How does one schedule a bond? Very carefully, and with a lot of advance planning.
Capital investment 101: In Texas, when it comes to local government, no bonds will mean no infrastructure.
Bonds are the tool for building – how government bodies fund investments into schools, roads, parks, parking lots, rail lines, and courthouses. But without voter approval, that investment never happens. With most Austin residents mulling whether to sign off on a billion dollars worth of construction projects at some point over the next 12 days – early voting is underway, with Election Day set for Nov. 7 – Travis County commissioners and Austin ISD trustees are busy explaining why their proposals are worth your tax dollars, while other entities plot out how long they have to wait before putting their own needs list on the ballot.
It's been only two years since Travis County last broached a bond. In 2015, the county's plan for a brand-new $287 million courthouse seemed like a no-brainer. But it failed ("The Courthouse Aftermath," Nov. 13, 2015), and now commissioners are back with a different ask: $185 million, split roughly even between roads and drainage, and parks and conservation. According to County Judge Sarah Eckhardt, the switch in direction and drop in cost has nothing to do with the courthouse's failure. The two propositions distinguish the county's separate needs. Comparing them is pointless, she said: "an apple and an orange."
"We go out for a courthouse once a generation. We go out for parks and safety once every four years," she noted.
Scheduling elections is a lengthy process. Every taxing entity has staff working full time to evaluate its needs, conceive solutions, and draft feasibility studies. After that comes calculations over whether there's enough bonding capacity – effectively the size of the entity's line of credit – to even contemplate a bond. You've got to get elected officials and relevant policymakers on board, which means balancing out the input of interested parties and stakeholders. Mix in a more nebulous group – known around City Hall circles as "the Chatterati" – who want their input on every issue and can quickly become electoral spoilers. Then, even with all of those parties engaged, there's still no guarantee that the bond will pass through at the polls.
The biggest concern is scheduling for an election. How soon is too soon? Take the City of Austin: In 2014, its long-term transportation plans took a hit when voters rejected a $1 billion ask for urban rail. Rather than wait four years, the city returned in 2016 with a smaller request: $720 million, swapping out rail for $482 million for corridor improvements. The revised transportation plan turned a 14-percentage-point loss into a 59-41% win.
It all comes down to pertinence: Do voters think the improvements in the bond before them would be pertinent to their needs? Last year, residents understood the issue, and the city presented a solution. Behind the scenes at City Hall, the autopsy on 2014 was that rail advocates presented the solution without really explaining the problem. Light rail did not fail because of arguments over whether to route the first line down Burnet instead of Lamar (a variation that cost the 2014 bond a few percentage points at most). Rather, the city and related agencies had not laid the groundwork for explaining how bad Austin's transit problem truly was, and how the proposed rail route was merely the first step toward solving a long-term issue. The proposal got pushed through too fast, due to fears that the shift from an at-large City Council to the current 10-1 structure would derail big capital investment planning. When urban rail comes back – and it inevitably will – expect attention toward the broader need to show up well before the ballot language.
A similar issue hit the Travis County courthouse bond in 2015. The failure was not about the operational need for a modern courthouse. Anyone who has visited the 86-year-old Heman Marion Sweatt complex can see that. Nor was the public likely turned off by the price tag. Instead, it came down to real estate and location. The county laid out the problem, but never provided a clear explanation as to why putting a new courthouse at 300 Guadalupe was the solution. The county now has a new plan that does not need voter approval: taking over the old federal courthouse at 200 W. Eighth and earmarking the funds gained from the sale of the current courthouse for renovations. "We had a political loss," said Eckhardt, "but I don't think that it will be a programmatic loss."
Everybody Form a Line
That Travis County still had to find a new courthouse, even without the bond, emphasizes how taxing jurisdictions are not just pulling their needs lists out of thin air. AISD didn't just start needing new schools this year, and the highways in east Travis County have necessitated expansion for quite a while.
There is no formal calendar laying out who will be allowed to go to voters for cash and when. Clashes are inevitable, especially in Travis County, where 15 school districts, 16 cities, Austin Community College, Travis County Central Health, and even sporadic statewide bond initiatives jockey for their time on the ballot. But no one is building bond packages in isolation: larger entities will generally keep each other in the loop on an informal basis, and there are quarterly meetings between the mayor's office, county commissioners, AISD trustees, ACC, and Central Health, where needs are discussed and plans are shared. Eckhardt noted the "great benefit" of "getting degree of predictability between all the taxing entities."
That includes the contentious issue of property taxes. Issuing bonds does not ensure a tax rate increase; instead, voters are approving the projects, and the issuing entity can adjust the debt component of the property tax rate accordingly. A strong credit rating and careful scheduling of the actual sale of bonds can dramatically decrease the need for a rate increase. However, even with a static rate, rising values mean rising tax bills, and that is an undoubted factor in the calculations and discussions during those quarterly meetings. AISD Board President Kendall Pace said, "We work together to support each other as best as we can, and we are mindful of implications to taxpayers when it comes to bond elections."
This year, Travis County splits the November ballot with three school districts: Austin, Leander, and Lake Travis. Sharing the date was an accident. Two years ago, AISD started planning for May 2017. But Pace said she and her colleagues "quickly realized that was too aggressive with the amount of community input and detailed facility review ... required."
Once it became clear that the district was aiming for a November election, the immediate concern was that running both AISD and the county at the same time would damage the chance of either passing. Eckhardt said commissioners were even asked by the Greater Austin Chamber of Commerce to move back into the May slot, away from AISD's billion-dollar ask, to reduce the risk of sticker shock. But external PAC polling showed the proposals stood less head-to-head than shoulder-to-shoulder. Voters were more interested in the details of the propositions than the final figure. The logic was simple: If taxpayers feel they are getting value for money, they will tick all the boxes.
AISD has not gone to the voters for a bond since 2013, when it sought $892 million across four propositions and voters rejected two, including the most important: $234 million for three new elementaries and extra classrooms and facilities at 11 other campuses. But even had Prop 2 passed, its improvements would still barely scrape the surface of the district's current needs, which amount to more than $5 billion through the next 25 years.
As with city rail and the county courthouse, Prop 2 failed because of AISD's presentation. Drafting of the Facility Master Plan, a master document conceived in 2011 to lay out the district's full stock of campuses and offices, had proven so contentious that by the time the bond came up, every initiative that had sprung from it was considered to be fruit from a poisoned tree. (See "What the Task Force Wrought," May 27, 2011.) The district spent the last four years revamping the FMP and re-establishing voter trust. More emphasis has been placed on explaining the problems, and framing the bond as the solution, and that makes Pace optimistic. "That was a different board, a different-configured bond," she said. "Born of a different process."
Planning for Expansion
If AISD's plotting of a bond looks like a game of checkers, for a school district like Leander's, the resemblance is something closer to playing mah-jongg in a tornado. Unlike AISD's rather compact confines, LISD has campuses in four cities – Leander, Austin, Georgetown, and Cedar Park – across a 200-square-mile attendance zone with a footprint in two counties. While Communications Officer Corey Ryan described the district as having "strong relationships" with all other entities, he said "there is not some coordinated effort" to schedule around everyone else.
Few areas of Texas have a longer history of public education than the city of Leander, which opened its first free school over 140 years ago. Yet LISD is no longer the small rural district it was when it finally opened its second high school in the Nineties. Enrollment has jumped by 11,000 kids over the past decade, from 27,000 to 38,000, making Leander the fastest-growing district in terms of numbers added year-over-year.
Right now, LISD's board is asking voters to support a $454 million bond package. Of that, 69% will go toward growth and overcrowding relief, with construction of three elementaries and a middle school, plus design and planning for the district's seventh high school. The district last went out for a bond 10 years ago, when voters approved $559 million for the same types of improvements. That money lasted longer than planned, said Ryan. "With the housing crisis, [fewer] families moved in, and prices also dropped, so we were able to do more with the money." The district is actually holding $18 million in contingency from that bond, just in case this $454 million proposal fails. "We're still going to have 1,200 new students a year from here on out," said Ryan.
Of course, the shadow over the district's shoulder is the tax bill, and that $454 million ask is built around keeping the tax rate static. Moreover, some of the projects are intended to cut operational spending, like the $18 million earmarked for a second bus depot to serve the northern half of the district. LISD administrators calculate that not having to send dozens of buses all the way from the current depot in Cedar Park to the other side of Leander should produce long-term efficiencies.
Shortening the Cycle
Ryan argues that a decade between bonds proves the district's fiscal responsibility, while the threat of overcrowding reinforces its pressing need. But the 10-year gap was really a fluke, and the district's Bond Advisory Committee is recommending that LISD shift to a regular four-to-five year bond cycle.
That's a strategy that's becoming more popular throughout the region. AISD usually goes four to five years between bonds, and staffers at City Hall say the city is in the early stages of considering a loose calendar. One proposal being mooted is for two overlapping four-year cycles: Cycle A for transportation and mobility, and B for all other capital investment. The earliest draft would propose a transit and mobility bond for 2020, followed by a comprehensive bond in 2022, more transit in 2024, and so on. Although nothing has gone beyond blue-sky planning, it would make the process more predictable, allowing the city to concentrate on selling the problem and the solution, rather than argue about timelines.
Travis County has already made the jump. Last fall, the county made an explicit shift from a seven-year cycle to four-year, and Eckhardt is optimistic that more predictable bond packages will not fall prey to sticker shock. Texas' bond law requires that jurisdictions be particularly specific about detailing future spending. That can be a liability – part of AISD's failure in 2013 was that it too explicitly committed to unpopular projects. But Eckhardt sees an upside: "We learned over the last two bond cycles: If we shorten up the cycle, we can have a much more accurate description for the voter about how much it will cost, and when it will be delivered. We can prove up that you're going to get exactly what we say in the bond, and we will deliver it as that cost or less."
Rather than an electoral battle, she said, the bond ratification process then becomes "a two-way street. We're coming back [in four years]. Instead of the public feeling voter fatigue, there's a feedback loop."
2004: AISD passed $519.5 million
Prop 1 (72%-28%): $183.6 million, schools and classrooms
Prop 2 (74%-26%): $201.1 million, renovations & technology
Prop 3 (73%-27%): $53.9 million, safety & security, buses
Prop 4 (68%-32%): $12.8 million, athletics
Prop 5 (61%-39%): $44.6 million, southwest middle school and performing arts center
Prop 6 (70%-30%): $23.5 million, debt refinancing
2005: Travis County passed $151 million
Prop 1 (57%-43%): $65 million, roads
Prop 2 (66%-34%): $62 million, parks
Prop 3 (55%-45%): $23 million, jail improvements
2006: City of Austin passed $567 million
Prop 1 (72%-28%): $103 million, roads and sidewalks
Prop 2 (69%-31%): $145 million, flood control
Prop 3 (73%-27%): $85 million, parks and recreation
Prop 4 (57%-43%): $32 million, cultural facilities
Prop 5 (63%-37%): $55 million, affordable housing
Prop 6 (60%-40%): $90 million, new library
Prop 7 (71%-29%): $58 million, public safety, animal shelter
2008: AISD passed $343.7 million
Prop 1 (74%-26%): $188 million, overcrowding, science labs, technology
Prop 2 (72%-28%): $74 million, essential repairs
Prop 3 (69%-31%): $82 million, performing arts center, land for new south high school, Anderson High repairs
2010: City of Austin passed $90 million
Prop 1 (56%-44%): $90 million, sidewalk improvement
2011: Travis County passed $215 million
Prop 1 (59%-41%): $133 million, roads, sidewalks, bikeways
Prop 2 (59%-41%): $82 million, parks
2013: AISD passed $490 million, failed $403 M
Prop 1 (51%-49%): $141 million, health, environment, equipment, technology
Prop 2 (49%-51%): $234 million, safety and security, overcrowding relief, new schools and new construction
Prop 3 (51%-49%): $349 million, academic and building infrastructure
Prop 4 (49%-51%): $169 million, academic initiatives, fine arts, athletics
2014: City of Austin failed $1 billion
Prop 1 (43%-57%): $400 million, roads; $600 million, second urban rail
ACC passed $386 million
Prop 1 (59%-41%): $225 million, Highland Campus conversion, plus new sites in Leander, Southeast Travis Co.
Prop 2 (58%-42%): $161 million, renovations and repairs
2015: Travis County failed $287 million
Prop 1 (49%-51%): $287 million, new courthouse building
2016: City of Austin passed $720 million
Prop 1 (59%-41%): $137 million, local mobility projects, including sidewalks & bike paths; $482 million, corridor improvements; $101 million, regional mobility