Q: What is a General Obligation Bond?
A: A General Obligation Bond is like a signature loan. It enables the City to finance capital projects over several years. All City resources, such as property tax revenue, are pledged toward the repayment of the loan. This makes it a low risk investment for lenders and allows the City to get a low-interest rate on the loan.
Q: Why does the City issue bonds?
A. The City's capital needs exceed its ability to fund these projects on a "pay as you go basis." Bonds allow for the City to pay for projects over a longer period of time.
Typically the City asks voters to authorize bonds for major projects or a package of several similar projects.
Q: How does the City pay holders of the bonds?
A: The City pays the holders of these bonds through a number of funding sources such as property taxes, sales taxes and City fees.
Q: How are projects selected?
A: These projects are compiled from the City's Capital Budget or Capital Investment Plan (CIP), a five-year infrastructure plan that matches the City's highest priority capital needs with a financing schedule. The plan includes investments in neighborhoods, housing, storm water, roads, transit, water, sewer and the airport. City staff recommends projects to Council for inclusion in bond packages. Recommendations are based on feasibility and cost effectiveness. City Council approves a final list of projects for inclusion into bond package(s), to be placed on the ballot.
Q: If and when a bond package is approved, when will construction of the bond project begin?
A: Voter approval of the bond package only authorizes funding for the project. There are several crucial steps that must occur before construction. They include planning, project design (which includes public input) acquisition of land and solicitation of construction bids. Depending on the project, this process may take several months or a couple of years.
Q: Why doesn't the City start preliminary work early, so construction may begin immediately after voters approve the bonds?
A: The steps before construction can take several months or a couple of years, depending on the scope and complexity of the project. In some cases, road projects and neighborhood improvements can be planned ahead of time to take advantage of early design work that shortens the time from the bond vote to completion of construction. Over a dozen road projects and several neighborhood projects have benefited from this approach.
Q: What happens if the bonds are not approved?
A: If an assessment determines that certain infrastructure needs that would be fulfilled by a project are too important, Council may fund projects through other sources. However if
funding is not available, the projects are held for inclusion into future bond packages.