Glendale asks voters to let it borrow $188M for city projects

Council says it can pay debt without raising taxes

Posted 7/26/20

Glendale is asking voters this November to let the city borrow up to $188 million to pay for projects primarily in streets and parks and recreation with some funding going toward flood control and the city’s landfill.

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Glendale asks voters to let it borrow $188M for city projects

Council says it can pay debt without raising taxes

Posted

Glendale is asking voters this November to let the city borrow up to $188 million to pay for projects primarily in streets and parks and recreation with some funding going toward flood control and the city’s landfill.

If authorized by the voters in the Tuesday, Nov. 3 election, the bonds will be paid back through Glendale residents’ property taxes. City staff and City Council are confident the city can pay back the entire debt without having to raise its share of property taxes. The trick is the city is not able to tell voters that on the ballot questions. In fact, the ballot will say quite the opposite.

“The issuance of these bonds will result in a property tax increase sufficient to pay the annual debt service on the bonds,” reads the ballot language for the four ballot questions, which each ask for bond authorization in different departments. Only one of four questions adds a key caveat onto that sentence: “…unless the governing body provides for payment from other sources.”

Assistant City Manager Vicki Rios said the law requires the ballot to say that taxes will go up if all the bonds the city is asking for are taken out at once, but the city plans to spread out the debt service payments over several years in order to keep their levy on property taxes flat. She said it wouldn’t make sense to issue all the bonds at once because the projects the bonds fund couldn’t be completed that quickly.

“That language will be there. And it could impact people’s property taxes if we were to do that,” Ms. Rios said, referring to issuing all the $188 million in authorized bonds immediately. “But the reality of it is we can’t issue all of these bonds at once anyway. We won’t be able to construct all of these roads at once. It’s a 10-year plan.”

Through four separate ballot questions, the city will ask voters to allow it to borrow up to $87.2 million for Parks and Recreation project funding, $81.5 million for streets, $9.9 million for the city landfill and $9.3 million for flood control. The total of $188 million does not include interest.

With its current property tax levy, Glendale can pay about $20 million each year toward its general obligation debt service. In 2023, the city’s debt service payments will drop to about $7 million, freeing up $13 million a year. That $13 million a year in freed up funding will grow to about $16 million in 2031 and $18 million in 2038, as the city’s current debt obligations shrink. Glendale’s $20 million a year in bond capacity will increase slightly each year as the city adds new property to be taxed.

While its been a long-held priority of everyone on Council to keep the property tax levy flat, it is not a binding policy. There are no laws stopping Council members from changing their minds in the future or from a future Council, composed of different members, reversing course on that pledge.

Vice Mayor Ray Malnar of the Sahuaro District was frustrated that the ballot language requirements made it seem like a yes vote on the bond authorizations would raise the voters’ taxes.

“Whenever we go out for a bond, the public assumes that their property taxes are going to go up, and that may be the assumption here,” he said.

Mr. Malnar initially asked if Council could add an explanation of its funding plan to the ballot, but Ms. Rios said it could not. Ms. Rios said staff will conduct public outreach August through October. City staff cannot encourage residents to vote a certain way on a ballot question, but it can explain Council’s plan.

“What we’ll do as part of that public outreach is provide explanation, information that explains how you can do it without raising the property tax,” Ms. Rios said.

Mr. Malnar said the success of that public outreach campaign to explain Council’s plan could determine whether the questions pass.

“It’s critical for the success of these bonds that the public understand that there will not be a tax increase on their properties due to these bonds. We will use existing authority to keep the levies at the same rate,” he said.

Glendale residents can submit an argument for or against any ballot question through 5 p.m. Wednesday, Aug. 5. Arguments are limited to 300 words and require a $100 payment to file. Arguments are being accepted for the four bond authorization questions and for a ballot question to select EPCOR as the water and wastewater utility provider for all areas in Glendale west of 115th Avenue. Visit bit.ly/39sllLU or call the city clerk’s office at 623-930-2252 to learn more.

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