Vision2 bonding costs have pros, cons
BY WAYNE GREENE World Senior Writer
Thursday, October 11, 2012
10/11/12 at 7:32 AM
Read more about the proposal and the status of Vision 2025 projects.
Nearly $92 million of the Vision2 package - 12 percent of the projected total - won't buy anything tangible for the people of Tulsa County.
That's the amount of money built into the $748.8 million package to pay for bonding costs and interest on the two parts of the proposal.
Opponents of Vision2 say that's too expensive, but proponents say it's the cost of moving immediately on urgent projects.
Bonding costs and interest are not unusual in local government capital projects, but there is another way.
The Metropolitan Area Projects plan - approved by Oklahoma City voters Dec. 14, 1993 - included money for the virtual reconstruction of the city's downtown, including a new baseball stadium, a new arena, a canal through the redeveloping Bricktown entertainment district and a new library.
The $309 million package was accomplished with zero bond costs.
The MAPS plan raised the city's sales tax by 1 percent for 66 months but stipulated that all the projects would be built on a pay-as-you-go basis.
In 2001, Oklahoma City leaders again came to voters with another public works plan, the $700 million MAPS for Kids program, which would continue the sales tax for seven years to pay for 70 new and renovated public schools. The program included 400 projects in 23 school districts.
The program, approved by voters in 2001, was paired with a separately approved $180 million Oklahoma City School District bond issue, but the city sales tax once again was a pay-as-you-go, no-bond program.
When that sales tax came close to its conclusion, city leaders again came to voters with MAPS 3, a $777 million package that would extend the tax rate to the end of 2017, financing improvements to the city's downtown arena and an off-site practice facility to accommodate the city's new NBA franchise.
As with the previous MAPS projects, MAPS 3 was pay-as-you-go.
Tulsa also has financed some municipal improvements on a pay-as-you-go basis. Projects built with the city's third-penny sales tax were typically built on a no-bond basis as are sales tax-funded road projects under the Fix Our Streets program, passed by voters in 2008, said city Finance Director Mike Kier.
But the vast majority of Tulsa County's Vision 2025 program - essentially, the local response to the MAPS program - was funded with bonds, said Kirby Crowe of PMg, which manages the program for the county.
The $575.5 million Vision 2025 program borrowed $483.8 million, which will result in interest costs of $146,285,397, Crowe said. Funding for the Oklahoma Aquarium in Jenks and some smaller projects in the Vision 2025 program were on a pay-as-you-go basis, but the biggest items, including the BOK Center in downtown Tulsa, were bond-financed, he said.
Oklahoma City Mayor Mick Cornett said the no-bond financing of the MAPS program has proven popular with Oklahoma City voters.
By avoiding bonding, the city had more money to spend on the projects themselves, he said.
But the approach does have a cost - time.
"It takes a long time for us to build these projects," Cornett said.
If you pay as you go, you can't go anywhere until money has accumulated.
The first MAPS program passed in 1993, but its final project, a new $21.5 million downtown library, didn't get finished until 2004 - two mayors later.
Work on projects from the second MAPS program is still in progress, 11 years after it passed, he said.
MAPS 3 may not be wrapped up until 2022, he said.
Time is not something Tulsa County has when it comes to the most important elements of the Vision2 program, backers of the proposal say.
The biggest portion of bond costs in Vision2 will finance immediate work at the Tulsa airport industrial complex, especially work to modernize the city-owned American Airlines maintenance facility at a time when the bankrupt airline is deciding where it wants to maintain jobs in the future. Some 7,000 Tulsa-area residents work at the airlines facility, the largest civilian air maintenance depot in the world.
"Were it not for the potential of job loss, I would never recommend that we borrow this money to renovate and repair the facilities, but we have to do it now," said Vision2 campaign co-chairman Don Walker.
Bonds would be sold for the airport projects so that the money is available four years prior to the beginning of the tax collections, but most of the other Vision2 projects are funded on a pay-as-you-go basis, he said. The job closing fund in Vision2's Proposition 1 and Proposition 2's quality-of-life projects for cities and towns around Tulsa County are all planned to be on a pay-as-you-go basis, Walker said.
The only bonded projects in Proposition 2 are a new Tulsa County juvenile justice facility and work on levees along the Arkansas River, both of which are urgent projects because of pressure from the federal government, he said.
Opponents of the Vision2 proposal say the bonding cost alone is reason to vote against the plan.
"Money spent on bond fees and interest is money that can't be spent on public improvements," said Ronda Vuillemont-Smith, a member of the People for a Better Vision steering committee and an unsuccessful candidate for the state Legislature earlier this year.
Election date: Nov. 6
Amount: $748.8 million
Tax impact: Extension of 0.6 percent Vision 2025 sales tax from 2017 through 2029
PROPOSITION 1: ECONOMIC DEVELOPMENT
Airport industrial complex buildings and infrastructure: $122 million
Airport industrial complex equipment: $132 million
Closing fund: $52.942 million
Bond costs and interest: $79.938 million
PROPOSITION 2: QUALITY-OF-LIFE IMPROVEMENTS
Tulsa County: $92 million
Tulsa: $157.92 million
Bixby: $11.3 million
Broken Arrow: $44.1 million
Collinsville: $3 million
Glenpool: $5.9 million
Jenks: $9.2 million
Owasso: $14.38 million
Sand Springs: $10.1 million
Skiatook: $1.16 million
Bond costs and interest: $12 million
Original Print Headline: Pros and cons of Vision2 bonding costs weighed
Wayne Greene 918-581-8308