In the past five years, the average interest rate of general obligation bonds sold by the County has been 2.78 percent per year. For planning purposes the County used interest rate assumptions of 2.78 percent per year for the first five years of bond sales, 3.20 percent per year for the next five years of bond sales, and 3.45 percent per year thereafter. Pima County's interest rates have been lower than the average of other AA rated local governments primarily because the County issues relatively short-term debt with a 15 year payback period. Many governments who issue debt will borrow for 20, or 30, or even 40 years. The longer the debt repayment period is, the higher the interest rates will be. Because Pima County repays so quickly, our interest rates tend to be more favorable than the average.
If all seven propositions are approved by voters, Pima County would be authorized to sell $815,760,000 in general obligation bonds. The bonds would then be sold in increments over 12 years and repaid with property tax revenues. As part of the annual County budgeting process, the Pima County Board of Supervisors approves the specific amount of bonds to be sold each year and the property tax rate necessary to generate the tax revenues to repay the bond debt. The Board has voluntarily committed to not exceed a tax rate of 81.5 cents per $100 of taxable net assessed value to repay this new debt as well as the existing debt on bonds approved from past bond elections. The current tax rate for bond debt is 70 cents per $100 of taxable net assessed value and is estimated to increase by 11.5 cents to the cap of 81.5 cents the first year that new bonds are sold.
The average taxable value for residential units (homes) in Pima County is $152,511. Based on the total value of all taxable property in Pima County, it is estimated that an average annual tax rate of 39.4 cents per $100 of taxable net assessed value would yield the amount needed for debt service on $815,760,000 of new bond debt. For a home with a value of $152,511, the average in Pima County, the cost to repay the new bond debt in its entirety is estimated to average $60 per year. Although the average annual cost associated with these new bonds is estimated at $60 a year, the current County bonds property tax bill for this same homeowner is estimated to increase by only $17.54 a year. This is because overtime the debt on existing bonds is repaid, and therefore the property taxes this homeowner currently pays towards existing bond debt will start to go towards repaying the new bond debt. The tax rate cap will ensure that property taxes for County bonds in future years will not increase by more than this initial $17.54 increase, unless the taxable value of the property increases.
What are General Obligation bonds and what do they mean to property taxpayers?
General obligation bonds are a common form of financing used by cities, towns, counties, school districts and other local governments. These governments sell bonds to investors and use the revenue to fund capital improvement projects, like libraries, parks and other public facilities. General obligation bonds are attractive to investors because the interest earned is typically tax-exempt. In the case of Pima County, the County then levies an annual property tax to repay the bonds. The County also varies the amount of bonds sold each year in order to prevent property taxes from varying considerably from one year to another. If all seven of the propositions are approved by voters, it is estimated that a homeowner who owns a home valued at $152,511, which is the average valued home in Pima County, would pay $17.54 more a year than they currently pay for Pima County bonds.
When will projects be completed?
The county intends to sell bonds once a year over 12 years in order to not exceed the voluntary property tax rate cap. Projects are expected to be completed or under construction between year 1 and year 12. The 2004 voter approved bond program anticipated 10 years of bond sales and project completion within 12 years, but 75 percent of bond projects were completed or under construction within 6 years of the bond election. The Bond Implementation Plan Ordinance states when, within the 12 years, individual projects are scheduled to be built.
Why are there seven ballot propositions instead of one?
How much will it cost the average homeowner to repay the new bond debt in its entirety?
How much will property taxes increase for the average homeowner?
Although the average yearly cost associated with repaying these new bonds is estimated at $60, the current County bonds property tax bill for the same homeowner is estimated to increase by only $17.54 a year. This is because overtime the debt on existing bonds is repaid, and therefore the property taxes this homeowner currently pays towards existing bond debt will start to go towards repaying the new bond debt.
How are property tax impacts and increases to the average homeowner calculated?
For a home valued by the Pima County Assessor at $152,511, which is the average value of all owner-occupied residential units in Pima County, the annual property tax impact to that homeowner to repay the bonds is estimated to be $60. This assumes that an average annual property tax rate of 36.4 cents per $100 of net taxable value will be necessary to repay the new bonds. The increase in property taxes is estimated to be $17.54 . This assumes that the current tax rate of 70 cents per $100 of net taxable value will increase by 11.5 cents to the cap of 81.5 cents. Substitute your home’s limited value, as determined by the Pima County Assessor, for the $152,511 used in these examples and calculated as follows:
$152,511 x 10%(residential assessment ratio) = $15,251.10
$15,251.10 ÷ 100 (because the tax rate is applied to $100 of net value) = $152.511
$152.511 x 0.3938 (tax rate) = $60.06 (year)
$152,511 x 10%(residential assessment ratio) = $15,251.10
$15,251.10 ÷ 100 (because the tax rate is applied to $100 of net value) = $152.511
$152.511 x 0.115 (tax rate) = $17.54 (year)
What would be the property tax impacts and increases to an owner of a $250,000 home and $500,000 home?
How can taxpayers be assured that their tax bills will not vary significantly from one year to another in order to pay off these bonds?
The County plans to sell the bonds once a year over 12 years. Selling the bonds over 12 years enables the County to keep the property tax rate under the voluntary cap of $0.815 per $100 of net assessed value, and prevents significant fluctuations in property taxes from one year to another.
Why not fund these projects with a sales tax instead?
Have there been any independent audits or reviews of the County's bond programs or finances?
What happens if voters only approve some of the propositions?
If voters do not approve one or more of the propositions, the County will not be able to sell the bonds associated with those propositions, and would not be able to fund with bonds the projects associated with those propositions. In addition, the Board of Supervisors would be required by County code to amend the bond implementation plan ordinance to delete reference to those bonds and projects.
What happened with the bond funds voters approved in 2004, 2006, and 2014 bond elections?
It has been almost 11 years since the last comprehensive bond election in 2004, which was followed by a single issue bond election in 2006 for behavioral health facilities and a single-issue bond election in 2014 for animal care improvements. Click here for updates on the animal care improvements. The 2004 and 2006 bond programs are substantially complete and successfully resulted in the following:
For more information on the status of the few remaining 2004 bond projects underway, please visit the main Pima County bond web page, Progress and Reports.
How can the taxpayers be certain the County will build the projects approved by the voters?
A 2013 audit by the Arizona Auditor General’s office of Pima County’s 1997, 2004 and 2006 general obligation bond programs found that: Pima County’s bond programs represent a uniquely collaborative effort between the County and its cities, towns and tribes; the bond funds were used for the purposes the voters authorized and followed the approval process for any necessary changes; and the programs benefited residents all over Pima County in similar proportion to taxes paid. Audit Report
How was the public involved in planning for this bond election?
Click on the Public Involvement tab to learn more about the Bond Advisory Committee, over 100 public meetings that were held, and other ways the public was involved in planning for this bond election.
Doesn't Pima County have the highest debt of any county in Arizona?
Credit rating agencies consider our debt well managed and moderate for a jurisdiction of our size.
To put Pima County’s debt in perspective, it is first important to realize almost all of our debt comes from voter authorization. Prior to the issuance of sewer obligations, almost all of our debt and capital financing debt instruments were approved by the voters, rather than being only approved by a jurisdictional governing body. Most new debt by other jurisdictions in Pima County has been authorized by the governing body of that jurisdiction without voter approval. Pima County remains one of the few large jurisdictions in Arizona to ask the voters to approve debt for bonds.
We are typically compared to Maricopa County, which is often cited as having no debt. However, Maricopa County transferred its hospital system to a special taxing district; and recently, Maricopa County voters approved the issuance of capital debt in the amount of $935 million for a new hospital system. In addition, Maricopa is actively discussing how to finance nearly $188 million of capital improvements for their detention facilities. The method of financing most often discussed is to issue Certificates of Participation (COPs) without voter approval. Hence, as much as $1.1 billion in new debt ($935 million in General Obligation bonds for a hospital and $188 million in COPs for detention facilities) may be issued in Maricopa County in the near future. This is a substantial debt incurrence by Maricopa County, much more than is being considered by Pima County.
The next fact to consider is that we have a long history of issuing bond debt. Since May 1974, voters in Pima County approved bond proposals at countywide elections 12 separate times. Voters have approved 54 bond proposition questions and disapproved four. In total, $2.064 billion in General Obligation, sewer revenue and Highway User Revenue Fund (HURF) bonds have been approved over the last 41 years. The most recent approval is for a new animal care facility in November of 2014 for $22 million.
Of the $2.064 billion in bonds approved by the voters, $1.965 billion has been issued and $1.258 billion has been repaid. The remaining debt of $707 million, which is $422 million in General Obligation bonds, $157 million in sewer revenue bonds and Water Infrastructure Finance Authority of Arizona (WIFA) loans, and $128 million in HURF bonds is being repaid at an approximate rate of 10 percent per year. Hence, in 10 years if no new debt is issued, Pima County will be almost completely out of bond debt. In fact, over this 10-year period, this debt will be reduced by 92 percent from what it is today.
Our County is unique among Arizona counties in that we own and operate a regional wastewater system. Funded previously with voter-approved debt, in 2010 we began issuing non-voter approved sewer obligations in response to federal requirements to improve effluent quality. Because these significant capital improvements were required, it would have been disingenuous to ask for a public vote when we were required to fund the improvements regardless of whether voters said yes or no. To date, the County has issued $531 million in sewer obligations and repaid $37 million.
Furthermore, the County’s bond programs have evolved over time into an important funding mechanism for cities and towns. This is unique in Arizona. Although our debt per capita is lower than the debt per capita of all of the cities and towns in Pima County, with the exception of Oro Valley where it is approximately the same, these cities and towns would essentially have significantly higher per capita debt if they were no longer able to rely upon the County to fund a portion of their capital improvements.
How can I get involved or participate prior to this bond election?
Check out these important dates or contact us.
130 W. Congress, 10th Floor
Tucson, Arizona 85701
Why can't the County fund road repair with funding sources that already exist?
Existing road funding sources are insufficient to keep up with the growing need. We estimate that it will cost more than $250 million to repair 1,000 miles of unincorporated county road that are in poor of failed condition. To fix all of those roads without the problem getting worse will cost $30 million a year for 10 years. In addition, we also have to consider our annual bill of $28 million for basic road maintenance and preservation costs. The largest funding source for road improvements, Highway User Revenue Funds (HURF) from the State, have not kept up with the growing need, and the State legislature continues to sweep some of these funds for other uses.
Click here for a brochure with more details about Pima County’s transportation funding and spending.
Will the County and cities and towns be able to afford to operate and maintain these new and expanded facilities?
Many of these projects will be operated by the County, or cities and towns, and will rely all or partially on taxpayer revenues to fund operations and maintenance. These costs have been estimated and disclosed for each project throughout the Bond Advisory Committee (BAC) deliberation process; and, in fact, the BAC and City of Tucson’s bond advisory committee, which advised the Mayor and Council, spent a great deal of time discussing these impacts and considering whether to support projects with high operational costs. The County’s Truth in Bonding Code requires, as part of Intergovernmental Agreements, that prior to initiating the design and construction of projects, cities and towns demonstrate they are able to fund the associated operating costs. The County will face the same budgeting considerations.
The BAC supported projects involving public/private partnerships, such as the YMCA, Tucson Children’s Museum, Oro Valley Business Accelerator, and even the acquisition of ranch lands, whereby County bond funds (taxpayer dollars) pay for the construction, but operations and maintenance remain the responsibility of the operating entity and are not borne by taxpayers. All of these partnerships provide services the County could provide itself; but for which it is more cost effective to delegate to these nonprofit organizations, or in the case of the ranches, private ranch managers.
There are also projects for which the capital improvements are expected to increase revenues or fees for use of the facilities that will offset, or partially offset, operation and maintenance costs. Examples include the shooting range improvements, sports field improvements, community centers, the County’s North health clinic, and the Medical Examiner’s Office.
In addition, there are some projects for which the improvements would decrease annual operation and maintenance costs, such as the road repair and pavement preservation program. An effective pavement preservation program will integrate preventive maintenance strategies that reduce short-term maintenance costs.
Why do the ballot propositions state that the bonds will be repaid over 20 years at 8 percent interest, when the County says it will pay them off in 15 years or less at a much lower interest rate?
“The bonds to be issued in one or more series, maturing not less than one year and not more than 20 years following the date of issuance of each series, bearing interest at a rate or rates not higher than 8 percent per annum and to be sold at prices that may include a premium not greater than that permitted by law.”
Pima County includes this language on the ballot questions on the advice of counsel in order to obtain a voter authorization sufficiently broad to cover most future circumstances. In fact, over the past 40 years, Pima County has only sold bonds with a maturity of no more than 15 years so the County's debt can be retired in a timely manner and future generations are not burdened with large debt. Furthermore, although the maximum interest rate would not be higher than 8 percent per year, Pima County expects to sell bonds at much lower rates. In the last five years of sales of General Obligation bonds by the County, the average interest rate has been 2.78 percent per year.
What is the difference between the bond implementation plan ordinance that the Board adopts prior to early voting and the voter information pamphlet mailed to registered voters?
Per Arizona Revised Statutes (ARS) 35-454, Pima County is required, not less than 35 days before the bond election, to mail a copy of an informational pamphlet to every household within the County that contains a registered voter. The pamphlet must contain specific financial information concerning the County’s retirement of outstanding debt and issuance of new debt, the purpose for which the bonds are to be issued, polling locations and hours, and arguments for and against the propositions.
The Bond Implementation Plan Ordinance, as required by Pima County code Chapter 3.06, includes similar financial information and the purpose of the bond issue, but does not include polling locations, hours and arguments for and against the proposition. Instead it provides project level detail that is not provided in the voter information pamphlet. It focuses on the projects that will be built with the bond funding, including the scope and estimated cost of each project, planned timing of when the project is expected be built and project benefits. County code requires that a Board-adopted Bond Implementation Plan Ordinance be published in full in a newspaper of general circulation in the County, and on the County’s website, prior to the start of early voting. In addition, County code states that the Board may not significantly change project benefits, costs or implementation schedules from what is stated in the ordinance, without a transparent process that requires multiple opportunities for the public to provide input on such changes prior to the Board approving them. Any significant change, however, must ensure that the bond funds are still used for the purpose stated in the actual propositions included on the ballot and in the publicity pamphlet.
I've heard that Highway User Revenue Funds that the County receives from the State should only be spent on road repair and not on building new roads; is this true?
No, Highway User Revenue Funds fund a variety of transportation improvements.
Doesn't Pima County already have a half cent sales tax for roads?
No, Pima County is the only County in Arizona without a sales tax. The Regional Transportation Authority (RTA), which is an independent organization that plans and funds transportation improvements, mainly new roads and road expansions, throughout Pima County and within incorporated cities and towns, levies a ½ cent sales tax as approved by voters in 2006. For more information about the RTA, visit www.rtamobility.com/
Why would some of the bond funding fund facilities that are operated by non-profits?
The County and the Bond Advisory Committee support projects involving public/non-profit partnerships, such as the YMCA, the Arizona-Sonora Desert Museum, Tucson Children’s Museum, and Oro Valley Business Accelerator. This is a way for the County to provide services to the public without providing those services directly. The County would fund the construction of facilities with bond funds repaid with property taxes, but the facilities once built would be operated and maintained by a separate operating entity with funds that are not borne by taxpayers. All of these partnerships provide services the County could provide itself, without taxpayer funding.
How many jobs would be supported or created if voters approved these bond propositions?
Since 2006, County staff has been tracking the number and value of County capital improvement projects and the number of construction jobs created as a result of these projects. Over this time period, approximately 280 awarded construction projects totaled more than $1.58 billion invested in Pima County’s capital infrastructure, creating approximately 17,125 construction jobs in the region. If voters were to approve the $815.8 million bond package, it is estimated approximately $564 million, plus $117 million in other funding, would go toward construction costs, creating approximately 7,400 construction jobs in the region. This job estimation comes from the American Recovery and Reinvestment Act (ARRA) of 2009 formula of “$92,000 of government spending creates 1 job-year,” a direct job creation of one job for one year.
Why does the County fund new and improved facilities within cities and towns?
Property taxes, which are the source of revenues for repaying bond debt, are paid by residents and businesses located within cities and towns, in addition to those within unincorporated Pima County. Those residents and businesses within cities and towns should also receive a benefit from property taxes they pay to the County, and therefore the County and the Bond Advisory Committee have included a significant number of bond projects within cities and towns. A 2013 audit by the Arizona Auditor General’s office of Pima County’s 1997, 2004 and 2006 general obligation bond programs found that: Pima County’s bond programs represent a uniquely collaborative effort between the County and its cities, towns and tribes; the bond funds were used for the purposes the voters authorized and followed the approval process for any necessary changes; and the programs benefited residents all over Pima County in similar proportion to taxes paid. Audit Report
If the Bond Advisory Committee recommended $643 million of projects, why did the Board approve $815 million?
The most significant difference between the Bond Advisory Committee’s recommendations and the Board of Supervisors,’ was the addition of $160 million for road repair. Although the Committee did discuss the need for road repair a number times, the County Administrator and staff continued to suggest to the Committee that user fees or a gas tax would be the most equitable and appropriate method of financing street and highway repairs. This was done with the hope the Arizona Legislature would address the issue in the most recent legislative session. Unfortunately, this did not occur. Therefore, the Board of Supervisors requested that bond funding be used for road repair. Only $160 million in bond funding could be allocated to road repair on top of the Committee’s recommendations without exceeding the County’s voluntary tax rate cap of $0.815 cents per $100 of assessed value and without lengthening the entire bond program by more than 12 years.
The County says these bonds will be considered short-term debt; what does this mean?
The County has traditionally limited the terms of general obligation bond debt to 15 years, which is viewed by our credit rating agencies as a very rapid debt repayment schedule in comparison to many other local governments. In fact, typically after 10 years, 90 percent of our debt is repaid. In the case of the road repair bonds, the County is proposing to issue those with 10-year terms, so they will be paid off even faster than the remainder of the general obligation bonds. We also do not artificially alter the debt schedule, such as making interest only payments for the first few years and then aggressive principal payments at the end of the debt period.
Why are the road repair bonds to be paid off sooner than the bonds for other improvements?
The Board of Supervisors felt that the life of the bonds should not exceed the life of the road repairs; meaning that we don’t want to still be repaying bonds that were used to fund pavement preservation long after the road is in need of additional pavement preservation. Based on our Transportation Department’s experience with road repair and pavement preservation, these improvements should last 10 years with normal maintenance. Therefore, the County is committing to repay the road repair bonds within 10 years, instead of the typical 15-year payback period.
Why is the County proposing to buy more open space?
The bond package as proposed includes $95 million to continue the County’s land conservation program, as well as $3.75 million for new and improved trailheads and trails to expand outdoor recreation opportunities at County mountain parks and the Coronado National Forest. The economic benefits of land conservation and outdoor nature-based recreation, are significant to our region in particular. According to VisitTucson, the primary reason visitors travel here is our natural environment.
There are multiple reports available that attempt to quantify the economic impacts associated with land conservation, parks themselves, and outdoor recreation. The results show that these activities combined directly support thousands of jobs in Pima County and generate hundreds of millions of dollars in direct spending locally. For example, in 2013, the National Park Service estimated that 680,000 visitors to Saguaro National Park spent over $41 million locally, supporting 570 jobs. In 2008, it was estimated that Tucson Mountain Park had even more visitors, excluding those to the Desert Museum and Old Tucson. One single outdoor recreation activity, wildlife watching, was estimated in 2001 to generate $174 million in sales locally, supporting 3,196 jobs.
Other economic benefits include increased property values for residences in proximity to undeveloped natural areas, reduced healthcare costs, retaining and attracting young professionals to the region, cost savings to local governments and taxpayers by not having to extend public infrastructure to far-flung areas, and reduced flood insurance premiums.
In addition, Pima County is pursuing a permit under the Endangered Species Act that will increase certainty for public and private developers regarding Endangered Species Act compliance. Pima County is one of the largest developers in the region; building roads, libraries, parks, sewer improvements, etc. The permit will be for 30 years and will streamline the Endangered Species compliance process for the County and private developers in unincorporated Pima County in return for the County setting aside land for conservation, among other commitments. These land acquisition costs would otherwise have to be funded at the individual development project level. Acquisitions completed with 2004 voter-approved bond funds resulted in enough mitigation land to support 20 years of expected development impacts. Additional mitigation land is needed to support the remaining 10 years of expected development impacts.
When the County buys private property, doesn't it come off the property tax rolls?
Yes, but the impact to Pima County’s property tax revenues, and the property tax revenues of school districts in the County, has been found to be minuscule. Click here for a report on this subject.
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130 W. Congress, 10th Floor
Tucson, Arizona 85701
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Pima County Administration,
130 W. Congress 10th Floor Tucson, AZ 85701