City of Boulder 2A – Bonding for Capital Improvement Program

To figure out how to manage a backlog of deferred maintenance and capital improvement projects, in April the city council supported a Capital Investment Strategy (CIS) plan. This fall you are seeing the results of Round 1. (Round 2 may be on the 2012 ballot.) The guideline for the Round 1 bond package was to address significant deficiencies and important capital project enhancements while not raising taxes.

In order to complete the Round 1 projects soon without raising taxes, the city would primarily fund these projects by borrowing money against future revenue. See a list below of some future revenue. For sales tax sources only the expiring bond portion of the tax will be "new" revenue.

(date revenue is available
“new” tax source
ballot issue name / year)

Jan 2011
accommodations tax increase*
2A / 2010

Jan 2012
0.38% sales tax for library bond
202** / 2008

Jan 2013
0.15% sales tax for rec center bond
2A** / 2009

* The tax increased from 5.5% to 7.5%. The intent is for 20% of the increase to go to marketing Boulder and the rest to the general fund.
** Voters approved tax extensions with dollars going to the general fund once the bonds were paid off.

The city estimates a $700 million backlog of maintenance projects. The estimated cost on the ballot for the Round 1 projects is $49 million. Eighty-five percent of the $49 million would be spent within 3 years. Because of borrowing costs and interest, the city would have to pay back up to $82 million over 20 years. Interest rates are low right now so this is a good time to borrow money.

Boulder now has about $25 million annually to spend on capital improvements (Camera, Sept 9, 2011) so the $49 million on this ballot issue is equivalent to 2 years of the Capital Improvement Program (CIP) budget. If 2A passes, the proposed projects and the new bond funds would be added to the city’s CIP.

Here's the list of projects recommended by the CIS Committee.
$4,500,000 Replace substandard bridges, structures, signs and systems
$5,000,000 Arterial road reconstruction
$2,803,000 Replace Financial and Human Resources Software
$925,000     Facility Electrical, Plumbing, HVAC and Elevator Replacements
$3,000,000 Boulder Reservoir Infrastructure Improvements
$328,000     Police Equipment
$5,000,000 Road Pavement Repair
$2,500,000 Road Reconstruction
$3,700,000 Existing Park or Recreation Facility Renovations
$500,000     Facility Parking Lot Repair
$1,602,602 Major Business Software Replacement
$5,060,000 Transportation Boulder Junction Improvements
$1,150,000   New Wildland Fire Facilities
$600,000     Transportation Transit System Enhancements
$2,000,000 Transportation New Multi Use Path connections
$850,000     Transportation Pedestrian Enhancements
$660,000     Police Equipment Upgrades/ Replacement
$500,000      Transportation Intersection Improvements
$50,000        Facility Outdoor Lighting
$300,000      Transportation Bike System Enhancements
$550,000      Columbia Cemetery Upgrades/ Enhancements
$500,000     Facility ADA Compliance
$1,000,000 Neighborhood/ Community Park Shelter Replacements/ Improvements
$2,450,000 Library Facility Upgrades/ Enhancements (Children and Teen area)
$100,000      South Boulder Rec Center Floor Replacement
$2,500,000 Downtown Commercial District Improvements
Recommended TOTAL     $48,128,602

About $30 million of the total is for significant deficiencies while $18 million is for high-priority city department action items.

Recommendation: against

The 2008 report to city council from the Blue Ribbon Commission (BRC) was disapproving of dedicated taxes and concerned about the sunset of taxes upon which the city heavily depends. It suggested asking voters to convert temporary dedicated taxes to permanent taxes with proceeds going to the general fund. The voters agreed in 2008 and 2009.

In terms of spending, however, this ballot issue is equivalent to a 20-year dedicated tax. Future city councils would not have as much flexibility to spend general fund money because they would have to pay the debt back. Partly because the $49 million isn’t that much money, I’m not convinced that tying the hands of future city councils is the way to go. The BRC agreed in its report, “Reduce number of restricted funds to provide greater budgeting flexibility.”

Consider that a large portion of the $49 million is for road repair and reconstruction. It seems likely that these roads will need further repair within the 20-year pay-back time. We could be paying for new repairs (if we have the money) and not yet be finished paying for old repairs. The BRC agrees with me on this: “Maintenance of infrastructure should not be tied to an expiring revenue source.”

I think it is a fine idea to have asked the CIS Committee to look at projects to see where the greatest needs are. The city can use its CIP budget and other general fund money to address those high-need projects, albeit at a slower pace. To make matters worse, this ballot issue sounds like the city would create some new capital infrastructure which would require more maintenance in the future, just increasing our backlog even more.

Most importantly, the city council needs to work on a long-term plan to keep the deferred maintenance backlog from getting bigger. And what if future city councils don’t adequately address capital needs and maintenance? If these issues concern you, then consider carefully whom you support for city council.

If this ballot issue doesn’t pass, the city would still have an annual revenue stream plus more general fund money to spend on capital improvements and enhancements with less going to debt payments.


City’s Capital Investment Strategy webpage (Click on Round 1)
http://www.bouldercolorado.gov/index.php?option=com_content&task=view&id=15259&Itemid=78


CITY OF BOULDER BALLOT ISSUE NO. 2A (Approved Ballot Language)

BONDING FOR CAPITAL IMPROVEMENT PROGRAM

SHALL CITY OF BOULDER DEBT BE INCREASED UP TO $49,000,000, WITH A REPAYMENT COST OF UP TO $82,000,000, WITH NO INCREASE IN ANY CITY TAX;

SHALL THE BOND PROCEEDS BE USED FOR FUNDING CAPITAL IMPROVEMENT PROJECTS THAT MAY INCLUDE WITHOUT LIMITATION:

1) REPAIRING AND MAINTAINING STREETS AND PATHWAYS;
2) REPAIRING AND REPLACING STRUCTURALLY DEFICIENT BRIDGES AND STRUCTURES;
3) COMPLETING MISSING LINKS IN THE TRANSPORTATION SYSTEM;
4) REPAIRING AND RENOVATING AGING CITY FACILITIES;
5) REPLACING AND MODERNIZING CORE SERVICE COMPUTER SOFTWARE;
6) MODERNIZING BASIC POLICE AND FIRE SAFETY FACILITIES AND EQUIPMENT;
7) RENOVATING AND REPAIRING PARKS AND RECREATION FACILITIES;
8) RENOVATING PORTIONS OF THE MAIN LIBRARY; AND
9) IMPROVING CONNECTIONS AND STREETSCAPES DOWNTOWN;

SHALL THIS PURPOSE BE ACCOMPLISHED BY THE ISSUANCE AND PAYMENT OF BONDS
OF THE CITY, AT A NET EFFECTIVE INTEREST RATE NOT TO EXCEED 5.5% PER YEAR AND
WITH A MATURITY DATE NOT TO EXCEED 20 YEARS FROM THE RESPECTIVE DATES OF
ISSUANCE;

SHALL SUCH BONDS BE ISSUED, DATED, AND SOLD AT SUCH TIME OR TIMES AND IN
SUCH MANNER AND CONTAIN SUCH TERMS, NOT INCONSISTENT HEREWITH, AS THE
CITY COUNCIL MAY DETERMINE, SUCH BONDS TO BE PAYABLE FROM ANY LEGALLY
AVAILABLE FUNDS IN THE CITY’S GENERAL FUND; AND

IN CONNECTION THEREWITH SHALL ANY EARNINGS FROM THE INVESTMENT OF THE
PROCEEDS OF SUCH BONDS (REGARDLESS OF THE AMOUNT) CONSTITUTE A VOTER
APPROVED REVENUE CHANGE AND AN EXCEPTION TO THE REVENUE AND SPENDING
LIMITS OF ARTICLE X, SECTION 20 OF THE COLORADO CONSTITUTION?
‐ FOR THE MEASURE
‐ AGAINST THE MEASURE


See Ordinance No. 7798 to refer 2A to the voters.
http://www.bouldercolorado.gov/files/Elections/2011/Ordinances/7798.pdf