Bond task force sees timelines, budget constraints for possible elections in 2025 and 2026

The Bond Election Advisory Task Force will have to decide by very early 2025 if the city should move forward with a possible climate change and sustainability bond package next fall, in a process and timeline that would see no community input or engagement in the proposal that would be put before voters.

At a meeting this week, the task force received presentations from staff in the Financial Services and Capital Delivery Services departments covering the long-term financial and logistical considerations involved in a bond package that the city’s budget office has suggested should limited to approximately $600 million. Eric Bailey, deputy director of delivery services, said the timeline needed to get a small 2025 bond proposal of about $50 million put on the ballot would wipe out any public engagement sessions and reduce the planning and design process the city is moving toward to speed up delivery of major capital investments. The remaining nonclimate-related needs could then be put before voters in 2026, with a hypothetical $550 million ask to stay within suggested budget and borrowing guidelines.

“Staff is developing project charters which define scope schedules and budgets, as well as coordinating opportunities between departments,” he said, noting that collaboration with departments that utilize public rights of way need to work closely to determine schedules, budgets and project scope. “If Council were to decide to hold a 2025 bond election, much of the project vetting, scoping and development would be truncated and any community engagement input and incorporation into the bond funded projects would be eliminated from the schedule.”

Next month, staff is expected to give the commission the full needs assessment from across the city, with $10 billion in total project cost already identified. The commission’s five committees – affordable housing, parkland and open space, investments in facilities and assets, stormwater, and transportation infrastructure – will soon begin the work to identify the most high-priority projects in each of those areas.

While staff told the task force they’d prefer to do some vetting of the total needs list to make sure every project included would be eligible for bond financing, Chair Mary Hager said she and others want to see the full picture more quickly so the 22-member body can begin its evaluation work early in 2025.

Financial considerations will also factor heavily into the task force’s decisions since the city’s general obligation debt continues to grow and could trigger action from credit ratings agencies that would increase the city’s borrowing costs.

Deputy CFO Kim Olivares said owners of a $412,000 home currently pay $396 annually pay for city debt service, with an additional $225 projected as the city issues remaining debt from past bond programs. Adding to this burden, each $100 million in new bonds would increase the average homeowner’s bill by about $13.78 annually.

Olivares said initiatives such as the cap-and-stitch proposed over an expanded Interstate 35, which would cost up to $1 billion, are being made difficult by the city’s recent run of “off-year” bond elections.

Traditionally, the city has pursued bond packages every six years, but additional proposals such as 2020’s $460 million mobility bond to fund additional transportation improvements, and 2022’s $350 million affordable housing bond have made it so the city won’t be retiring bond debt as quickly as it had for many years.

“We are now at a point where we are adding more debt faster than we are paying off debt,” she said. “As a result of just the bond programs growing in size in general for the voter-approved comprehensive ones but then also the off-cycle bond programs, we put ourselves in a state where the amount that remains to be issued far exceeds how much is being paid off each year.”

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