Denver’s latest bond project asks, explained
It happens every few years. You, dear voter, decide if you want to let the city borrow millions and millions of dollars to pay for things like roads, buildings, parks and other things that you will end up using on any given day. . It also helps to build and maintain things.
If the city’s leaders are successful and Denver City Council votes in favor of them, you’ll eventually decide this fall to let the city borrow about $ 400 million to pay for multiple projects. This money will be borrowed through what’s called a general bond, one of two types of municipal bonds used by cities and towns to pay for things (the other is called a municipal tax bond).
Alex Fayman, an assistant professor of finance at Metropolitan State University in Denver, said general bond bonds don’t come with a tax hike.
Since 1982, Denver voters have approved all but one of the 11 coupons sent to them. These bond packages ranged from $ 25 million in 2002 (to help reshape the Quigg Newton Denver municipal auditorium) to a $ 937 million package voted on by voters in 2017 to pay for several projects.
The new money sought by Mayor Michael Hancock’s administration was touted last month as a way to help the city’s economy recover from the pandemic.
Brendan Hanlon, the city’s chief financial officer, describes it almost as a domino effect: providing money for projects will in turn create jobs, which will make more people spend more money. This, in theory, will help Denver recover from the pandemic.
“That’s why we are pursuing this,” Hanlon said.
This whole program is proposed because the city expects to raise $ 308 million in federal funds to help with the recovery (it is supposed to receive the money in two installments). Hanlon noted that he was wondering why the city is borrowing money when it expects to get so much from the federal government. This federal money will not necessarily be used for things that a bond program will pay for; he said federal money would go to things like business takeovers and rent assistance programs. He joked that the money came with a “150-page instruction manual” explaining how it could be used.
“What we’re hoping to do is sort of continue some lessons from previous years, previous recessions, frankly, where we injected extra dollars into our construction market,” Hanlon said. “It has helped us preserve and create additional jobs at a time when the construction industry has been affected.”
In 2007, for example, voters adopted a $ 549.7 million bond package, months before the onset of the Great Recession. It’s a very different timing this time around, but Hanlon said the concept is similar, as the purpose of this program and all of the bonds is to provide money that can be used for urban projects.
Emily Swenson Brock, lobbyist for the Government Finance Officers Association, said now is a good time to issue this type of debt. Municipal bond debts like the ones Denver will seek voter approval this fall are considered low risk, so they can be very attractive to investors – the people who will buy the bonds and in turn provide the debt. money to pay for these projects. , essentially “loan” money to the city.
“It seems to me that this is a really smart process, a really proactive process,” said Brock, whose organization represents public finance professionals across the country, of the Denver proposal.
So what is it going to pay for?
The city has a shortlist of about 200 projects based on feedback received from the public as part of the city’s six-year capital improvement plan. They include things like paying for city-wide cycling infrastructure, building sidewalks and crosswalks.
Other partners such as local cultural institutions can apply for money. Hanlon expects to receive some requests. For example, the $ 937 million bond package approved in 2017 paid for things like renovations to the Denver Art Museum, the Denver Botanical Gardens, the Denver Museum of Nature and Science, and the Denver Zoo. Paco Sanchez Park and the 47th and York cycle and pedestrian bridge in Elyria Swansea are other examples of urban projects funded by this bond package.
The city plans to give people the opportunity to provide feedback on how they would like the money to be used. Details on what this process will look like have yet to be announced.
Are you sure this won’t increase my taxes?
This will not be the case. However, Fayman pointed it out is possible for the city to raise taxes in some in the future to help pay off the debt. Hanlon confirmed this, although he pointed to the city structures bond programs to ensure that the money he borrows for can be repaid with the existing property tax mill. Now this tax mill can be increased or even lowered.
By voting yes, you are essentially giving the city permission to invest its money.
“If you have confidence that the city will make investments in key areas, which will help make the city better, beautify the city, improve the city’s infrastructure, create jobs, you know, these are the things that are going to have positively impact an average Denverite, ”Fayman said.
The city continues to repay the bond package adopted in 2017 and the bond package 2007. Hanlon said the city does not know how much it will have to pay in interest for the proposed $ 400 million package because it does not yet know what projects. she will go.
These packages are not safe, but it is rare for voters to say no. Residents rejected a $ 325 million bond backed by Mayor Wellington Webb in 2001 to pay for a new justice center. Four years later, voters ended up passing a package under Mayor John Hickenlooper to pay for it.
Council member Candi CdeBaca, a regular Hancock critic, called out the plan last month after the city officially announced it. She noted that property taxes for some have gone up (this was due to a routine assessment done every two years) and noted that the city already had a bunch of projects under construction paid for by existing bond programs.
“Getting people to do construction in Denver when they can’t afford to live here doesn’t sound like a great plan to me,” CdeBaca said in a public Facebook post. “They will sell this to you as equity and regarding jobs or small businesses owned by minorities and women – ask these small minority businesses how they have been served so far and how easy it is for them to bid on large infrastructure projects. ”
Does this bond project have a cool name?
Well, it’s subjective.
This bond program is called RISE Denver, which stands for Rebuilding for an Inclusive and Sustainable Economy. The one adopted in 2017 was called Elevate Denver, while the package adopted in 2007 was called Better Denver. So he definitely gets points for consistency.