There is an interesting article tonight dealing with a little talked about way of funding large projects without a vote of the people. This is important because there is increasing concern that the big stash of federal cash that new terminal proponents had paraded around won’t be there. Of course, that presumably meant that there would need to be a bond issue and thus an election where everyone could finally have their say via their vote.
Now comes this via Show-Me Daily.
It turns out that not all bonds require voter approval. These bonds, known as Special Obligation Bonds, are not considered debt in the same way as other bonds and therefore require no public vote. Kansas City uses them all the time, and in fact is preparing to issue some this year to pay for the streetcar. Special Obligation Bonds were created to address a city’s immediate need — say, a broken water main — when it does not have the resources to fix it or the time to seek a vote. Kansas City issued two such bonds in 2012 amounting to $75 million that funded computer upgrades for the city’s revenue collectors, garages, and the refinancing of the ill-fated Citadel Plaza project.
Unlike revenue bonds, which do require a public vote, these bonds are normally secured by property. In this case, the Aviation Department may secure the $1.5 billion debt with the airport itself. While the city may not have to raise taxes, as VanLoh says, it is well within reason that the city will have to cover those bond payments from the general fund just like we cover KCP&L.
According to the article, payments to cover the Power & Light District amount to $13 million per year, or about ten times the cost of those extra security folks keeping the lines short at KCI.