Suhm: Bond Package Is "Absolutely Critical Stuff." Some on Council Have Their Own Ideas.

Categories: City Hall
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City Manager Mary Suhm reminded the council, again and again, by way of introduction: Today's presentation on the 2012 bond program is very, very, very, very preliminary. There will be many more meetings, including February confabs in every district. The numbers are rough, very rough -- guesstimates of guesstimates. The city's chief financial officer, Jeanne Chipperfield, immediately followed with her own whoa-whoa-whoa: It's still "a very volatile economy worldwide," which could impact the projected value of the property tax base -- one among several factors that goes into the program projections. Still: Expect it to be 'round $450 million to $550 million. A fraction of the 2006 bond program, which was $1.35 billion.

Then it was Assistant City Manager Jill Jordan's turn at the mic during this tag-team afternoon. She laid out the needs inventory, up to $10 billion after we were just told we had $6 billion worth of to-do's in the middle of last year. "Some people's needs are other people's wishes," said Suhm, interrupting her lieutenant. "And some people's wishes are other people's needs." (Give that lady an acoustic guitar!) "We're pretty broad" when it comes to defining needs, she said.

Jordan then gave her Top Three List of Needs: streets, flood protection and economic development. She warned: If we don't invest in streets, they'll get bad. OK, worse: "Ya hit a bad pothole, you wipe our your tire, you wipe our part of your car ...," she said, in case you didn't know. Also: "Street condition plays a role in the transportation of goods," on a more serious note. "Back in 1995, we weren't investing in streets." Tsk.

She showed pictures of things under water: "Flooding can be a significant problem." And she talked about investing in private companies' new facilities; hey, you gotta spend money to make money. Then she echoed Suhm's remarks: This is early in the process. There will be meetings, town halls, briefings, etc. "We'll show you what the needs inventory looks like," she said, "and where those project are." In May we'll see what Suhm's recommending. After that: more talking.

"If the economy does better than we projected, we can always have another bond program sooner than what we're talking about," Jordan told the council. At which point she revealed that 90 percent of the '06 bond program projects are either done or being tended to in some way, shape or form.

Now, to the council's comments! And, as always, Carolyn Davis did not disappoint.

Tennell Atkins was first. He called Chipperfield back to the mic and asked about the 2006 bond package, which was worth $1.35 billion. He asked when the bonds would be paid off. She said she expected the last contract to be awarded in 2015, so ... 2034, 2035, let's say. He wondered: How does the city's existing $1.8 billion general obligation debt factor into the $450 million to $550 million being proposed for the upcoming election?

"I think we need to show the value of the city's going up," he said. "How do we do that?" At which point he mentioned .. wait for it, wait for it ... flow control: "That's new revenue," and he wondered why that's not added into the projected revenue line and "an increase in the value of the city."

Suhm explained: "Flow control money is about [the] operational side."

"It's new revenue, though," Atkins said.

"It is."

Jerry Allen liked that. "These have been tough, tough times for cities across the United States for the last four years," he said. "Our debt will almost double since '07, with this new bond program, and our revenues have been down last three, four years. That's not a trend that makes it easy to sleep at night."

Suhm said: Hang on. "We're not suggesting creating larger portions of debt."

Allen said, well, OK, but the city's like every homeowner in America, making "less income but [taking on] more debt."

Suhm said, look, she isn't about to propose a package that'll increase citizens' taxes or jump the debt. So if she's wrong about property tax revenue -- which'll get a bit more firm in May -- then she'll "dial it back." She told Allen, look, this will be "challenging," trying to tend to $10 billion in needs with a fraction of a fraction of a fraction of that. She called it: "a whole lot of needs and not much money." Said Suhm, "This is balance. This a balance about stimulating the tax base so you don't cause it to deteriorate and hopefully cause it to grow."

Carolyn Davis said she wanted to talk about something, but she wouldn't say what: "It'll be in the paper." Big laughs! She's hilarious! She said she'd "push for some kind of dollars for housing," because "I believe housing creates economic development." And she mentioned Hall of State at Fair Park: "Can we power-wash it?" Suhm said, well, that's not really something to do with bond money.

She said some other things about streets and parks in her South Dallas district in need of fixing, then asked: "Does this go out to voters to vote on?"

Good thing she's not worried about that going in the paper.

Davis threatened not to support the bond package if there's not enough in it for her district -- housing especially. Suhm warned her: This is a small package containing "absolutely critical stuff." To which Davis responded: Yeah, well ...

Caraway also wanted to make sure Southern Dallas is tended to "in the first sale" of the bonds. He wants to give his constituents "some belief" that they're being tended to. Suhm told him his district isn't being and hasn't been pushed to the back of the line, no matter what he thinks.

"I want us to have a strong focus somehow in this discussion somehow about what we're going to do about Fair Park," the former mayor said. "We have a creative opportunity to include Fair Park. It's so, so important. I don't know if we go back and do what we should have done, the half-cent sales tax or one year, that would have saved us everything we're going through at Fair Park. But somehow we have to put the focus on Fair Park."

Next up, Angela Hunt said "this is on the right track, looking at the very basics" while also keeping the debt level consistent with the tax rate. But she wondered if perhaps we weren't being a little optimistic in revenue projections: "If we're wrong and we're not bringing in enough money, we still have to pay back our debt ..."

Suhm interrupted: "You just wouldn't sell the bonds." Which relieved Hunt, who had a few issues about spending bond money on economic development. She asked if that isn't better served by TIF districts or tax abatements. "Have we looked at going in that direction instead of relying on bonds?" she asked. Assistant City Manager Ryan Evans told her we have a lot of TIF districts already, and for some "stand-alone projects," those just "don't make sense."

Hunt also wanted to know about the state of the downtown municipal courthouse -- which one day may finally become the UNT law school. Depends. She asked Suhm: "Are they going to displace our courts?" Suhm said, "Eventually they will. We're redoing the building. It depends on the Legislature giving the law school money ... They're a good way from being where they need to be." Note to self: Look for her upcoming memo to council concerning the fate and future of the law school.

Sandy Greyson wanted to know: What in the heck are we supposed to tell our constituents? Is the council supposed to promise specifics or just vague proposals or ask for suggestions or ... something?

"Don't create a Christmas list," Suhm said, "because you can't afford it." Suhm seemed to be speaking to all the council members on this point, because while they all want and need for their respective districts, hey, there's only so much to go around. Ann Margolin asked about libraries -- how much have we spent on land that still sits vacant? Expect a memo.

Scott Griggs, Suhm's newest foil, insisted that based on her numbers, we won't be able to sell new bonds till .... 2021? Suhm resisted that. He also wanted to know about partnering with the county, to "leverage money when we don't have it." Suhm said, well, fine, but often the city can't wrap up a project because Dallas County isn't done with something of its own that's related. He also brought up Bishop Arts District and spreading small projects like that to other parts of the city -- a requisite for every council meeting.

Vonciel Jones-Hill asked Chipperfield, since everyone has their own ideas about what needs to be in the bond program, can she maybe work out a formula that says, "If you add X dollars to the bond program that will cause a property tax increase of X?" Sure, said the CFO. The judge said, hey, everybody got upset about that last tax-rate hike, so before you go on about adding extras to the "critical stuff," such as libraries and parks: "I want those colleagues to be very mindful as we increase the bond package we are talking about a tax-rate increase."

This confused Sheffie Kadane, who said he just wanted to be warned if a tax hike was coming. There was a collective: Slow your roll, Sheffie! Well, he said: "All I heard was tax increase."

Mayor Mike wrapped it up: "I don't want any new taxes." Matter of fact, he wants to roll back property taxes "at some point."

Now then: "This is what's hard: If you're gonna be conservative you gotta make some Sophie's choices when it comes to this stuff. ... Our job, as a city council, I believe, is to drive the city so it'll hit the green line," he said, referring to the growth line. "We need to hold ourselves accountable. To do that I am suggesting we think about these items in the budget three ways. One is safety ... second is how can we invest our money to get to the green line, to the best return on our investment ... and then the third area is what increase quality of life. I believe ultimately that's what our job is. ... We've gotta get a sense of what is sell-able to our citizens They didn't get to vote on the tax increase."

All together now: "Some people's needs are other people's wishes/And some people's wishes are other people's needs." Gotta get that on a coffee cup.
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24 comments
dallasmay
dallasmay

$500,000,000 sounds like a lot, but it's really not. That is going to really hurt the civil engineering and construction industry. Especially since yesterday we learned that $300,000,000 of it is likely to be spent on a single project. That doesn't leave much to go around. 

MattL1
MattL1

Aside from a lot of the substantive issues discussed, this piece, and I'm sure the meeting itself, was an absolute treasure-trove of great quotes.  

PlanoDave
PlanoDave

This meeting sounds like the perfect argument against city government that is all single-member districts with no at-large members.  Everybody is worrying about what we are going to do for their little slice of town and nobody has the big picture in mind.

It's absolutely disgusting and it is the number one reason that I'm not DallasDave anymore.

LakeWWWooder
LakeWWWooder

Let's hope Henderson Avenue being rebuilt with wide sidewalks is on the bond program. That will actually make money - as in the Lower Greenville improvements...

Mister_Mean
Mister_Mean

More bond money (and higher taxes) for the city to squander.  With no guarantee that it will be spent well.   The streets and flood control have been issues before Miller’s election.   Same old song and dance: “we have neglected the basics now we need more money to continue on our merry/inept way). 

niceguytx
niceguytx

I hope someone explained "Sophie's choices" to the Council.  Doesn't strike me as a crowd that gets literary references....

Anon
Anon

Down the list: If you don’t invest in streets all you do is make it more expensive later. Do not let the streets slide any farther down, they are bad enough already. Dallas Council Member(s) often seem to not know the basics of municipal budgets. Revenues from enterprise funds (like the landfill) are on the Operations side of the budget. The O&M side. Which is separate from the debt side. If ever the two meet then bad things tend to happen.  Suhm is right not to wrestle with Atkins about “new revenue”. There are lots of ways to create new revenue. What’s being talked about is debt funding big projects, like streets, flood protection, and serious economic development efforts. The landfill isn’t going to bring in half a billion in new revenue for a very long time. Allen seems to have a better understanding. Not much money and a whole lot of need.  Davis. There’s not much to say. Sounds like she wants the city to go into debt to build some houses or apartments. I’m not sure that’s the city’s job. How long has she been on council? And she doesn’t know that a bond proposal has to be put before the voters? Really? Oh, and see the difference between O&M and debt – so how long to you want to pay interest to power wash that building? That's something you pay for out of existing Operations revenues. Extensive renovations or expansion might worthy of inclusion in a bond package. But not running it through the car wash. The Mayor-that-Was thinks folks need tending to. Like sheep. I suppose.  Angela, just because a bond package is approved does not mean you immediately sell the bonds. That would be exactly like taking a cash advance on all your credit cards for the full amount you can borrow plus doing a home equity loan, assuming you have any equity in this economy, and visiting the loan sharks for car title loans all at the same time. Immediately you have to start making unaffordable payments. Why would you do that? You sell bonds when your project is ready to go, not before. This helps hold down the pressure on the tax rate. So you don’t have to visit the loan sharks.  Griggs, in order to keep the tax rate pressure low, you don’t issue new debt until old debt falls off. See the above description of the credit card. If you don’t want the payment to go up, don’t put more on the account than you have paid off.  Vonciel, again, see the above descriptions of the credit card analogy. If your credit card has a limit of ten dollars but you never charge anything you have no payment to make. So it does not impact your finances. If you put a dollar on your credit card then you might owe more than a dollar if you let it linger for too long. Put ten whole dollars on that card and you’ll owe a whole lot more. For the real impact on city finances, just scale this example up and add a whole bunch of zeros to the right of the 1. Mayor Mike seems to have a pretty good grasp of it. But some of the others? Come on, guys! Most of you have been on the council a while and should have a reasonable grasp of how this works!

(City staff, would you pretty please provide these folks with a basic primer on this material? Again?)

Oak Cliff Townie
Oak Cliff Townie

Jordan then gave her Top Three List of Needs: streets, flood protection and economic development.

Take care of the streets and keep us from floating away there is an greater than Zero chance that "economic development" will take care of it self.

I tell the Family when they come with their ideas for using my Money to make them money . If you can't get all the loan from a Bank don't come to me .

Dallas should be a Business Pays its own Way kind of city.

Ellum08
Ellum08

I guess I don't understand city government that well, but shouldn't stuff like fixing streets, flood control, library/park maintenance, etc. already be part of the operational budget and not have to rely on bond programs? I understand bonds for big stuff, but day-to-day, nuts and bolts type of issues should ALWAYS have some place in the city budget, right?

Anyone care to explain it to me?

In addition, if we don't have the money to maintain it, then why are we building it in the first place?

On a side note, Carolyn Davis must not have a clue what the Housing Department does. Almost all their resources are focused on South Dallas and West Dallas.

yeahisaidthat
yeahisaidthat

I love it when Scott busts Mayor Suhm's balls. Hilarious.

Herewegoagain
Herewegoagain

You mean the flow control that will be tied up in expensive litigation for years? The Mayor doesn't want new taxes but doesn't mind raising the cost of doing business in Dallas with flow control. All those trucks going South will require more street repairs.  

Heywood U buzzoff
Heywood U buzzoff

How can anyone look at the Dallas City Council and believe in Intelligent Design? (apologies to Kinky F.)

Bill Holston
Bill Holston

that mention of libraries, reminds me. Every time I pass that Casa View Library, I see it, looking blighted. It has plywood over the windows and repeatedly grafittied. It's a cool building. I really truly don't see why we don't sell those buildings. Again, they are not neutrals, they are negatives in our neighborhoods.  

Anon
Anon

can we take on hundreds of millions in debt to support my industry too?

The Credible Hulk
The Credible Hulk

I'd really like to know how many of our fine council members are carrying credid card debt for the purchase of a burrito for some long forgotten lunch.

Gaging from the responses reported above, I'll bet it's more than a few...

The Credible Hulk
The Credible Hulk

Maybe "Hobson's choice" might be a better comparison for what the council offers the citizens: You'll take what we give you - and LIKE it.

Bob
Bob

"Sophie's Choice"? You mean we have to kill one of our children or we must take cyanide with our lover?

Filing under "hide the salami."

Angela Hunt
Angela Hunt

Anon, of course you don't sell all the bonds at once -- you sell them over several years, as you undertake projects.  For the last couple of years the city has used commercial paper to further shorten the time of bond sale viz actual contract letting time to reduce accumulating interest (then wrapped the commercial paper into long-term bonds).

My concern is that if the economy doesn't improve, and we bring in less money but are taking on more debt, we will start eating into our operating budget -- yet again.  If you analyze the way the city has sold bonds in the last several years, you'll see that our annual bond sale and the resulting debt service has exceeded the amount of debt falling off.  So to pay for this increase in debt service, we've eaten into our general fund, significantly.  (We did not increase our debt service in this year's budget, only borrowed what will fall off.)  Given that we've eaten into our operating revenue for several years, to the detriment of our streets, parks, etc., it's important to ensure we're not going to do that in the future.  That was my point to Mary and I think Scott's point as well.

No doubt we could become more educated about how bonds work, but I think you'll find most of us do get the basics.

Anon
Anon

The nuts and bolts for streets is fixing the potholes and reconditioning them. Major reconstruction (meaning complete replacement) is a legitimate bond item.

If you've been following Jim's articles about the Army Corps then you should know that flood control isn't cheap either.

And building new libraries or water parks is also not something you'd necessarily want to pay out of O&M.

Of course you could do it that way. Either save up over a long number of years and pay cash (then you have to keep pesky council members from spending what they then see as a free mountain of cash on their pet projects - good luck with that) or have a much higher tax rate, or both.

Your choice.

Cliff Dweller
Cliff Dweller

Funny he's talking about Bishop Arts which isn't in his district.  Well, not yet anyway. . .

Gosspl
Gosspl

My question is: why can't we properly maintain city buildings so they don't fall into disrepair? We allow them to fall apart which then requires expensive land acquisition and then expensive construction. 

All the while a neighborhood gets to enjoy a blighted building that becomes an eyesore and center for crime. Dallas: the city that works? 

Anon
Anon

Thank you for the reply. It is reassuring that you understand how these things work. Thanks also for the information about Dallas using a commercial paper program. That can indeed save a lot of money for a city. The only way forward if property values don't improve is to push out even farther into the future the implementation of the 2006 bond program.  The question is, can Dallas afford any new bond program right now? Dallas is fiscally constrained in how much new debt can be issued by how much debt is falling off. That's the new number for annual new debt issuance. It seems you understand it is not a good thing when O&M funds go to debt payments, and it is perhaps even worse to use one time monies to pay for recurring expenses. Reports like this one from Robert fail to reassure overly much.  Just out of curiosity, what’s kind of bond rating does Dallas enjoy? That is a key reflection of stewardship.

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