When is it a good idea for a City Council member to vote against a $1 million construction project in his or her district on principle? It’s a call some are reluctant to make, but Northeast city Rep. Melina Castro did it on Dec. 16.
The issue she raised didn’t get a lot of attention at the time, but it’s bound to be at the center of her re-election race next spring, and probably the races of other council members, too.
At the council’s Dec. 16 meeting, Castro and city Reps. Eddie Holguin and Rachel Quintana took their opposition to the use of certificate of obligation bonds – charging on the city’s Visa card without asking voters for permission – to a new level.
At issue were two related items on which the council wound up taking a total of 15 votes:
1. A routine recommendation to award a $1.12 million bid to Medlock Commercial Contractors to repair and improve a stretch of median on Fairbanks Drive from Patriot Feeway to Dyer Street, and,
2. The approval of a resolution to let the city give notice that it intends to authorize the sale of $53-to-$60 million in certificates of obligation to pay for a list of street and drainage projects on Jan. 27.
Castro, along with everyone else on the council, initially voted for the Fairbanks project, which is in her district.
Castro, Holguin and Quintana then voted against the issuance of the $53 million in debt, which the council approved on a 5-3 vote.
The need for repairs on Fairbanks was described by city staff as going back to the massive damage to city streets and drainage facilities caused by the floods resulting from a record downpour in August 2006 that has been dubbed “Storm 2006.”
The city estimated the damage to city property at about $200 million. Throw in the money it cost to buy out 80 or so homes in the Northwest El Paso’s Mowad community and the Ledo-Saipan area in Central, and the price tag rose to $215 million, mas or meno.
The council in 2006 voted to sell certificates of obligation to take care of the first $115 million in projects to repair damage and go ahead with other work that had already been planned on some of the same streets and other facilities. The city hasn’t sold all those bonds yet and is down to the last of the projects on that initial list.
This year, the council handed the remaining $100 million or so in projects over to the newly created stormwater utility under the Public Service Board.
But, City Engineer Alan Shubert and other officials have said the $115 million wasn’t enough to finish all of the repair projects on the first list that the city committed to complete.
Fairbanks median looks boring but undamaged
The Fairbanks median repair was one of the smallest of several repair projects that the city came up short on once the final cost estimates were in. From the explanation at the Dec. 16 council meeting, I had understood the Fairbanks median was still torn up and resembled the demolished sections of North Mesa, Sunland Park and Silver Springs on the West Side before they were repaired.
Do some Googling and you can find at images of Fairbanks starting at the freeway and heading toward Dyer. There doesn’t appear to be any damage, just a boring dirt median that’s nothing like the pretty landscaped medians you see in some other parts of town.
The authorization notice for selling up to $60 million says the money would pay for contracts to build, resurface streets and sidewalks, to improve city facilities, design and build flood control, storm water and drainage improvements and to buy equipment to do all that.
Just how and why the city sells bonds to pay for the purchase of equipment and the maintenance and improvements of city buildings, streets and other assets has been a big point of debate and disagreements in the last three elections. It’s going to be one again in the months and weeks leading up to this year’s May 9 elections.
El Pasoans will be electing the mayor and four city representatives and effectively deciding which of two factions will lead City Council for at least the next two years.
Mayor John Cook will run again. City Rep. Emma Acosta, just elected in a special election, will seek a full, four-year term. So will Rep. Susie Byrd and Castro.
Rep. Steve Ortega, the ally of Byrd and Rep. Beto O’Rourke, is questionable. He’s 32, but has yet to establish himself as a lawyer, which he feels he needs to do.
Northgate Transit Terminal almost bit the dust too
But back to the meeting …
When Castro voted for the Fairbanks project and then against the issuance of $53-$60 million in new CO bonds to pay for it and the other projects, Byrd noted aloud that Castro was voting for her project but against the bonds to finance it.
That pointed observation led Castro to reverse herself by voting (1) against the Fairbanks project, (2) for removing it from the $53 million list, (3) against the issuance of the remaining $52-$59 million in CO bonds and (4) to place the Fairbanks work on a list of projects the council and administration plan to put to voters in a 2010 bond election.
What was unique was that Castro was voting against a project in her district that would have to wait at least a year for a bond election and then, if it passed, for another year or two to be completed.
Voting with Castro to kill the Fairbanks project were city Reps. Ann Lilly, Acosta, O’Rourke, Ortega, Holguin and Quintana. The only one who voted no was Byrd.
O’Rourke and Ortega supported the Fairbanks contract but had threatened before to vote down a project in Castro’s district when she voted against funding for it from CO bonds or any other source.
They actually did it on Dec. 2, defunding a new $5.8 million Sun Metro terminal by the rundown Northgate shopping center after Castro voted against the $73 million capital improvement program to be paid for with a combination of certificates of obligation, federal funds and Sun Metro revenues. [divided council oks $73 million in capital projects, NPT Dec. 3, 2008]
Castro was also willing to let that project go and to risk the loss of federal funding that could cover much of the $73 million because the voters had not approved the city going into debt.
After Cook appealed to the council to restore the Northgate funding for an important Sun Metro project because of Castro’s vote, O’Rourke got to feeling remorseful, called for a new vote and then changed his vote. That created a 4-4 tie that Cook broke to approve the project.
The same thing happened on the Fairbanks project, only it was Ortega who had second thoughts about killing a project that the city had agreed to complete.
His call for a reconsideration led to a tie, with Lilly, Castro, Holguin and Quintana voting against the Fairbanks project. Cook again broke the tie with a vote to spend the money and complete the project.
Line in the sand: No election, no bonds sold
But Castro, Holguin and Quintana drew their line in the sand once again, saying no to any bonds without voter approval, even if the money would go to projects that would benefit their constituents or their district.
When asked after the meeting why she initially voted for the Fairbanks project, Castro said “because I thought the funds were already there, the debt was already issued, and they were just allocating it”
Indeed, even though it was explained correctly during the meeting, the agenda itself incorrectly shows the funding source for the $1.1 million Fairbanks median work as coming from certificates of obligation issued in 2006.
In her early days in office, Castro she said, “I would always vote everything down because everything was COs.
“Then, I had a talk with the city manager. She explained it to me this way: We already issued the COs, now we’re just allocating the money to see where it goes.”
So why vote for a project financed with COs that she opposed?
“Because the district is still going to pay for it,” Castro said.
“You may as well get a share of the money because if (the district’s taxpayers) are going to pay for it in the long run, then the district should get its share.
“But if they’re going to issue new debt, then I don’t believe in putting us further into debt.”
That is the kind of considered response that Castro would not have made two or three years ago.
She’ll be running on a “no debt without a bond election (except in an emergency)” platform this spring. And she will face at least one opponent who will challenge the sensibleness of her conservative philosophy.
Bonds, Dee Margo and how we got here
In the 1980s, the city largely relied on voter approved bonds, known as government obligation bonds, to pay for everything from much-needed street paving and drainage projects to parks and libraries and other quality-of-life projects.
But under then Mayor Jonathan Rogers, not many quality-of-life projects were proposed. Nor, some think today, was bond funding sufficient for street paving, repairs, maintenance or replacement of aging equipment, like city buses. The city paid dearly for that later.
The use of bonded indebtedness began to change in the 1990s and in 1997 or so, Mayor Carlos Ramirez put together an ad hoc bond advisory committee headed by Dee Margo to re-examine the city’s policy. [npt background]
That committee, and Margo in particular, proposed a new bond policy under which the city pays for street and drainage projects, major maintenance of city property and police and fire stations with certificates of obligation.
The justification for selling CO bonds without an election was that taking care of city assets is a basic responsibility of City Council members as stewards of the public investments that voters had made.
That philosophy, which Ramirez’s council approved and followed, meant that only quality-of-life projects would go on the ballot and that voters would not be choosing between a flood control project and a library.
That is the official policy of the city under the present mayor and a majority of council, though some would say they have taken it too far and spent too much, giving their opponents an issue in the process.
El Paso now has about $645 million in bonded indebtedness, or about $800 per capita, as a result of the sale of voter-approved general obligation bonds and certificates of obligation that voters didn’t approve, according to Bill Studer, the city’s assistant city manager for finance.
He didn’t have the breakdown between the two types of bonds when I called him. But, talking off the top of his head without numbers in front of him, he said the city’s bonded indebtedness was about $366 million in 2002, $386 in 2003, $400 million in 2004, $431 million in 2005, $478 million in 2006, $620 million in 2007 and about $645 million today.
“We’ve sold about $50 million a year and paid off $30 million, so the net increase has been about $20 million a year,” he said, noting that didn’t include the pension bonds.
Last year’s jump included the sale of $110 million in pension obligation bonds to bail out the police and firefighters pension fund. A second installment of $110 million will come up next year.
Voters did give the city permission to sell bonds to fix the pension plan in 2004 but they didn’t know then how much it would cost.
State restrictions on elections make bond elections harder
Compared to other major Texas cities, Studer said, El Paso is in the middle when it comes to the level of debt carried by taxpayers.
That is largely a factor of growth, he said. Fast growing cities sell bonds to keep up with expansion while slower-growing cities don’t have to be as aggressive.
A decade ago, he said, cities conducted more bond elections because it was a lot easier to do than it is today.
“Back then, a city could pick a day and do a bond election,” he said. “But the state reduced the dates for elections about a decade ago and then seven or eight years ago, reduced it to two dates a year.
“Now, you’re limited to May and November, so it’s much more difficult to react quickly to projects as they come up than it used to be to send them to voters.”
In the case of the bonds the council approved in 2006 to repair flood damage, one could easily make the case that it was an emergency.
But if the city had a strict policy of only selling bonds that voters approved, El Pasoans would still be looking at damaged streets and storm water facilities today because the city could not have gone to the voters with a bond proposition until May 2007.
There are other consequences of a strict policy on the use of bond that that voters will have the dubious joy or sorting through or the satisfaction of ignoring in coming months.
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To reach David Crowder, write to dcrowder@epmediagroup.com or call (915) 351-0605, ext 30.
