Potential Bond Election:
“I’ve always had the perspective that if it’s inexpensive to borrow money, then it’s better to go that route as opposed to spending everything that you have within your savings because you never know when you may have an emergency.” – Jersey Village City Council Member Sheri Sheppard
The above was titled as “Quote of Note” in Volume 13, Issue 3 Nov 1-Dec 1, 2021 IMPACT newspaper. I believe the quote was taken from her comments during the discussions regarding a Bond Issue to be placed on the ballot in May 2022. The city council wants the voters to approve the sale of bonds to provide up to $20 Million to allow the construction of a new Golf Course Clubhouse/Convention Center and other major projects to be defined at a later date. Each of those projects needs to be better explained with details including Cost/Benefits Analysis and realistic forecasting of the financials from current operations, but that is another discussion.
The focus of these comments is on the view presented above by Sheri Sheppard on borrowing money. It is not my place and not the point of these comments to question her personal borrowing processes; however, her views as they relate to Jersey Village’s spending practices are the business of all property taxpayers. Borrowing money for any purpose increases the cost of every item or service. Borrowing also creates a liability that does not go away until that last payment has been made. Municipal Bonds are not “free money” and they have restrictions on when the bonds can be redeemed (paid off) and will be supported by the taxing power of the city. Getting investors to loan money to a city to be paid back over twenty or twenty-five years is not the same as getting a short-term loan. The amount of current debt and planned future major projects affect the credit risk of the bonds and the interest rate required for the bonds. For a family planning to buy a house with a thirty-year mortgage, buying new cars and other major purchases prior to the mortgage will affect their ability to get the best rate. If JV plans to build a new city hall, golf clubhouse, and other major projects – the credit risk goes up because of the added strain imposed on relying on tax sources like residential property taxes.
The property owners already know that the Mayor, City Council Members, and the City Manager all believe they have the authority to enter a contract for $11 million to build a new city hall without voter approval. We have been assured that they have more than that amount in “Surplus funds” to cover the cost without a vote by the citizens. We also were assured that they had developers that were ready to develop the Village Center and that would provide the $8.2 million that city council paid for the land where Village Center was to be constructed. That land purchase was not presented to the voters for approval and “surplus funds” were used for that as well. The revenue source for those “surplus funds” was higher residential property taxes over several years. The Village Center project has yet to see the first shovel in the ground because those involved were not able to provide any money to the project nor has the land been sold to recover the $8.2 million. Now we are expected to believe that spending $8 million on the golf course is going to make it a profitable enterprise that can pay for the increased operating cost plus retiring an additional multi-million debts by getting in the convention business.