The Austin Chronicle

http://www.austinchronicle.com/news/2014-06-27/growth-funds-accs-bond-proposal/

Growth Funds: ACC's Bond Proposal

Community college asking for $386 million

By Richard Whittaker, June 27, 2014, News

After years of stagnating budgets, Austin Community College is asking voters for help. During their June 16 meeting, trustees moved to put two bond packages, for a combined value of $386 million, on the November ballot, and will seek backing for a property tax rate increase of three cents per $100 of property valuation over the next six years. If that sounds like a lot, the administration and trustees point out that most government entities ask for that kind of cash every half decade or so. This is only the second time ever that ACC has asked for a bond or a rate increase. Board Vice Chair Victor Villarreal said, "To only have one bond in 41 years, I think that says a lot about our planning."

Texas law requires one of two different votes for any educational body to raise taxes, depending on what kind of cash they need. There's maintenance and operations, which covers day-to-day expenses. Then there's the interest and sinking tax rate, which pays for construction. This time around, ACC needs both.

The college was founded in 1972, initially under the governance of the Austin ISD board of trustees. It developed its own board in 1982, but had no separate taxing authority until 1986. Even then, voters only approved an M&O tax rate of five cents per $100 of property valuation. In 2003, voters approved a new tax rate cap of nine cents, plus a separate vote for $99 million in bonds to cover expansions and renovations at the Cypress Creek, Eastview, and Rio Grande campuses, and construction of the South Austin campus on Stassney.

The board has been considering this new bond package for the last five years, but began serious preparation in late 2012, finally establishing a 25-member bond advisory committee in March 2013. That June, the committee submitted a list of 32 projects, 11 classified as highest priority, worth roughly $450 million. Across 13 meetings, trustees chipped away at that list, eliminating projects worth $115 million. Villarreal said that, while those items are not on the bond, they're not off the table. For example, the board re-prioritized some districtwide renovations, such as parking, so they could be covered from the annual budget. Villarreal said, "We were able to say, are these true [general obligation] bond items?"

In Texas, community colleges have three revenue streams: state cash, student tuition, and local taxes. Historically, tuition has accounted for about a third of ACC's income, the state pays about 20%, and the rest comes from local property owners. However, ACC Vice President of Finance & Budget Neil Vickers said, "Ten years ago, that was the exact opposite. We were getting 40% from the state, and only 20% from local taxes." Students have seen their fees creep up, accounting for about 35% now, and state money cannot be used for construction. So for ACC to make any kind of capital investment, and not further squeeze students, Vickers said, "The only option ... is to go to the voters."

However, not every board member is happy with the bond package. Place 1 trustee Tim Mahoney voted against it, arguing it does little to clarify a long-term strategy, or serve current student needs. He said, "ACC has a real problem with positioning itself in the present and the future." However, he did vote for the M&O increase, and said it "may be a short-term way to fund improvements at Highland."

At this point, there's no Plan B if either of the propositions fails; Vickers said he presumed there would just have to be some tough decisions. For example, though the board recently agreed in principle to improve pay and working conditions for its adjunct faculty (see "ACC Adjunct Faculty Sees Progress," May 23), the teachers' union, ACC-American Federation of Teach­ers, has already agreed that some of these changes may have to wait, if the M&O bond fails.

ACC is banking on voters understanding that it's a relative bargain. Over the last four decades, the college has expanded to cover multiple counties, with a footprint that covers parts of Bastrop, Caldwell, Hays, Travis, and Williamson, and a service area that extends into Blanco, Gillespie, and Gon­zal­es. That means that, unlike most local governmental entities, it can spread the costs across a much larger area than, say, a city or a school district. Even at an 11-cent M&O rate, it will be a fraction of the taxes collected by Austin ISD ($1.24 per $100 valuation), Elgin ISD ($1.54), the City of Austin (50 cents), or even Travis County Health District (13 cents). Meanwhile, even if both bond props pass, and ACC issues all possible bonds at the same time, the maximum tax increase for I&S would only be 2 cents, and less than half that for senior citizens or homeowners with disabilities.

But the downside of spreading the tax bill across multiple counties is that it's a huge electoral push to get anything passed. ACC has always struggled, relative to its more compact neighbors, to get the more conservative areas outside of Austin to sign off on raises. That's arguably why a 1999 vote to approve a 10-cent tax rate failed.

Then there's the issue of going head-to-head with the city of Austin's anticipated transportation bond. For Villarreal, that's just an unavoidable fact. While other entities, including AISD, have blanched at competing with the city's rail and road plan, ACC just can't wait. Moreover, he said, the board had already made a commitment: "We told the public a year ago that we're going to wait from that November to next November."

In fact, Villarreal argues that the city and college bonds are basically part of the same bigger picture – infrastructure investment along a key Austin corridor. The current city plan sends light rail right to the ACC campus at the former Highland Mall, which is exactly where $152 million of the ACC bond is going. Villarreal said, "The city has really demonstrated that their priority is transportation. We think we complement that."

The Propositions

Prop. 1: Future Growth: $224.8 million
Phase II of Highland Campus
New Leander Campus
Property in southeast Travis for regional workforce training center

Prop. 2: Renovations/Enhancements: $161.2 million
Career training facility upgrades at Highland Campus
Expand Round Rock Campus
Regional first responder training center at Hays Campus
Workforce training center at Elgin Campus
Districtwide health, safety, technology, and sustainability renovations

Total general obligation bonds: $386 million; phased-in tax impact of approximately 2 cents

Maintenance/Operations Tax Cap Election
Three-cent increase per $100 property valuation, phased in at one cent each in 2016, 2018, and 2020, to a maximum of 12 cents.

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