Municipal bonds are issued by cities to fund public projects. General obligation bonds are not secured by assets; rather, they are backed by the full faith and credit of the issuer, which, in this case, is the City of Shreveport and its citizens. For this reason, bond proposals are subject to direct taxpayer review.
The Mayor and City Council appointed a Capital Improvements Committee in August 2023. They met fourteen times over a period of four months and developed a proposed list of projects. The City Council reviewed their report and voted in February to call an election for April 27 to give voters a chance to decide whether the bonds should be issued.
Municipal bonds serve as a crucial financing tool for cities and local governments to fund various public projects and initiatives. They play a vital role in enabling cities to finance essential projects and services while spreading the cost over time through bond repayments.
In the state of Louisiana, General Obligation (GO) Bonds can be used for a variety of purposes, typically related to public projects and infrastructure improvements. The language on the April 27 ballot groups projects into three propositions : Police, Fire, and SPAR, Streets and Drainage, & Water and Sewer
The total property tax impact of the full $256 million in projects will take several years to occur. There will be no tax increase associated with the bonds in 2024, 2025 or 2026. The expected increase for 2027 is about $6.40 per month on a $100,000 home, with another $3.50 per month in 2028. After that, rates should remain stable.
The exact yield will be determined at the time the bonds are sold in the market. Various factors, including prevailing interest rates, market conditions, and investor demand, will influence the final yield.
While we cannot provide a precise figure for the yield at this moment, please be assured that we're committed to securing the most favorable terms for the bonds. Our goal is to obtain competitive rates that minimize costs for taxpayers while providing the necessary funding for vital projects.
Projects may take four to five years to reach completion. While we understand the importance of timely progress, it's crucial to prioritize thorough planning, efficient execution, and adherence to regulatory requirements to ensure the successful realization of these projects. Rest assured, we are committed to keeping you informed throughout every step of the process via our capital project dashboard and will strive to minimize disruptions while maximizing the long-term benefits for all residents.
The millage rate is adjusted every year, depending on what our bond payments are for that year. The bonds will be sold for either 20 or 30 years, so there will be some tax millage levied until they are paid off.
The interest rate on the bonds will be determined in the bond market at the time of sale, but the average rate will likely be 4.5 to 5.5%. Bonds will likely be sold in three groups of roughly $85 million each.
If the bond issue is approved by the voters in April, the City will begin receiving funds in October. Although it is possible that a few projects will get underway in late 2024, the pace will pick up significantly in 2025.
Improvements funded by the bond will actually lead to cost savings over time. One significant area where we anticipate savings is in maintenance expenses. Addressing infrastructure needs proactively through the bond helps prevent costly repairs and extends the lifespan of our assets. Being proactive not only saves money in the long run but ensures that citizens continue to benefit from reliable and well-maintained infrastructure.
Baa1, which is investment grade.
Anticipated to span a construction period of four to five years, the proposed projects are poised to undergo meticulous planning and execution. City staff has diligently formulated cost estimates, mindful of the phased nature of the projects. However, it's imperative to note that each project will undergo a competitive bid process, rendering the precise sufficiency of funds uncertain until that stage.
The Mayor and City Council have agreed that the City will hire program management firms to oversee the projects and assure that they are done on time. Their cost (likely 1-2% of the overall construction price) will be funded from the bond proceeds.
Priority will be given to projects that are already designed or can swiftly progress to the construction phase. Primarily, these early projects are expected to focus on vital infrastructure such as water and sewer systems and essential public buildings. Allocation of bond funds will include expenditures in 2025 and 2026 for engineering and architectural endeavors aimed at preparing projects for construction between 2025 and 2027.
The bonds will be issued in phases over the next few years. Each tranche, or portion, of bonds will require council approval. Interest costs will depend on the market at the time of the sale.
$49.3 Million
$82 Million
$125.1 Million
We’ve created a public dashboard with up-to-date information on the 2021 bond projects. Some of the 2021 bond projects are completed, and several more are under construction. A few, like the proposed Police Headquarters building, take a lot of planning and design work. Construction on that project will start in 2025.
No. Each bond proposition authorizes money to be spent for specific purposes. The Council will pass a resolution before the bonds are sold, stating the intent of the City to spend the bond funds for specific projects. This becomes the blueprint for how the funds will be used.
The City plans to have a Web-based dashboard of information on all 2024 bond projects. There will also be quarterly reports to the Council at its meetings. If you have a question about a specific project, please ask the City administration or your City Council representative.
It has been 13 years since the City last issued a bond for streets and drainage, and there is a unanimous consensus that our most pressing infrastructure requirement lies in the enhancement of our streets. Additionally, there is a crucial need for funding to bolster water and sewer projects, aimed at enhancing the reliability of our water system and progressing towards compliance with the Federal Government's sewer consent decree.
Property tax rates are described in terms of “millage”. One mill of property tax equates to a $10 tax bill on a home valued at $100,000 by the Tax Assessor.
