Cara Mendelsohn: What is The Real Cost of The 2024 Dallas Bond? – CandysDirt.com – CandysDirt.com

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By Cara Mendelsohn
District 12 Dallas City Councilmember

Early voting for the Dallas Bond 2024 starts next week, Monday, April 22, running through April 30. Election day is May 4th. There are ten propositions, or topics, and you can vote “for” or “against” each one. Together, the amounts of each proposition total $1.25 billion dollars.

I wrote an editorial that was published in the April 14, 2024, edition of The Dallas Morning News that explains how, for too long, Dallas has relied on debt to address basic maintenance and improvements in our city, and it has to stop. These items should be built into our annual budget. Since that hasn’t been the management philosophy, we’re stuck funding these very needed items through debt, for now. And that has a cost.

Cara Mendelsohn
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Cara Mendelsohn

Because CandysDirt.com is niche-centered on real estate, this article will focus on the financial condition of the city and the property tax implications of taking on more debt as reasons to not support every bond proposition. Most CD readers understand that increases in property taxes affect everyone, from residential homeowners with a homestead exemption, to rental property owners who have no exemptions and indirectly pass on cost increases to tenants as an annual rent increase. Commercial property owners usually serve as a pass through on all property tax, insurance, and maintenance costs (triple nets), resulting in inflationary higher consumer costs. 

How much will the bond cost Dallas?

A bond election allows voters to approve the city issuing debt that will be repaid with interest for capital projects. Together, the amounts of each proposition total $1,250,000,000$1.25 billion — sometimes it helps to understand how big that number is when all the zeros are shown.

Is that the total amount of the bond?

No, that is just the principal. Like any mortgage, there is interest: the bond total, principal and interest, is $1.76 billion, an additional $510 million dollars. And in case you’re worried some projects may cost more than what was estimated, the city can issue an additional 25 percent of the cost for any project without voter authorization, meaning the total bond could exceed $2 billion.

According to the city website, our current total debt for the city is $3.5 billion dollars. That does not include $3.4 billion of unfunded liabilities for the Dallas Police Fire Pension Fund, and $1.2 billion of unfunded liabilities for the Employee Retirement Fund. 

So that is more than $8 billion in debt for our city before the bond!

Will it raise taxes?

The messaging to the public on the bond and in promotional materials from the media consultant and political action committee formed to pass the bond conveys the message that your taxes won’t increase if all the bond propositions pass. They literally say, “No New Taxes.” 

But is it true? No. In fact, the city’s website says otherwise

The text box below is available for each proposition, with different letters and numbers filled in for each.

The city estimates the taxes for this disclosure based on a residential home of $100,000, which Housing Department staff openly says in meetings is no longer a realistic price point in Dallas. Then they add an assumption that the property has a homestead exemption. Can you imagine what the real numbers are for the median valued home in Dallas, valued at more than $395,000 per city reports, or for rental homes, apartments, or other commercial property without homestead exemptions? Unfortunately, they don’t calculate the costs for those types of properties or scenarios.

It is possible that some bond debt will replace existing bonds that are expiring, thus there will be no increase. It is also true that if some of the bond propositions don’t pass, your property tax rate will go down. Debt service for the bonds is one part of the property tax rate, the other being the general fund. 

Starting this year for Dallas, there’s a cap on increasing the general fund portion of the tax rate, but not on the debt service portion. Without the approval to issue debt, the rate will have to decrease.

At the end of the day, it is your taxes that will be repaying each of these propositions. Is it worth going into debt to pay for all of them? 

My Recommendations

Propositions “FOR:” A,B,F,J; “AGAINST:” C,H (as in City and Hall)

There are propositions I hope the residents will vote “for.” They include:

  • Prop A: streets/transportation
  • Prop B: parks 
  • Prop F: public safety 
  • Prop J: information technology 

These items are necessary and postponement will yield higher costs down the road or could threaten our city’s future. Everyone seems to agree the roads need to be improved and outdated traffic signals replaced, parks need new playground structures that aren’t decades past their useful life; soccer fields that can be played on with smooth ground; recreation centers with lighting and security; and parks developed in areas where there currently aren’t any. 

The new police academy will train our officers in the latest techniques including reality-based and virtual training in a facility designed for this purpose, without mold. After our hack and loss of serious data, Dallas needs secure computer server storage for complex and important police and city data that is included in the technology proposition. 

The flooding and erosion (prop C) and housing (prop H) propositions are important, but I am against them because they can be funded in other ways, not requiring city debt. For instance, flooding and erosion projects can be funded by a revenue bond and added to your water bill (less expensive) and housing projects have more than a dozen different ways of receiving tax exemptions and financing through the federal, state, and county governments, as well as programs unique to Dallas. 

Many of the other propositions not mentioned include items that I support but could be absorbed into our general fund (operating) budget, if the city council would get serious about how tax dollars are spent. There is no reason to have to take out debt and pay interest on many of these items, and our city needs to reassess our role in providing services that are already being delivered by other government entities with your tax dollars. That’s duplication.

Timing

Mentioned above is the debt of two pension plans. The Dallas Police and Firefighter Pension plan is required to submit a funding plan to address the unfunded liability by November. The city council has been meeting and working to figure out how to reduce the $3.4 billion unfunded liability, along with increasing the annual contribution, but it is tricky because it will have a significant impact on our annual budget. 

Without knowing how we will meet this important obligation, it is imprudent to ask for the ability to issue additional debt. Several of us on the city council voted to delay the bond election until November, when the pension funding plan would be resolved, but we did not prevail. It is possible to bring items back to the voters if conditions change. Every proposition that is voted down allows the city flexibility until this outstanding issue is resolved.

Your Vote, Your Tax Dollars, Your City

Some of the advocates asking you to pass the bond don’t even live in Dallas, or they work for entities that will financially benefit from the bond dollars. Only you should decide what additional debt you want to take on because it will be your property tax dollars that pay off not just this bond, but all the other debt owed by the city. 

No matter how you vote in the upcoming election, I hope you’ll consider taking a greater interest in Dallas governance and be an advocate for city efficiency and improvement. 

This post was originally published on 3rd party site mentioned in the title of this site

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