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The Facts about Pima County's Bond Program

Canoa Ranch

There are times when keeping up with the needs of an expanding population and making investments that will shape the region’s economic future can outstrip the ability of a governmental jurisdiction to “pay as you go.”

When used responsibly, bonds allow a jurisdiction to get started on major projects now, and pay them back over a longer period of time, much like homeowners typically pay a mortgage instead of buying a home with cash up front.

The State Auditor General’s Office completed a review in early 2013 of the Pima County General Obligation Bond Program and determined the bonds have been effectively managed and administered without bias.

For the full report visit: bd-auditor.general.bond.audit.report.pdf


Additional facts about how Pima County manages debt are in the tabs below:

Pima County is well below the state’s “cap” on debt the County may issue

The state constitution sets a cap on general obligation debt at 15 percent of the County’s net secondary assessed valuation. Cienega CreekIn Fiscal Year 2012/13, for example, the constitutional debt limit is $1.2 billion.

However, the actual bonded indebtedness was $457 million, far below the constitutional debt limit. Unless there is another voter authorization, no additional general obligation debt will be incurred after 2013, or at the latest 2014.

Pima County is not a high-debt government

Pima County has the highest per capita debt among Arizona counties. That statistic, without proper context, is grossly misleading. Just one example: Nearly half of the County’s debt stems from operating a regional sewer system. Pima County is the only county that operates a regional sewer system.

No other county has paid for road improvements by leveraging revenues it receives from its share of state gasoline and licensing taxes. The County became the only one with highway debt after voters approved that mechanism in 1997. Another difference: Pima County has a large unincorporated population. Maricopa County, for example, has a 6 percent unincorporated population, while Pima County’s unincorporated population is 36 percent, at roughly 355,000 people. If those residents formed a city, they would form the fourth largest in the state.

Given the municipal-style services Pima County provides, it is reasonable to compare our debt with cities. The City of Tucson’s per capita debt is $2,061 – twice that of Pima County’s. Other local entities, from Marana, to Oro Valley, Sahuarita and South Tucson, all have higher per capita debt. In fact, 40 cities and towns have per capita debt greater than Pima County.

Pima County embraces conservative principles in its debt management policies

  • We are prompt. Our debt is retired within 15 years under Board policy, even though it is common among local governments to issue bonded Joel D Valdez Libraryindebtedness for 20, 30 or more years. In general, 90 percent of our bonded debt is retired within 11 years, with 100 percent retired at or before 15 years. We have been paying off principal on our general obligation bonds at an average of $50 million annually.
  • We are responsible. Pima County has set voluntary property tax rate caps to avoid surprising property taxpayers who repay the bonds. Initially set at $1 per $100 of assessed valuation in 1997, the secondary tax rate that supports debt service has dropped as assessed valuation increased. It is now at 78 cents.
  • We are cautious. Voters in 1997 authorized $350 million in transportation bonds that are repaid through annual allocation of gas and licensing revenues. To date, Pima County has issued only $242 million of that and we will continue to be careful given shrinking revenues. State sweeps of our funding, lower fuel consumption and higher gas prices have all worked to diminsh the revenue stream available to pay back borrowing.

Pima County’s credit is good

The County is generally rated by Fitch Ratings and Standard and Poor’s. In particular, rating agencies look for predictability, Loop Rillito Mountain Bridgestability and accurate financial forecasts.

Pima County’s position is stronger now that we no longer have the uncertainty of operating and funding a hospital. We also have healthy fund balances that can serve as a buffer during uncertain economic times.

In giving Pima County a AA bond rating, analysts noted, “Pima County maintains a sound financial profile, with healthy operating reserves….The County’s debt burden is manageable and debt repayment is rapid; the capital improvement plan is sizable, but consistent with an entity of this size.”

Pima County is accountable

Voters do not have to worry that they’ll vote for one thing and get another. ROMPThe oversight of the County bond program is strict, transparent and detailed.

An independent Bond Advisory Committee, with 25 members, including representatives from each of the incorporated cities and towns and two tribes, meets a minimum of twice a year - but typically far more - at public meetings to review the status of the bond programs and consider any substantial changes.

Any substantial changes in scope, costs or timing must be approved by this committee at a public meeting and by the Pima County Board of Supervisors in public session.

Pima County’s capital improvement programs support jobs

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The County’s bond program has infused the economy with capital in times of need. When private sector spending or construction activity decreases due to unfavorable economic conditions, the County has been able to advance public capital investment programs.

Since the 1997 bond election, Pima County’s capital improvement program, which is largely funded with bonds, Tumamoc has created or sustained an estimated 14,500 jobs locally, not including any other funding sources that might have been applied to the projects.

Pima County’s bond programs have improved quality of life, neighborhoods and economic development efforts

Sometimes it’s easy to get swamped by big numbers, given that voters have authorized $1.5 billion in bonds since 1997.

Bike CampBut the County’s bond program has touched the lives of residents throughout the County, from the roads we drive on, the open space we enjoy, the parks we play in, and the libraries that expand our world. Many projects just make things work better.

We are upgrading our sewer system to meet strict federal regulations. We are ensuring that different law enforcement and fire agencies can communicate through a new regional communications system.

Library Baby Time

And we now have new crisis intervention and behavioral health treatment facilities that ensure Pima County residents have access to a strong, responsive and efficient care system that addresses their needs.

The Pima County bond programs authorized by voters in 1997, 2004 and 2006 are on track

  • 1997 general obligation bond program of $257 million: Substantially Complete; $10 million remaining.
  • 1997 sewer revenue bond program of $105 million: Complete.
  • 1997 transportation (HURF) program of $350 million: 77% projects complete or under construction; 78% of bonds funds spent. Given shrinking gas and licensing taxes that fund the program, the County is being cautious in issuing the remaining debt.
  • 2004 general obligation bond program of $582 million: 86% projects complete or under construction; 79% of bond funds spent.
  • 2004 sewer revenue bond program of $150 million: Complete.
  • 2006 general obligation bond program of $54 million: Complete.

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