Muni Credit News October 27, 2016

Joseph Krist

Municipal Credit Consultant

With less than two weeks to go before Election Day, much talk about the nation’s infrastructure needs has been in the air. While both candidates talk, many localities have decided that they cannot wait for federal action. As a result there is significant ballot activity regarding transportation on local ballots on November 8. This issue of the MCN focuses on some of the more prominent items.



Voters in the City of Austin will consider one proposition for $720 million in General Obligation bonds to fund transportation and mobility improvements. The proposal calls for implementation of a ‘Corridor Construction Program’ in ways that prioritize: a) reduction in congestion; b) improved level of service and reduced delay at intersections for all modes of travel; c) connectivity, and improved effectiveness of transit operations within these corridors and throughout the system; and subject to these conditions, also makes allowances for: i) preservation of existing affordable housing and local businesses on the corridors, and opportunities for development of new affordable housing along the corridors, including, but not limited to, the use of community land trusts, tax increment finance zones along corridors, homestead preservation zone tools, revisions to the S.M.A.R.T. Housing Program, and targeted investments on the corridors utilizing affordable housing bonds and the Housing Trust Fund; ii) geographic dispersion of funding; and iii) opportunities to facilitate increased supply of mixed-income housing.”

The plan has the goals of reducing vehicle miles traveled, increasing transit ridership and non-vehicular trips, and promoting healthy, equitable, and complete communities. That’s a complicated way of saying that wants to promote bus ridership and bicycle use. Based upon market conditions as of the date of the ordinance and using taxable assessed values for the 2015 tax year (2015/16 fiscal year), without adjustment for anticipated growth in taxable assessed value in future years, if the bonds and notes are authorized, the estimated total tax rate of the City is expected to be approximately $0.5339 per $100 of taxable assessed value (which represents an increase of $0.0750 per $100 taxable assessed valuation as compared to the City’s total tax rate as of the date of adoption of this ordinance), based on current State law, which is subject to change. City financial staff has determined that, if the bonds and notes are authorized, the City’s total tax rate would increase by an estimated $0.0225 per $100 of taxable assessed valuation.

The campaign to pass Austin’s $720 million transportation bond initiative, powered by donations from real estate, development, engineering and construction individuals and companies, has raised eight times as much money as opponents of the measure.


Wake County, North Carolina voters will see a referendum on their general election ballot for a one-half percent local sales tax increase to partially fund the Wake County Transit Plan. This recurring local revenue source would be authorized by NCGS 105-164.13B. Upon approval by Wake County voters, the sales tax would be adopted and funds would be available in Spring 2017. To project sales tax dollars that would be available, actual Wake County Article 39 gross revenues for fiscal year 2015 served as the base, less 10% as Article 39 is charged on food purchases which are prohibited to be taxed as part of Article 43. Then, it was assumed that the local sales tax revenue would be half of that amount, as Article 39 is one cent and Article 43 is one half cent. Using the County’s same assumption for sales tax growth that is used in the County’s debt and capital financial model, this amount was grown annually by 4%. Accordingly, the alternatives include an assumption that the half-cent sales tax revenue available for new transit would be $78.5 million in FY 2018 and would grow by 4% annually thereafter.

The schedule of capital projects would occur over the next 10 years and is dependent on multiple factors, including successful grant awards. The planning and design process may begin for the infrastructure projects -the Commuter Rail Transit (CRT) corridor and the four Bus Rapid Transit (BRT) corridors – simultaneously, or it may be phased. Through that process, the corridors will be prioritized based on feasibility and cost. Individual projects or groups of projects will be submitted for federal grants and State Transportation Improvement Program (STIP) funding. Since BRT can be built incrementally, improvements—–such as new buses, signal prioritization, off-board fare collection, level-boarding stations, or dedicated busways—can be built in phases.

For example, the initial project may include dedicated busways on 50% of the corridor and additional lane-miles of dedicated busways will be added in future years as those sections of road are widened, redeveloped, or as additional funds become available. Corridors that are anticipated to have high ridership and fewer physical constraints (thereby lowering impacts and costs) are likely to move faster through the federal funding process. To create a more useful commuter rail project, the CRT line was assumed to extend from Garner to Durham as part of the first phase. A line ending at RTP, and therefore almost entirely in Wake County, was considered. However, successful commuter rail services running only during peak hours rely heavily on a major dense employment center within walking distance of stations. While NC State and downtown Raleigh provide his to a degree, the analysis concluded that downtown Durham and Duke University also need to be on the line to generate strong two-way demand sufficient for the line to succeed.


Atlanta voters will have the opportunity to cast their ballots for two ballot referenda authorizing investment in transit and transportation infrastructure. The City of Atlanta has proposed a special purpose local option sales tax for transportation – a T-SPLOST – for four-tenths of a penny or an additional 4 cents on a $10 purchase. This T-SPLOST will generate approximately $300 million over a five-year period to fund significant and expansive transportation projects citywide. MARTA, the Metropolitan Atlanta Rapid Transit Authority, has also proposed a half-penny sales tax for transit expansion and enhancements in the City of Atlanta. Over a period of forty years, this half-penny sales tax will generate an estimated $2.5 billion, allowing MARTA to make major investments in transit infrastructure, including introducing high-capacity rail improvements, building new infill rail stations within the City, purchasing new buses, adding more frequent service, and introducing new bus routes.

The approval of the two referenda will implement high priority projects from the Connect Atlanta Plan, the City’s comprehensive transportation plan, the Atlanta Streetcar System Plan, and Concept3, the Atlanta region’s transit plan, and more than a dozen neighborhood and community plans that have been adopted in the last six years, and features projects in nearly all of the city’s commercial districts, including: $66 million for the Atlanta BeltLine, which will allow the BeltLine to purchase all the remaining right of way to close the 22-mile loop; $75 million for 15 complete streets projects; $3 million for Phase 2 of the Atlanta Bike Share program; $69 million for pedestrian improvements in sidewalks; and $40 million for traffic signal optimization. In addition, the projects include high priority sidewalk and bikeway projects connecting our neighborhoods to 80 Atlanta Public Schools and all of Atlanta’s rail stations.


A measure on the Nov. 8 ballot purports to provide for free-flowing traffic on Highway 101, smoothly paved roads, designated bike lanes, Bay Area Rapid Transit in the South Bay and not a pothole in sight anywhere. Santa Clara Valley Transportation Authority’s (VTA) Measure B not only proposes to untangle bottle-necked highways, expressways and interchanges, repair roadways and potholes and finally bring BART to the South Bay, but also aims to ensure bicycle and pedestrian safety around school zones, increase Caltrain ridership and add transit options for seniors, students and the disabled. This ambitious list of goals comes with a hefty $6.3 billion price tag and South Bay and Peninsula taxpayers are being asked to pick up the tab.

Measure B is a 30-year half-cent sales tax that requires a two-thirds super-majority vote to pass. If approved, it would go into effect as soon as April. Of the $6.3 billion, $1.5 billion would be spent to bring BART to downtown San Jose and Santa Clara; $1.2 billion to maintain and repair streets, $1 billion to improve Caltrain capacity and construct grade separations, $750 million to expand the county’s nine expressways, $750 million to pay for freeway interchange improvements, $500 million to bolster transit operations for under-served residents, $350 million to study transit alternatives on the Highway 85 corridor and $250 million to make bicycle and pedestrian improvements.

VTA would appoint an independent citizens’ oversight committee to annually track all that money to make sure it’s spent as promised. Traffic experts identified $48 billion worth of traffic-relief measures needed and securing the remainder of that money will have to be done through other means. The passage of Measure B would draw anywhere from $3 billion to $3.5 billion in additional state and federal funding according to estimates. Then, “based on past practices,” other local, regional, state and federal funds would generate an additional $10 billion to $12 billion over the life of the measure.

Sales tax votes have a long history  and Measure B is only the latest in a series of sales tax measures in Santa Clara County over the years. Voters in 1984 passed a 10-year half-cent sales tax to build Highway 85, widen Highway 101 and upgrade Highway 237 to a full freeway. In 1996, a nine-year half-cent sales tax was approved for general county purposes, which included widening highways 101, 880, 17 and 87, upgrading interchanges, extending light rail, increasing Caltrain service, expanding bicycle routes and improving senior and disabled transit service. A transit improvement program funded by a 30-year half-cent sales tax was passed in 2000, but it didn’t begin until April 2006, when the 1996 measure expired. The current measure supports several transit improvement projects in the county, among them the BART to Silicon Valley extension project.

About $1.2 billion of Measure B revenue would be divided among 15 cities for street maintenance and repairs, with respective amounts based on population and road miles. At $580 million, San Jose would receive the largest share of the street maintenance funds. That breaks down to about $19 million a year.


Sound Transit (A Regional Transit Authority) Proposition No. 1  would authorize Sound Transit to levy or impose:  an additional 0.5% sales and use tax; a property tax of $0.25 or less per $1,000 of assessed valuation; an additional 0.8% motor-vehicle excise tax; and use existing taxes to fund the local share of the $53.8 billion estimated cost to expand light-rail, commuter-rail, and bus rapid transit service to connect population and growth centers.  It would fund light rail to add 37 new stations connecting employment, growth, and population centers, with trains serving Everett via the industrial center near Paine Field, Ballard, South Lake Union, Seattle Center, West Seattle, South Kirkland, Bellevue, Issaquah, Federal Way, Fife, Tacoma, and Tacoma Community College.

Commuter rail improvements would add longer trains; new Tillicum (Joint Base Lewis-McChord) and DuPont stations; and more bus, pedestrian, bicycle, and parking facilities at stations. Improvements to the regional bus system would increase bus rapid transit runs every 15 minutes all day (every 10 minutes during peak commute hours), with new freeway stations along I-405/SR 518 (Lynnwood—Bellevue—Burien) and SR 522/NE 145th (UW-Bothell—Kenmore—Lake Forest Park—Shoreline light-rail station).

Editorial opinion in the region is not consistent. Tax conservatives are unsurprisingly opposed to the plan. A campaign in favor of the plan is being financed by the region’s leading business interests. The likelihood of approval is currently uncertain.


In addition to these items, there are nine counties in California seeking sales tax increases for transit projects. Kansas City, MO, Charleston, S.C. , and Columbus OH have sales tax increases for transit on the ballot. Twenty-seven transit-related ballot initiatives in all are up for a vote this November — the largest being Los Angeles’ bid for $120 billion over 40 years for transit, transportation and road improvements, paid for with a half-cent sales tax increase.

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.

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