Thursday, October 29, 2009

The Woodlands Bond Proposals 2009 - League of Women's Voters Debate

Tonight, a debate was conducted at the Association building on Lake Woodlands to debate the FOR and AGAINST viewpoints. This is a summary of that debate.

Adrian Heath ( presented the opposition, while Joel Deretchin (TWA Association President) and Don Glennell (Texas Rush Soccer Club) alternately presented the FOR.

Proposition 1
FOR - We need all three fire stations as recommended by those who have studied the detailed criteria to achieve a 5 minute response  time average. Currently, certain areas of Indian Springs, Panther Creek and Cochran's Crossing have insufficient emergency response time. Indian Springs has an average of 8 minutes and Creekside Park an average of 15 minutes. In the two additional minutes after the target fire response time, a fire grows three times its size.  There is hope of saving a heart attack victim  after  four minutes, whereas all bets are off after about six minutes. Time is very critical to safety. Our emergency services are lacking and we need to improve them now. The third station is falling apart and structurally unsound. It will likely cost more to repair than rebuild it. We have put 1/2 million band-aid dollars into it already. It is time to replace it.  Additionally we seek an ISO rating of "one" here. The Savings in insurance for the residents will offset the investments. We have been told that we will achieve an ISO rating of "one" with the improvements through these bonds. Part of our community does not even meet ISO level two status currently.  This will fix that problem. Association representatives have analyzed and reached agreement to the necessity of these stations. Financial analysts have determined that the bonds are fiscally responsible and make sense in this economic climate. 

AGAINST - let's pay as you go. Make the Township fiscally responsible and squeeze existing funds. We are in an economic decline. Let's defer some projects and spent thrifty. Get our financial house in order. Wait to do these projects until we have fully elected residents on the board. Put the issue in their hands because they will be more fiscally responsible.  Maybe we could even do as we did before - have volunteer firefighters. Let's have some better cost conscious ideas. 

Proposition 2
FOR - we have an urgent need for an additional  sports field. Our children are not able to participate in some sports activities such as soccer for the lack of sufficient amenities. We need to support our children and their quality of life. A 12 year old cannot wait three years for us to start such a park project. We have favorable financial rates now and the costs of constructing our assets is low due to the current economic environment.  Some of these parks are required by contract.

AGAINST - we can cut expenses and pay for these parks out of our general fund. Prudent spending is necessary to achieve the quality we want. Again, defer these projects until the new resident elected board is in place.  We need to trim the fat. Look at who is behind the coalition who is sending the leaflets out to the residents. They have special interests and have something to gain via approval of these bonds.  Some sponsors are outside of The Woodlands. They build parks and fire stations. An example of an excess expenditure - a check was written for a domain name; it cost us over $1000. You can get a domain name for $18. There are many of these unnecessarily extravagant expenses, some in the 100's of thousands of dollars. Fix that and then start thinking about spending more. Pay as you go is the only prudent way to go.

Proposition 3   
FOR - this is just a no-nonsense way of distributing debt over 20 years. It is a very fiscally responsible proposal. It provides a means to have those living in your house after  you leave to assume some of the financial responsibility for these proposed and completed 20-30+ year assets. The bonds will not increase taxes (none of these three will). This particular proposal is only a refinancing proposal. It will save us money in the long run. For all of these propositions, when we require additional funds in a pay-as-you-go scenario, we will have to raise taxes. This proposal protects us from interest rate increases and allows to maintain our constant annual assessment rate of 32.8 cents per $100 assessment. We expect the bonds to be 4.5 to 5.5 percent loans. If we pay for this out of our annual budget, taxes will be much higher!

AGAINST - let's pay off the debt and not leave it for those after us. We pay a lot of interest. The best way to go is use the general fund. If after we have cut excessive spending and we need more money, then raise the taxes. The bonds will not solve all of our problems, whether  of safety or keeping children off the street and out of trouble. Get out of debt, put our financial house in order. Spending thousands of dollars for songs on the fountain at Waterway does nothing for me. It is for the businesses on the waterway.

For some present, the information presented was nothing new. For others, this was an opportunity to ask questions and perhaps see "two sides of the coin". Everyone wants prudent spending and most people see there are opportunities to improve financial efficiency. However, many residents also see that safety and our children are extremely important. So is the stability of our tax rates. What may seem conservative to one person may seem like just prudent spending to another. What seems like exorbitant spending to one person may seem like the norm to another. Bring those two thinking processes together and you have diversity of financial thought. Either way, the right way seems to be that which takes care of the issues while keeping a lid on taxes. These proposals are part of a five year plan (and longer) to keep our tax rate at 32.8 cents per $100 of assessment. If that is accomplished, the rest can be managed with the budget process and detailed financial thriftiness. Let's have the bonds and let's have prudent spending. Let's not get the two confused. We need progress and we need for it to be aggressively pursued, without undue strain on the resident's pocketbook.

Please vote FOR the bonds.

Thursday, October 15, 2009

Bond issues - The Woodlands needs your vote!

This is a critical time for our little Texas community. Major projects completing the final build-out of The Woodlands is being put on the line for funding in the November 3rd election. In about five years, our town should be all grown up in the residential areas and have a completed infrastructure except for government offices. Sure, the community will continue to grow after these five years, as undeveloped lots continue to be developed in various locations, especially in the Town Center and some parts of Creekside park, but after five years, our town should be primarily in maintenance mode, improving what we have, replacing what is falling apart, and in general, maintaining the usefulness and presentation of our public assets. Some parts of our community are already falling apart. These bonds address some of those issues as well.

Our current economic environment presents an opportunity for this community. Interest rates are the lowest they ever will be. They can only go up, and I believe they will, probably starting sometime in 2010. We can lock into these low rates with GO bonds. The township expects to be able to sell bonds at a rate between 4 and 5 percent. Execution of the sale can not realistically be started until about June 2010. Not all projects would be included initially. These bonds would be appropriated when the projects need to be executed. If the bond issues pass, there will be several bond sales of varying terms and interest rates. If there are better financial vehicles available at the time, then the voter-approved bond vehicle would not even be utilized. What I fear is a quick rise in interest rates. That would impact all the township bank loans having a varying interest rate. Just as we seek a fixed rate loan for a home, the township seeks the security of fixed rate bonds for financing its projects. These bonds will help mitigate the risk of rising interest rates. We as taxpayers need and want a fixed predictable low rate amortized over the life of the asset and minimized for future tax relief.   

In preparing the budget for 2010, a strategy was invoked to flatten our tax rate so that residents could keep a lid on their local tax rate, similar to the county tax strategy. To do this, our financial wizards in the association and township put their heads together and formulated a plan that would accomplish everything required over the next five years, and they planned a year-by-year budget leveled at 32.8 cents per $100 evaluation. The township has successfully developed our first budget using this strategy. Subsequent years are dependent on what happens with the bond issue on November 3rd. The plan is to levy a 32.8 cent tax rate in each year of the five year plan. The bonds will not increase our tax rate. They only provide a financial vehicle to finance the projects at an optimal cost and provide a financial path to our final governance model during this final phase of building out The Woodlands.

If the three bond issues are passed:

The plan will proceed as visioned, with a projected 32.8 cents per $100 evaluation. Therefore taxes will increase or decrease with the county assessment valuation of homes, not affected by the interest rate nor variations in the township tax rate unless the community decides to add major projects within the next five years. I don't see that happening unless we feel we must take control of the local road maintenance. These three bonds have no affect on  either the county taxes, school taxes or MUD district taxes. These bonds have everything to do with the services provided to your neighborhood but not maintenance to your streets. The bonds are interconnected to the operating budget but are related only to capital expenses, either past or future.

Funding for capital projects is normally done with bonds, because bonds are a tool to spread the payment of the assets over the life of the assets. Therefore, say for a fire station, which will be in service perhaps 30+ years, the cost of building the asset is spread out for the next 20 years. That means whoever moves into your house after you leave (unless you stay forever), will share the burden of paying for the fire station. You will pay less each year and probably collectively over the years as a result. The normal residency in The Woodlands is probably on the order of five years, so perhaps the burden of that fire station is shared between the four families living in your home over that time. For a fire truck, that would be seven years and so a shorter term bond would be used or we might pay as we go on some shorter life items or projects. 

Bottom line is that the tax rate should remain at 32.8 cents per $100 evaluation for the next five years if we vote FOR all three propositions. It is not risk free but voting FOR will go a long way to manage the tax rate risk in The Woodlands.

If the bond issues are not passed:

The township must prioritize all contracts and operational requirements and safety projects ahead of other projects. First and foremost, all obligations must be honored. Repair of existing facilities might be deferred. That means that the parks for the new village would be built, because they are a contractual obligation. The two proposed new fire stations - one in Creekside Park and the other in Indian Springs would be built for safety reasons. I would think that the Central Station which is not structurally sound might be deferred, although it might be argued that is also a safety issue.

Residents would be taxed an additional one cent per 1.1 million dollars expended for capital. There is no exact scenario of what would be built and what would not if the bonds were not passed. A contingency plan does not exist, because a complete new plan would need to be created, and it would have dependencies on the economy and interest rates.

Basically, if the township had to plan the new facilities from operational funds, that would be a direct expenditure in the years incurred. Therefore, for example, if one fire station was built in 2010 and one in 2011, taxes would have to be increased by 3.7 cents for each station in the year it is built. The alternative is to finance them at a bank, probably negotiated at a low variable rate in the near future, rising to a high rate in a few years as the rates increase because of Fed intervention. Most of us know what that means with credit cards and even homes! Over time, a variable rate has only one way to go now - up! And it can go way up! I remember not too long ago, a 14.5% fixed rate on a home.That is the reason we lock in interest rates on our homes. The same goes for our township.

Another way to look at this is for us to pay the cost of the assets as we go from our own pockets -  Proposition 1 and 2 combined adds up to 28.3 million dollars. Divide that by 1.1, equating to the number of cents required in taxes from each resident to do those projects. That equals to  24.5 cents. Spread that out over four years and it equates to about 6 cents added to your tax each of those years, if the expenses are incurred evenly. So instead of 32.8 cents, count on 38.8 cents. If we finance that amount through a bank over say 10 years, assuming we can, it would be perhaps 5 percent compounded interest. It could also be 10 percent compounded interest. Residents taxes would be impacted by the interest rate. If you can figure this all out, let me know. I am not going to try, not yet anyway. Amortization schedules and various scenarios of financing are best left to the experts.

So what am I really trying to say? 

I am FOR all three bonds. We should put this tool in the hands of the competent people we have in authority and those who work for the township in finance. Let them make the decision next year on how to finance these facilities or refinance our debt. Their tactical decisions will be based on financial analysis and strategies aligned with the economic environment and interest rates at the time. Personally, I want to keep our taxes under control and not be exposed to the risks of variable rates.  Already the financial community of the world is questioning the USA for low interest rates. They want toe USA to be financially responsible. The federal government is holding to near zero rates for the near future, but economic recovery will be measured by reasonable control of inflation through controlled borrowing. Reasonable interest rates to manage inflation is considered an appropriate tool to do this. Our current opportunity  will not last forever and in fact may change before we can even take advantage of the low rates available now.

There must be hundreds of spending scenarios. Optimizing it is the job of the township's president, financial manager and analysts. Our job is to ask questions, understand the propositions, assess our position and go vote. Please vote FOR these propositions. There is a nice brochure being distributed which presents the three propositions in an easy-to-read format. It is available at the township office1. Perhaps it will be made available at additional locations soon.

Proposition I -  $17.335mm bond authorization to finance three fire stations, related equipment and payment of Emergency Service District debt. Drawing associated annual budget funds of $4.9 mm for total of $22.335mm.1

Proposition II - $12.380 mm bond authorization to finance park and pathway contracts and renovate parks and equipment needing major maintenance. Drawing associated annual budget funds of $7.8 mm for a total of $20.189mm.1

Proposition III - $20.225mm  bond authorization to refinance existing debt, mostly under variable rate contracts . This will bring our capital debt obligations into a fixed rate bond service and take advantage of the township's legal status to have non-taxed debt.1

4.  1Printable brochure in PDF format

Wednesday, October 14, 2009

Mobility takes a new turn - Lake Woodlands moves up

Now we have a 40mph speed limit posted on part of Lake Woodlands. That should make a lot of people happier. The new speed limit was established after a long study on risks and traffic patterns. From West Panther Creek west to The Woodlands Parkway, the speed limit is 40. From West Panther Creek east to I-45, the speed limit remains 35 mph.  A 45 mph speed limit is too dangerous to post, so please observe the limit as posted. A former study showed 45 mph not feasible on the roadway.

Unfortunately, this means that some of our children will be crossing a 40 mph road instead of a 35 mph road now, near Shadowbend. It also means that the duck chicks at Shadowbend Park will be more at risk this coming spring.

Of additional interest are the school zones in The Woodlands. Please note that cell phone usage by drivers is not permitted in school zones. All zones should now have the related signage up and enforcement of this new Texas law is in full effect.  

Thursday, October 1, 2009

Major crimes in The Woodlands and area - apprehensions

Apparently, many of the crimes pushing us towards a larger police force are being solved here in The Woodlands Texas.  We have had arrests for bank robberies, and now arrests of members of two groups responsible for local home break-ins. The latest arrest was announced today when one person of 23 years of age was apprehended and who is a member of what is thought to be a Colombian "gang". He allegedly participated in the burglary in Indian Springs on Landsdowne.There should be more arrests in the days to come for the 1000+ robberies thought to be performed by this gang. The gang apparently targets residents of Indian descent and possibly other Asian nationalities. He was apprehended in a robbery in Harris County.

The previous arrest in September was an 18 year-old caught near a burglary he had allegedly committed in The Woodlands. There was evidence of other robberies and weapons in the automobile he had driven to the scene.

On September 30th, deputies made another arrest - Arnolus Bulli Snel, W/M 47 YOA, of Shepherd, Texas for attempted sexual assault. Deputies were dispatched to a home in The Woodlands where they learned from the 49 year old victim that Mr. Snel had come to her home around 9:30 A.M. looking for work. He was known to the victim from working at the home in the past. He had told her that he was in the area handing out business cards. The victim allowed the man into the home and when her back was turned, the man grabbed her, picked her up off the ground and tried to drag her into a bedroom. The victim screamed, resisted and fought off the assault. The victim was not injured. Fleeing from the home. the lady called the Sheriff’s Office. Deputies called the man using the phone number on his business card. The man surrendered to authorities at the Sheriff’s Office Substation in The Woodlands.  He was arrested and charged with attempted sexual assault.

As one crime gets resolved, another is committed. A bank robbery was reported on September 28th by a white male 25-30 years old,  escaping by foot from Regions bank in Montgomery County on highway 249, outside of The Woodlands. He was wearing  a black hat that had “POLICE” written on the front in white letters.