It is my goal to find a compromise that everybody can agree with,” she said. “When we find a compromise that all seven us can get behind then we can be optimistic.”

Northeast Valley Managing Editor Terrance Thornton can be contacted at tthornton@newszap.com

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