CHICAGO - Voters could face a crowded ballot this November in Columbus where city and school officials are putting at least seven new bond proposals on the ticket, including a $1.66 billion package that marks the largest bond proposal in the Ohio city's history.
Six of the issues being proposed by the city are part of a $3.3 billion, six-year capital improvement plan. Included is $1.1 billion in utility revenue bonds, of which about half would finance the city's effort to update its sewer system to meet federal Environmental Protection Agency standards.
The utility bond proposal will be divided into two separate issues on the ballot - a $552 million sewer issue and a $525 million water issue. Also appearing on the ballot will be a $347 million streets and highway proposal, an $86 million safety and health proposal, a $124 million recreation and parks issue, and a $32 million refuse collection issue.
Separately, the Columbus Board of Education last week approved a $164 million bond issue that would include $123 million for construction and new school buses and computers.
None of the seven bond proposals call for a tax increase - though the school board may put a separate levy increase on the ballot to fund additional future costs.
While market participants say that a weak state economy has soured some voters on approving new bond issues across Ohio, Columbus has rarely seen a bond proposal defeated in the last five decades, said Hugh Dorrian, the city's auditor for 43 years.
"Our typical game plan is we go to the ballot ever three to five years, with our last trip in 2004," Dorrian said. "The city of Columbus started this process back in 1956. Since then the city has gone to the ballot with 82 bond issues, and the voters have said yes to 76 of them. I think that's a phenomenal record for any government."
Key to winning voter approval is the city's promise not to raise property taxes to pay for its bonds. On its general obligation debt, the city sets aside 25 cents on every $1 of income tax revenue in a debt service fund. Utility bonds, such as the upcoming water and sewer bonds, are paid for through that system's revenues.
"It's a promise that's held in sanctity around here," Dorrian said of the city's pledge not to raise property tax for debt. "Just break that promise one time and see what kind of reception we get at the ballot."
The sewer project is part of the city's $2.5 billion, 40-year project to update its sewer systems to meet U.S. EPA requirements. The city issued $440 million in revenue debt in January as the first piece of that plan, and the current proposal includes another $552 million. Ohio's Environmental Protection Agency and the city signed consent decrees in 2002 and 2004 mandating the system improvements.
While the sewer and water projects are expected to move forward regardless of the region's economy, Dorrian said a flat economy could end up delaying some of its income-tax backed projects.
"The economy in Columbus Ohio is in the tank," he said. "We do better than other areas but we're not recession-proof."
The city is currently facing a possible $75 million budget shortfall going into next year, according to Dorrian. "I see no growth compared to a year ago, and that's not good. We will do what we can afford," he said.
The bonds will most likely be fixed-rate and mature in 20 years. Columbus generally sells its GO debt competitively.
Prism Municipal Advisors LLC is the city's financial adviser on its bond issues. Bricker & Eckler LLP is bond counsel.
