The 2019 bond election we’ve been contemplating, given that our current Bonds for Better Bellaire 2016 program was from the outset expected to last three years, will no longer be necessary. We’ve determined that we’ll be able to maintain the same pace of infrastructure work for at least another year with existing bond authority, for two reasons. First, in response to significant public input last fall we canceled standalone sidewalks, freeing up the associated bond funding for street and drainage projects instead. Second, the earlier phases of BBB16 have come in quite a bit below cost estimates, leaving us with some remaining funds which, when combined with the unused sidewalk money, will be enough for the next round of street and drainage improvements.
This is great news, as even one more year of progress without requiring new bonds will have a dramatic impact on our debt projections. Not only will we not be adding to our outstanding indebtedness during that time, we’ll still be making our regular annual payment to retire existing debt. The benefits carry well into the future, quantified by a lower projected debt service tax rate and lower total indebtedness. Looking out over just the next five years of our updated forecast, the debt rate is reduced on average by 6.5% (1.2 cents) each year, and total debt by an average of 9% ($14 million) each year:
As shown above we still plan to issue this year the remaining $4 million of BBB16 authority for water line replacements. That will put us even further ahead of schedule, as cost savings in the earlier phases have allowed us to expand the scope of the program by some 13,000 feet, an increase of 23%. Note this issuance will have no effect on the debt service tax rate, because bond funding for water lines is supported by utility rates, not by property taxes.
The $6 million left over for streets and drainage, authorized but unissued, will be available for cost participation in regional projects should opportunities present themselves, whether in the Master Drainage Concept Plan or otherwise. Positioning ourselves to take advantage of such regional opportunities, to provide the most effective protection against our most severe flooding risks, is our primary focus moving forward and one of the main priorities of our citizen Flood Hazard Mitigation Task Force. Though no such projects have yet been identified, our revised debt service forecast errs on the conservative side by assuming an August 2020 bond issuance for drainage improvements.
It also conservatively assumes, for now, a November 2020 bond election, but we don’t know one will necessarily be needed at that time as a lot could still change in the coming year. Among the variables affecting that decision are our pending applications for flood mitigation grants, which could push our next bond election even further out or at least reduce the amount of funding that will be needed. There’s plenty of time for us to hear back on our applications before we’ll have to figure that out. What we do know is that we can maintain the same pace of progress for at least another year without a 2019 bond election, while accomplishing everything we set out to do (actually more, with respect to water lines) in our current bond program.
This is great news, as even one more year of progress without requiring new bonds will have a dramatic impact on our debt projections. Not only will we not be adding to our outstanding indebtedness during that time, we’ll still be making our regular annual payment to retire existing debt. The benefits carry well into the future, quantified by a lower projected debt service tax rate and lower total indebtedness. Looking out over just the next five years of our updated forecast, the debt rate is reduced on average by 6.5% (1.2 cents) each year, and total debt by an average of 9% ($14 million) each year:
As shown above we still plan to issue this year the remaining $4 million of BBB16 authority for water line replacements. That will put us even further ahead of schedule, as cost savings in the earlier phases have allowed us to expand the scope of the program by some 13,000 feet, an increase of 23%. Note this issuance will have no effect on the debt service tax rate, because bond funding for water lines is supported by utility rates, not by property taxes.
The $6 million left over for streets and drainage, authorized but unissued, will be available for cost participation in regional projects should opportunities present themselves, whether in the Master Drainage Concept Plan or otherwise. Positioning ourselves to take advantage of such regional opportunities, to provide the most effective protection against our most severe flooding risks, is our primary focus moving forward and one of the main priorities of our citizen Flood Hazard Mitigation Task Force. Though no such projects have yet been identified, our revised debt service forecast errs on the conservative side by assuming an August 2020 bond issuance for drainage improvements.
It also conservatively assumes, for now, a November 2020 bond election, but we don’t know one will necessarily be needed at that time as a lot could still change in the coming year. Among the variables affecting that decision are our pending applications for flood mitigation grants, which could push our next bond election even further out or at least reduce the amount of funding that will be needed. There’s plenty of time for us to hear back on our applications before we’ll have to figure that out. What we do know is that we can maintain the same pace of progress for at least another year without a 2019 bond election, while accomplishing everything we set out to do (actually more, with respect to water lines) in our current bond program.
