Austin voters approve a $7.1 billion light rail system
After two failed efforts to bring light rail to one of Texas’ most congested cities, Austin won voter approval Tuesday for a $7.1 billion system known as Project Connect.
Though not on the ballot as a bond proposal, the plan is expected to lead to some form of municipal bond finance as federal funding is obtained. Proposition A dedicates 8.75 cents of the city’s operation and maintenance portion of the property tax rate to the project.
Austin expects to receive federal funding for about 45% of the project’s total cost, and the Capital Metro Transit Authority is using its capital expansion fund for the project. The initial investment includes 27 miles of rail service and 31 stations, according to CapMetro.
"With the passage of Prop A, voters have given the green light to a once-in-a-generation opportunity to revolutionize our transportation infrastructure," Austin City Manager Spencer Cronk said in a post-election statement. "Project Connect will be better for our residents’ health, environment, safety, and prosperity.”
Light rail funding measures failed in Austin in 2000 and 2014, and supporters were wary about how the pandemic, the presidential ballot and a record turnout would affect the outcome.
In addition to Proposition A, Austin voters approved $460 million of general obligation bonds for more traditional city projects such as sidewalks.
The Austin bond proposal was included in $10.2 billion of bonds on ballots across Texas.
Dallas Independent School District voters appear to have delivered mixed responses to the district’s $3.7 billion of bond proposals as of mid-day Wednesday.
The proposal was split into five parts that appeared to receive different levels of support. Recently enacted Texas law allows school districts to split proposals into sections as cities and counties have done over the years.
Propositions A and B, worth $3.4 billion for new buildings, improvements and security upgrades, appeared to be passing while C, D and E, providing about $153 million for athletic and performing arts facilities, were failing.
Proposition A, at $3.2 billion, represented the lion's share and had 53% of the vote reported Wednesday morning. Moody's Investors Service called results positive for the district's credit.
"The debt authorization provides Dallas ISD with funding to upgrade and replace aging facilities, a credit positive despite the significant increase in leverage and challenges associated with managing such a large debt-financed capital plan," analysts wrote. "Upgraded facilities offer the prospect of attracting more students as Dallas ISD faces a continued enrollment decline, partially due to increased competition from charter schools and population loss to the suburbs."
The increase in leverage is a credit challenge, especially at a time when property tax revenue growth will likely slow because of the macroeconomic impact from the coronavirus crisis. However, the district plans to issue the debt over the next 10 to 12 years and intends to leave the debt service tax rate flat. As long as tax base growth continues over the next decade, the debt will be manageable even with a near-term slowdown due to the coronavirus-induced economic downturn.
San Antonio ISD, which also sought a record bond authorization of $1.3 billion, had an easier time at the polls, passing the largest bond authorization in its history, two measures totaling $1.3 billion, by a 2-1 margin.
“We’re grateful to our community and to our taxpayers,” SAISD Superintendent Pedro Martinez said in a prepared statement after the results were known. “Every school will be impacted – whether it’s upgrading every single classroom to be a 21st-century classroom, replacing our outdated AC systems, or upgrading our security systems.”
Another large Texas school bond proposal for $937.7 million from Northwest ISD appeared to be failing, with 60% of voters opposed.
With a record voter turnout for the presidential election, local governments and school districts across Texas were slow to report results on local bond proposals.
Tuesday’s vote the Lone Star State's only bond election in 2020 after the traditional election in May was canceled because of the COVID-19 pandemic.
The highest volume of bond proposals on record came a year ago when $16 billion, including $3 billion from the state made the ballot. Were Austin’s Project Connect added to the bond total, this year’s vote would have set a new record.