Transcript www.gfoaz.org

Bond Election 101
January 8, 2010
GFOAz Quarterly Training
Chandler, AZ, 12:15 p.m. – 2:00 p.m.
Presented by:
Mindy Russell, Management Assistant
[email protected]
Mary Jo Waddell, City Clerk
[email protected]
City of Peoria, AZ
Michael Cafiso, Esq.
Greenburg Traurig LLP
[email protected]
Troy Corder
Policy Development Group
[email protected]
Mark Reader, Managing Director
Stone & Youngberg LLC
[email protected]
Agenda
Topic
Est. Start Time
Presenter(s)
Topic and Speaker Introductions
12:15 - 12:20
Mindy Russell
Bonding Capacity Reminder for G.O. Bonds and Impact on
Declining Secondary Assessed Values
12:20 - 12:35
Mark Reader
Bonding Capacity Reminder for HURF Bonds
12:20 - 12:35
Mark Reader
Bond Election Requirements - by Financing Alternative
12:20 - 12:35
Mark Reader
Recent Bond Election Statistics and Property Tax Law Changes
12:20 - 12:40
Mark Reader / Mike Cafiso
Election Call Requirements and Timeline(s) - Working
Closely with Clerks, Finance Directors and County Officials
12:40 - 12:50
Mary Jo Waddell/
Mike Cafiso
Voter Information Pamphlet Requirements
12:50 - 1:00
Mary Jo Waddell/Mike Cafiso
Election Legal Do's and Don’t's
1:00 - 1:15
Mike Cafiso
Election Strategies and Case Studies (Separate Power-Point)
1:15 - 2:00
Troy Corder
Questions/Answers
2:00 - 2:15
Mindy Russell
1
General Obligation (G.O.) Bonding Capacity
CITY OF AVONDALE, ARIZONA
Fiscal Year 2008/09 Direct Bond Debt,
Legal Limitation and Unused Borrowing Capacity
20%
Water, Light, Sewer, Open Space, Public Safety,
6%
Law Enforcement, Fire/Emergency Services,
General Municipal Purpose Bonds
Streets/Transportation Facilities and Park Bonds
2008/09 Secondary Assessed Valuation $704,115,001
2008/09 Secondary Assessed Valuation $704,115,001
6% Limitation
20% Limitation
42,246,900
Direct Such General Obligation
to be Outstanding
Less Direct Bonded Debt
1,665,000
to be Outstanding
Unused 6% Borrowing
Capacity
140,823,000
11,785,000
Unused 20% Borrowing
$40,581,900
Capacity
$129,038,000

G.O. bonds are repaid with secondary property tax revenues

Bonding capacity impacted by changes in secondary assessed valuation and July 1 principal payments
2
Declining Assessed Valuations
The State of Arizona had seen double-digit growth in assessed valuation for
many local governments from 2003-2007
 Recently, this trend has slowed to single digit and double digit reductions or
negative declines in assessed valuations in FYE 2009 and 2010 with FYE 2011
estimates forthcoming
Assessed Valuation Drives Access to Bond Dollars:


Voter approved authorization ≠ cash available now

Higher growth allows earlier issuance

Lower growth/decline hinders issuance and potentially impacts secondary tax
rate policy objectives

$2.6 Million in lost capacity for every $10,000,000 reduction in assessed value

18-24 month catch-up with County Assessor’s valuation
3
Street & Highway User Revenue Bonding Capacity
(HURF Bonds)
City/Town Credit Rating (a)
HURF Revenues
Bond Sizing Per $1,000,000 of HURF
Leverage Calculation
Revenues (b)
"A" or Above
66.60%
$6,500,000
"A" or Below
50.00%
$4,900,000
 Bond election required (Note: Not limited to November)
 Generally successful as a result of no tax increase
 Small number of elections due to HURF budget capacity constraints
(a) Credit rating of A or better by at least one nationally recognized credit rating agency
(b) Estimate assumes 5.75% interest rate, 15-year amortization, level debt service
4
AZ City/Town Bond Election & Financing Alt. Summary
G.O.
Bonds
(a)
HURF
Bonds
(b)
Excise
Tax
Rev.
Bonds
I.D.
Bonds
CFD
Bonds
No
Utility
Revenue
Bonds &
WIFA
(c)
GADA
(d)
USDA
Yes
Yes
No
(petition)
1. Streets & Roads
(Transportation)

(20% or
6%)



2. Parks & Open
Space

(20% or
6%)

3. Water &
Wastewater
Utilities
(Acquisitions &
Improvements)

(20% or
6%)


4. Electric & Gas

(6%)


5. Police & Fire
(Public Safety)

(20% or
6%)


6. Administrative
Facilities
(i.e., City Hall)

(6%)


P3
Yes
Yes
(G.O.
Bonds)
Bond Election Required?
Lease
Purchase/
COPs
(Annual
Approp.)
No
Maybe
(GO
Bonds)
Maybe
Maybe



(No Grants)



(No Grants)




(Including
Grants)


(No WIFA)


(No Grants)



(No Grants)



(No Grants)
Type of Infrastructure

(a) Election permitted to be held on the First Tuesday after the First Monday in November of each year. (c) Election not required if population is less than 50,000.
(b) Election permitted in March, May, September and November.
(d) Election not required if population is less than 50,000.
5
AZ City/Town Bond Election & Financing Alt. Summary
G.O. Bonds
(a)
Bond Election
Required?
Type of
Infrastructure
7. Libraries
Yes
HURF
Bonds
(b)
Yes
I.D. Bonds
CFD
Bonds
No
No
(petition)
Yes
(GO
Bonds)
No


(6%)

8. Airport

(20% or 6%)

9. Equipment /
Technology
(e)

(20%or 6%)
10. Economic
Development

Lease
Purchase
/ COPs
(Annual
Approp.)
Excise
Tax
Rev.
Bonds



Utility
Rev.
Bonds &
WIFA
(c)
GADA
(d)
USDA
P3
Maybe
Maybe
Maybe
(GO
Bonds)



(No
Grants)



(No
Grants)

(e)

(No
Grants)


(No
Grants)

(Grants)
(No
Grants)

Maybe


(6%)


(20% or 6%)

12. Solid Waste

(6%)


13. Sport Facilities
(Professional)

(6%)


11. Storm
Drainage





(a) Election permitted to be held on the First Tuesday after the First Monday in November of each year. (d) Election not required if population is less than 50,000.
(b) Election permitted in March, May, September and November.
(e) Amortization Limited to Average Useful Life of Assets Being Financed.
(c) Election not required if population is less than 50,000.
6
AZ Counties Bond Election and Financing Alt. Summary
G.O.
Bonds
(15%)
Bond Election
Required?
HURF
Bonds
Excise
Tax
Rev.
Bonds
Yes
Yes
No
1. Streets & Roads
(Transportation)



(b)
2. Parks & Open
Space

I.D. Bonds
CFD
Bonds
Lease
Purcha
se/
COPs
Special
Districts
(a)
Library
District
Jail
District
WIFA
(c)
GADA
(d)
USDA
No
(Petition)
Yes
(GO
Bonds)
No
Maybe
Yes
Yes
Maybe
Maybe
Maybe


Type of Infrastructure
3. Water &
Wastewater
Utilities


(No Grants)




(No Grants)






(Pima
County
WW Only)
4. Public Safety /
Courts

5. Administrative
Facilities


(Includes
Grants)





(No Grants)





(No Grants)
6. Libraries




(No Grants)
7. Equipment /
Technology

8. Detention
Facilities & Jails

9. Economic
Development







(No Grants)





(No Grants)



(No Grants)
(a) Includes Sanitary Districts, Domestic Water Improvement Districts and other similar Districts.
(b) County Highway Acceleration Financing Option Also Available.
7
(c) Election not required if population is less than 50,000.
(d) Election not required if population is lass than 200,000
G.O. Bond Election Results-AZ School Districts
Class B School Improvement General Obligation Bond Election
Results: 1999 - 2009
9 Issues
6%
PASS
FAILED
147 Issues = 5.3 B
Authorization
94%
Source: Stone & Youngberg, LLC
8
Debt Authorization Election Results: 2003 to 2009
Includes G.O. Bonds, Revenue Bonds and HURF Bonds
20 issues
= $1.835 B
(a)
13%
FAILED
PASSED
133 Issues = $7.510 B
Debt Authorization
87%
(a) Includes cities, towns, counties, special districts, and community college districts. Does not
include Arizona school districts.
Source: Stone & Youngberg LLC
9
Recent Bond Election and Property Tax Law Changes
(Note: Does not include provisions specific to school districts)
2009
Bill No.
Topic
Section
Page
Content
HB 2360
Ch. 140
Bond Pamphlets
35-454
1
 Requires bond voter pamphlets to calculate the tax impact on an
individual property owner as if the value of that property increased at
50% of the projected growth rate of the total SAV in the district.
 Requires bond voter pamphlets to state that the bonding authority
requested exceeds the district’s Constitutional limit (if applicable).
2
Requires ballots for bond questions to state that issuing bonds will cause
a property tax increase. (Note: This apparently does not apply to school
districts because it contradicts specific ballot language in section 15-491.)
Bond
Resolutions
35-455
3
Requires the call for a bond election to include the minimum number of
years bonds may run, the current amount of bond debt and the
Constitutional bond debt limit.
Refunding Bonds
35-473.01
4
Requires the weighted average maturity of refunding bonds to be at least
75% of the weighted average maturity of the bonds being refunded or else
voter approval is required.
Final version: House engrossed bill
2007
Bill No.
HB 2784
Ch. 258
Topic
Property
Taxes
Section
42-15001
Page
4-5
Content
Accelerates the reduction in the Class One assessment ratio so that it
reaches 20% in FY 2012 instead of FY 2016.
Final version: Senate engrossed bill
10
Recent Bond Election and Property Tax Law Changes
(Note: Does not include provisions specific to school districts)
2006
Bill No.
HB 2876
Ch. 354
Topic
Section
Page
Election
Date
16-204
42
Requires any election for an obligation that will require the assessment of
secondary property taxes to be held in November, including bond and
override elections.
43
Eliminates the requirement that bond elections be called not less than 30 or
more than 150 days before the election.
44
Replaces current requirements for tax impact in voter pamphlets for bond
elections with a new requirement to show the average annual impact and the
total cost over the life of the bonds on a $250,000 home and commercial
property valued at $2.5 million.
45
Requires all written information provided by the political subdivision
pertaining to a bond election to include the estimated average annual tax
rate.
Bond Elections
(Effective
6/30/07)
35-453
(Effective
6/30/07)
Bond
Election
Information
35-454
(Effective
12/31/06)
Content
Final version: Conference Engrossed Bill
Bill No.
SB 1041
Ch. 44
Topic
Section
Page
Content
Bond Elections
35-454
27
Changes deadline for mailing voter information pamphlets for bond elections
to 35 days before the election and requires mailing them to each household
with an elector (instead of each elector or each household). Effective 4/5/06
11
Recent Bond Election and Property Tax Law Changes
(Note: Does not include provisions specific to school districts)
2005
Bill No.
Topic
Section
Page
Content
HB 2623
Ch. 164
Bond
Elections
35-454
6
Requires bond ballot questions to state that issuance of the bonds will
result in an annual levy of property taxes. Effective 11/1/05.
HB 2779
Ch. 302
Property
Taxes
42-15001
7
Reduces the Class 1 (commercial and industrial property) assessment
ratio from 25% to 20% in one-half percent increments over 10 years.
12
Calendar For Calling and Holding Municipal Elections
Hire Consultants (by January/February)
Investment Banker
Bond Counsel
Facilities Planning Professional
Demographers, Election Research Consultant, etc.
Educate Key Administrators (by February/March)
Capital Financing Alternatives
Bond Basics
•
Practical Elements and Strategic Use
•
Election and Pamphlet Requirements
AZ Property Tax Basics
Financial Policies for Debt and Taxes
Community Outreach and Research Efforts
•
Demographic and Election Research Consultants
•
Formation of Political Action Committees (PACs)
Prepare a Capital Improvement Plan (March/April)
Comprehensive in Scope and Easy to Read
Current and Long Range Needs (5+ Years through build-out)
Reliable Cost Estimates with Contingencies and Inflation Adjustments
Repair and Replacement Needs Scheduled and Quantified
Funding Sources Identified and Prioritized
Impact on M&O Identified and Integrated with Long Term M&O Forecast
13
Calendar For Calling and Holding Municipal Elections
Form and Educate a Stakeholder Committee (by March)
Council Representatives
Key Administrators
Site Personnel (administrators, certified and classified)
Residential Representatives
Business Representatives
Other Community Leaders
Local Media
Stakeholder Committee Goals to Consider (by May)
Recommend a CIP to Governing Board
Become Educated with Enough Pertinent Facts to Assist Voters
•
District Long Range Plans for Bond and Override Elections
•
District Financial Policies on Debt and Taxes
Recommend Use of Oversight Committee(s) for CIP, Elections, Debt and/or Taxes
Council Dissolves Stakeholder Committee, Community Members May form PAC
Council Calls for the Election (June/July)
Justice Department Civil Rights Division,Voting Rights Section filing is made
Request Arguments For/Against
Mail Publicity Pamphlet (September 28)
14
Voter Information Pamphlet Requirements
See City of Peoria Voter Information Pamphlet
See copies of Arizona Revised Statutes
15
Election Do’s and Don’ts
ARS 9-500.14. Use of city or town resources or employees to influence elections;
prohibitions
A.
A city or town shall not use its personnel, equipment, materials, buildings or other
resources for the purpose of influencing the outcomes of elections. Notwithstanding
this section, a city or town may distribute informational reports on a proposed bond
election as provided in section 35-454. Nothing in this section precludes a city or town
from reporting on official actions of the governing body.
B.
Employees of a city or town shall not use the authority of their positions to
influence the vote of political activities of any subordinate employee.
C.
Nothing contained in this section shall be construed as denying the civil and
political liberties of any employee as guaranteed by the United States and Arizona
Constitutions.
16