Cityscrapes: Streetcars, debt and us
Published: August 6, 2014
The big local news, beyond the change in the mayor’s office, is the city’s turnaround on the proposed VIA Downtown streetcar. Faced with a flood of signed petitions and the possibility of a streetcar vote on the November ballot (which would just happen to coincide with streetcar proponent County Judge Nelson Wolff’s re-election bid), the city honchos chose to avoid a conflict that might boost voter turnout and threaten a broader set of city and county priorities.
The streetcar decision—whether a public vote is ultimately held or a broader transportation plan crafted—is really a triumph of local political calculation. Newly installed interim mayor Ivy Taylor and her council colleagues appear to recognize that a public investment on the scale of the proposed streetcar, some $280 million, where the public had once before said a clear “no” to rail transit, should be subject to a public vote. Yet avoiding a vote has been precisely the intent of city, county and VIA officials.
County Judge Wolff neatly arranged a funding “swap” with the Texas Department of Transportation to avoid a legal challenge to using local Advanced Transportation District money for the streetcar scheme. And when Downtown property owners and developers balked at funding the streetcar themselves through a special tax district and contributions, the City stepped in to commit $32 million out of general funds, to be repaid by our property taxes. The way the city council could do that without a public vote, as we usually have for large capital projects, was with certificates of obligation.
These certificates, termed “C of O’s,” are a form of municipal borrowing allowed under state law for a variety of capital projects. The city first began serious use of C of O’s in the late 1980s and early 1990s. They provided a way to pay for the purchase of the Majestic and Empire Theaters, to build Nelson Wolff Stadium (some $10 million) and for the construction of the Natatorium at Palo Alto College to serve the 1993 Olympic Festival. In the years since, C of O’s have financed a host of “public-private partnership” deals and Downtown improvements, with a total that has steadily grown over the years. For instance, the fiscal year 2000 budget included $3.6 million in certificates for the restoration of the Alameda Theater and Casa de Mexico downtown, $400,000 for work on the Municipal Plaza building and additional funds for a number of new fire stations in outlying parts of the city.
By 2004, the total of outstanding C of O’s came to a hefty $219 million. But we didn’t stop there. The city council has continued to use these handy certificates to finance a wide range of capital projects. More recently, there was the reconstruction of Main Plaza and the new campus for Texas A & M San Antonio ($15 million). By fiscal year 2013, the outstanding total of certificates stood at $328 million. And the six-year capital program outlined in the current fiscal 2014 budget calls for spending an additional $238 million in C of O’s, including $118 million to be issued this year and beyond.