Items on the ballot include Austin's $350 million affordable housing bond proposition, ACC's $770 million campus upgrade bond proposition, and a three-part package from AISD: $2.32 billion in building improvement bonds, $75.54 million in technology and infrastructure bonds, and $47.43 million in stadium improvement bonds.
While the three entities are asking area residents to back those investments at the same time, each has a slightly different plan for issuing the new debt and delivering on their promises to voters. If approved, each bond would also result in several years of tax rate increases to cover the city's and districts' debt obligations.
Voters can make their choice on the bonds during early voting through Nov. 4 or Election Day on Nov. 8.
City of Austin affordable housing bond
Austin's Proposition A would give the city hundreds of millions of dollars for "planning, designing, acquiring, constructing, renovating, improving and equipping" affordable housing projects around town. The $350 million would be spent in the same way as the city's 2018 housing bond funds: support for both rental and ownership housing developments, land purchases for future affordable housing, and home repairs for existing residents and facilities.
To pay off the bonds, the city said taxpayers can expect a total tax rate increase of $0.0132 per $100 valuation if the bond proposition is approved—a 2.85% increase over the current fiscal year's $0.4627 rate.
That figure was calculated assuming the city issues all bonds in a single year. However, the city said it plans to issue the bonds over several years, meaning the full tax rate effect would not be immediate. The city also said its timeline for issuing new bonds depends on how quickly it spends the $350 million.
"[A]ny related tax rate increase will correlate with the amount of debt that is issued in the respective fiscal year," said Sarah Torchin, a business process consultant for Austin's Financial Services Department, in an email.
If the bonds were to all be issued next year, the $0.0132 figure would translate to a $44.66 increase on the annual tax bill of the owner of a home with a taxable value of $338,344—the median in Travis County this year—although the final numbers could end up higher or lower through the bonds' full life cycle.
Austin's city limits also stretch into Williamson and Hays counties, which have different median home values than Travis County.
While voters will see the $350 million figure on the ballot, the overall cost of the bond program could be closer to $561.7 million thanks to $211.7 million in expected interest payments. The city said it set a "conservative" 5% interest rate estimate to reach that figure in its calculations this summer, a rate that could shift in future years along with the market.
"A number of factors are considered when estimating an interest rate, including current market conditions, the city’s bond rating, the tax status of the bonds, and the structure and term of the bonds," Torchin said. "If, at the time of the sale of the bonds, the actual interest rate is higher than 5%, then the total interest paid on the bonds will be higher. Conversely, if the actual interest rate is lower than 5%, then the total interest paid on the bonds will be lower."
Taxpayers could also see changes on their bills if the city experiences any large swings in the taxable property value within its limits. If values significantly increase, homeowners could see a reduced debt service portion of the city's tax rate. The city assumed no growth in its bond projections.
More information on the bond proposition is available from the city.
Austin ISD campus and infrastructure improvements
AISD's three-piece $2.44 billion package would support school modernization, security and infrastructure upgrades and athletic facility renovations.
The district also plans to sell its bonds over time with an expected six-year issuing timeline beginning as soon as next February if voters approve the three propositions.
AISD Chief Financial Officer Eduardo Ramos said the combined cost to taxpayers would be $0.0123 per $100 valuation, an increase voters could first see next year and that would likely last for a decade. The owner of a median-valued home in Travis County could have a $41.62 addition to their annual tax bill based on that projection.
Ramos said the bonds' tax rate increase is not expected to change over time and will likely be accompanied by cuts to the district's overall rate.
"Based on how we are projecting to sell the bonds, that’s why we sell them over six years versus all at once, just to make sure that we maintain that one-penny increase. And also knowing that we’re planning to reduce our maintenance and operations tax rate by $0.03, and so we know that next year we’re also reducing the total tax rate again," he said.
AISD said it plans to pay off its bonds over a maximum of 25 years. However, Ramos said the district has traditionally sped up its bond payments to get debt off the books sooner than initially projected.
If all three propositions are approved, AISD estimated its $2.44 billion in bonds will be accompanied by $1.94 billion in interest payments for a total debt obligation of $4.38 billion. Those figures assume a 4.5% interest rate in 2023 and a 5% interest rate from 2024 through 2028 based on current projections.
"We kind of worked those fluctuations into our estimates, and that’s why we kind of look like paying on the high end, that 5%," Ramos said. "We usually end up paying about 3 or 4% when we actually go through the bond sale itself."
Ramos said the district's calculations regarding local property value increases are also likely to end up being conservative. After seeing its property values jump by 18% this year, AISD projected increases of between 2% and 7% over the next decade in its bond outline.
More information on the bond propositions is available from AISD.
Austin Community College campus upgrades
ACC's $770 million ask of voters would support workforce training and other programming across the Central Texas district's campuses.
Neil Vickers, ACC's executive vice chancellor of finance and administration, said ACC is still nailing down the timeline for the range of projects across its three regions. The bond-funded improvement program on ACC campuses will likely stretch over six to eight years, while bonds will be issued in three or four blocks spread over five to six years.
Vickers said ACC anticipates the related tax increase will gradually grow over that period.
"It’s going to be this ramping up of it, and we’ve been saying about over a five-year period until you see what we are projecting to be the total impact of the bonds," he said. "We’re going to issue these bonds kind of in a ‘just-in-time’ kind of fashion, which saves everybody."
The first block of bonds could be issued next summer to support the initial development of district projects, Vickers said, followed by a "fairly straight line" of tax increases as further bonds are sold. The district is planning for 30-year maturities, which is historically the timeline ACC has followed.
For the owner of a median-value Travis County home, that could mean a year one tax bill increase of about $3.38 that would rise to an additional $16.92 by year five.
ACC expects the $770 million in bonds will have $540 million in added interest payments over their life cycle for a $1.31 billion total based on an interest rate of 4%.
Vickers said the community college had started its projections earlier this year assuming a 3% rate, which was then increased to 4%. Vickers said that rate estimate is "a lot tighter" now than when the bond program was laid out in recent months. However, he said he believes that figure still makes sense and that the district will consider other options for taxpayer relief in future years if rates end up swinging upwards.
“We have other levers to pull to offset the impact of interest rates in either direction to make sure that we’re getting the most balanced total program for the college, for the taxpayers and the delivery of the projects," he said. "It’s definitely a big component of it, and obviously there’s this uncertainty that we haven’t had in a very long time about interest rates, but there’s a lot of other variables too that could also have just as much of an impact—some of which we control."
Any interest rate hikes could end up being "completely offset" by gains in taxable value across ACC's district, he added, and the college plans to stick to the anticipated tax effect over the coming years.
"To the extent possible, which we feel confident that we should be able to, ... we’ll be able to honor that estimate regardless of what happens with these other variables," he said.
More information on the bond proposition is available from ACC.
