What is a General Obligation Bond? A General Obligation bond is a financing tool that a city can use to finance large capital projects over a multiyear period, similar to a home mortgage. A bond permits the project costs to be amortized over a period that more closely matches its useful life. Lake Jackson has held 5 bond elections in the past 22 years: 2016, 2010, 2005, 2003, and 1997.
Why issue bonds? General Obligation bonds are an alternative to funding projects on a “pay as you go” basis. Bonds are used to allow the City to pay for more costly projects over a longer period of time. Otherwise, to fund capital projects on a “pay as you go” approach, the tax rate would have to be increased sufficiently to generate additional revenue to pay for projects.
What kind of credit rating does Lake Jackson have? The City’s current credit rating, issued by Standard & Poor’s, is AA+ on General Obligation Bonds.
If the propositions are approved, what will this do to my taxes? If approved, the bonds would be sold in multiple issues. The tax rate would increase in increments over several years to a projected maximum increase of about 4 cents. This rate would gradually decline if no additional bonds are issued or property values are greater than projected. For example, the average home in Lake Jackson, valued at $200,000, could see a tax increase of $80 per year in 2025.
How were the propositions selected? Interested citizens were appointed by the Mayor and the City Council to review, prioritize, suggest, and eventually recommend bond projects going before the voters. The forty volunteers met for five months, obtaining feedback from the community and recommendations from City staff.
What if all of the money is not used? If there are funds remaining after all projects are completed (due to the City being able to reduce the cost), the City Council can consider other similar projects, such as other residential streets or drainage projects, to put the remaining money towards.
If a bond proposition is approved, when will construction of that project begin? Voter approval of a bond proposition only authorizes funding for the project. Before construction, the City must take steps to plan, design, and bid a project. Therefore, depending upon the type of project, the process from planning to construction may take a number of months. All projects are expected to begin within five years.
What happens if the bonds are not approved by the voters? If a bond proposition for a particular purpose does not pass, and funding is not otherwise available to complete that project, that project could be eliminated from the City’s long-term capital improvement plan or it could be included in a future bond package.