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Early voting begins for Central Landing-related bond issue: What you need to know

Posted: September 2, 2014 - 1:27pm

Early voting has begun in the special election that will decide if Conway will stretch an 1/8 cent sales tax to 2044 to fund bonds that will build $21 million in roads — mostly roads associated with the Central Landing shopping center proposal.

 

What is it?

 

Cities in Arkansas cannot, by law, borrow money beyond five years without approval of local voters. In its request for proposals for a sale of more than 150 acres that makes up Dennis F. Cantrell Field, the city’s “old” airport, the city committed itself to build roads capable of handing traffic to and from a large-scale retail development. 

The road improvements also include another I-40 overpass, and will function as another main east/west road that would relieve East Oak Street congestion. Some of the money will also be used to continue construction of the Western Loop’s southern leg. The Western Loop is an ongoing project to build an I-40 bypass from northwest Conway back to I-40 near Mayflower.

In order to finish the roads inside the Central Landing project footprint in the next few years, as the city is contractually obligated to do if the Central Landing project is to come to pass, the city has to take out a larger, longer-term loan. This requires approval by voters this week. 

The special election asks voters to approve or deny “stretching” the existing 1/8 cent tax to 2044. The tax will stay “on the books” to service debt created by the new bonds. Otherwise, the tax would expire in 2022, but realistically it would be rededicated for some other street project. The funding stream that currently exists as the 1/8-cent tax has been the city’s major street project “workhorse” for more than 25 years.

 

Why are there two ballot items?

 

Before the city could legally rededicate the tax to issue new bonds, it has to satisfy its obligation to holders of the existing bonds. That means that to rededicate the tax to fund  an additional $21 million in bond money, city would, by law, also have to “borrow” $7.5 million through issuing other new bonds to satisfy the current debt and pay for overall refinancing of bonded debt.

Since a vote of “no” for the $7.5 million bond issue, which is the first item a voter sees on the voting machine, would effectively block the $21 million bond issue, voters in favor of the overall proposal would need to vote for both.

 

What are the arguments against the bond rededication?

 

As expressed in letters to the editor and heard “on the street,” many in Conway feel that the city offered too rich a deal by contracting to build millions of dollars worth of streets mostly related to one developer’s shopping center. Many also feel uncomfortable with stretching the 1/8-cent tax to 2044 mostly to pay off debt for one project.

 

What are the arguments for the bond rededication?

 

It is hoped, and has been projected, that high-profile stores including Dillard’s in the new, more upscale shopping center will bring a needed injection of retail sales tax dollars for Conway’s budget, especially the largely retail-dependent general fund that pays for things like police and fire salaries and equipment.

If Central Landing works as projected, city economic development officials have said, it will capture retail dollars from the northern central Arkansas area and far “upstream” along the I-40 corridor that would otherwise spend in similar Little Rock stores.

 

When and where to vote:

 

Early voting will continue at the Faulkner County Courthouse until 4:30 p.m. every day until Sept. 8 (Monday). Election day polling places will be the McGee Center and Don Owen Sports Complex on Sept. 9 until 7:30 p.m.

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MessiahAndrw
1337
Points
MessiahAndrw 09/02/14 - 03:17 pm
6
0
Vote No

Our city's budget is living off borrowed time, and we can't afford what we already have.

$21m in infrastructure handouts for 1 shopping complex (+$7.5m in existing debt refinancing) is not how you build a financially resilient city.

The majority of our city's revenue comes from sales tax. The problem with sales tax is that we've already saturated the retail market in Conway (there's only so many toothbrushes and cars a person buys in a year) to the point where additional shops won't generate new sales (and new tax revenue), it'll be merely shifting it from other retail in Conway. It'll give the illusion of growth, even though the net tax revenue will stay the same.

Vote yes if we should add a $21 million debt burden (plus interest) on the city's growing list of liabilities. This is not the path to a prosperous city.

Our city is growing, and that makes it an attractive place for retail and offices wanting to tap into the growing base of workers and shoppers in Conway. We have plenty of under-developed commercial and industrial land, especially around central Conway, with plenty of existing high quality roads and other infrastructure. If a business wants to tap into Conway's worker or shopper demographic, we should welcome them with open arms, but they should do their best to utilize the infrastructure we already have - before we spend tens of millions of dollars building more.

We can barely afford to maintain what we already have, why do we want to add an additional $21m of debt (plus interest) and $21m of future infrastructure maintenance to our list of financial obligations?

The key to growth is lowering the cost of entry and red tape to opening a business in Conway - and that is completely different to hand picking the winners and throwing in free infrastructure and tax subsidies (i.e. HP) to any business that looks our way.

Diogenes
10206
Points
Diogenes 09/02/14 - 03:27 pm
4
0
Well said

Vote NO!

Elmer Fudd
4377
Points
Elmer Fudd 09/02/14 - 04:44 pm
3
0
Mr. Lamb

I need to know more than this. Like what does it cost to hold a special election and what does it cost to service this bond reissue over all the years for example. How can anyone make a educated guess as how to vote on these two issues without the later? Oh I get it trust us it's a great deal. Wink wink..

Igor Rabinowitz
9185
Points
Igor Rabinowitz 09/02/14 - 05:01 pm
0
5
Vote yes

Look! Facts!

Also, Joe, nice balance on the story.

SWIBC
1942
Points
SWIBC 09/02/14 - 05:46 pm
5
0
Igor stop shilling for the

Igor stop shilling for the Chamber guys, those are not facts they are projections only if the project comes to fruition which is not a given, things can change on a whim and the city is left holding the bag.

I hope the projections turn to facts, but not clear if the projects will even hit those numbers thrown out to pump up the vote.

MessiahAndrw
1337
Points
MessiahAndrw 09/03/14 - 09:16 am
6
0
Thanks for the info, Igor.I

Thanks for the info, Igor.

I ran the numbers and projected the city's return-on-investment for 75 years, assuming:

  • 2% Inflation.
  • 4.25% yield on 25 year bonds. (Maybe it's a 40 year bond? But the yield would be higher.)
  • The infrastructure has a typical 25 year civic life-cycle.
  • The sales tax revenue is from new sales, not sales that are stolen from another store (which is more likely.)
  • We start collecting this sales tax revenue in year 1 (unlikely as it will take a few years for the shops to open.)
  • All revenue raised from this project is actually set aside to pay for its future obligations, and not for other city projects (also unlikely.)

In the most optimistic, perfect case scenario, assuming all projections are true, here's what a 75 year projection looks like:

We issue the bonds in year 0. All shops are built by year 1 and we start collecting sales tax.

Year 25 when both the bond ($25,052,500) and infrastructure matures ($33,777,182.24 at 2% inflation), we have a $57,427,026 expense and total ROI falls to -$33,294,233. Takes 13 years to recover.

Year 50, when the infrastructure matures again, we have a $51,456,830 (adjusted for 2% inflation) expense and the total ROI falls to -$9,885,628. Takes 3 years to recover.

Year 53, we start getting a positive ROI that we will stay in the positive across an entire lifecycle (you can see we don't fall negative again in year 75.) Remember this is the most optimistic scenario if all of the city's assumptions about the new revenue coming in are true.

Now, the big question is - will we have the money to pay for $57,427,026 in bond maturities and the infrastructure to keep Central Landing up and running 25 years from now? If the answer is to double-down and issue more bonds every time they mature, then I'm afraid we're just getting into more debt and making the problem worse with every generation.

It's such a huge gamble with taxpayer money even if all of their projections are true.

Also, the user 'open book' on the next page of comments points out "Regretfully, the writer failed to point out that extending the bond issue will cost citizens another $38.6 million in tax dollars." I didn't even take that into consideration in my calculations.

Elmer Fudd
4377
Points
Elmer Fudd 09/03/14 - 11:01 am
1
0
Messiah

Should I have presented a capital expenditure to my employer with a return on investment like this I would have been sent off for a mental examination and if not crazy fired for being a incompetent idiot.

Elmer Fudd
4377
Points
Elmer Fudd 09/02/14 - 07:51 pm
3
0
SWBC

I like you appreciate the truth and sadly we are not getting it. And yes I hope they do too as our administration has got the City in a twit with the way they approached this entire issue. Like how many airports has Garver ever engineered before? How many has the general contractor ever built before? I have no clue. Does anyone? Has the City got any of the grant money yet from the Feds? Last I heard they had not as the conditions to get those funds had not been meet yet. Anyone know? Someone does but I doubt they will fess up. Okay Igor jump and call me a cynic again.

ARBEAR
1320
Points
ARBEAR 09/02/14 - 08:34 pm
4
0
Why couldn't voting on this

Why couldn't voting on this issue have waited until the general election in November?

mikeng1994
11776
Points
mikeng1994 09/03/14 - 07:07 am
3
0
Just asking

I don't have a dog in the fight here as I am a Faulknerite and not a Conway resident, but is this a tax gamble on a project that they are still trying to sell to potential tenants that officially have not committed themselves too? I do spend most of my money here, so it does affect us county residents. We count on y'all to make it right.

If so, what happens if the project falls thru? Does the tax extension go away, or can they just keep it? It seems to me that the Conway residents need to protect themselves in the event it does not come together after Conway does their part.

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