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City Financial Office offers early look at possible funding for urban rail

Tuesday, February 2, 2010 by Austin Monitor

The city’s financial office says Austin currently has about $200 million to spend on a proposed downtown rail project before it would have to begin raising taxes to pay for such a system. That would get the process started, but voters would have to approve the rest of the funding, which could be a considerably larger sum.

 

Deputy Chief Financial Officer Greg Canally sent a memo Monday to the Mayor and City Council concerning a preliminary estimate of the city’s general obligation bonding capacity as it relates to a potential urban rail funding plan. 

 

According to the memo, the city has approximately $200 million in available bonding capacity above its existing commitments, meaning the city can access that money without raising its debt service tax rate. Voters must approve general obligation public improvement bonds; the public pays for those bonds through property taxes.

 

Last December, City Council outlined a series of questions concerning urban rail in advance of a potential mobility bond election this November. It requested answers to some questions by the spring before determining whether or not to go ahead with the bond election. Mayor Lee Leffingwell  told In Fact Daily that a comprehensive urban rail system would require several bond elections along with federal grant money.

 

“Right now the strategy we’re trying to deal with is laying out what a full build-out would look like,” he said, “but obviously the entire system would have to be funded over a generation, probably, with several bond elections. And hopefully, after we get the initial segment approved and built, (with) a lot of help from the federal government.

 

“There’s a lot of unanswered questions right now: We don’t know who is going to operate it, we don’t know where the rest of the money is going to come from, but we have to have answers to those questions within the next two or three months if we’re going to get a November 2010 bond election.”

 

Leffingwell stressed that the Financial Office’s numbers are preliminary and that any funds related to the creation of an urban rail system would have to be looked at in relation to the issue of citywide transportation as a whole.

 

“We haven’t settled on any numbers yet,” Leffingwell said, “but I think what we’re talking about is a bond package that would result in a small increase and then maybe another couple hundred million. Then we could raise enough money to fund some of these strategic gaps, as we’re calling them, in our roadway system — some money for pedestrian and bike facilities and some for rail — and we don’t know what that’s going to be just yet. But it would have to be something in the confines of that.”

 

Canally also pointed out that each one cent per $100 property valuation above the current debt service tax rate would generate about $100 million in additional bonding capacity.

 

“(W)e feel it is appropriate to share these (numbers) at this point,” Canally wrote, “since bonding capacity would be an integral piece of the overall analysis.” He is expecting to complete an analysis of the funding issue by the spring, followed by a meeting on the Strategic Mobility Plan in June.

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