Dear Reader,
On March 7, 2000, Luther Jones stood before Mayor Carlos Ramirez and City Council and called the sale of $42.3 million in certificates of obligation "terrible public policy." He said, "I do not believe the public knows today you are issuing $43 million in bonds."
Certificates of obligation or COs are debt instruments approved by City Council without voter approval. In contrast, General Obligation Bonds or GOs are debt instruments approved by voters in general bond elections. Other than that, they essentially function in the same manner.
On that day before City Council, Jones was saying that any debt incurred by the City without voter approval is unacceptable. And that brings us to the $115 million bond election -- including flood control improvements, fire services, health services, and more -- facing us today.
But, I've left too much out. So, let's start in the middle. The 2000 Quality of Life bond election.
The Quality of Life
In 1998, Mayor Carlos Ramirez wanted to hold a bond election. The previous bond election, held by Mayor Larry Francis in 1994, was a resounding failure -- with only two of the five issues passing. Voters approved a $4 million bond issue to build new fire stations and $22 million for street improvements; but they refused bond issues that would have funded a new central library, parks improvements, city building rehabilitation, a city hall parking garage, and downtown bridge improvements.
With a general fund that barely covers maintenance, the city was falling apart by 1998 -- literally, physically -- and major quality-of-life projects, such as libraries, were put on hold altogether, until a successful bond election could be organized.
But, how to organize a successful bond election?
The Greater El Paso Chamber of Commerce developed a report called "1998/1999 Bond Election: Research and Analysis," and submitted it to the mayor and council on June 19, 1998. In the report, the Chamber, through its research, concluded that three key elements were shared by all successful bond campaigns:
- Early planning: 12-18 months of city research & analysis and community education;
- Strong, broad based community development of the issues through a Citizens' Bond Committee; and
- An adequately funded public information campaign
As a result of these recommendations and lobbying from the business community, the 1998 bond election was postponed and an Ad Hoc Bond Committee was established to plan and execute an undated future election. Dee Margo, President of JD Williams Insurance, was appointed the chair of the committee. Through its due diligence, the committee realized that the existing system of maintaining and growing the community's infrastructure was grossly inadequate.
To begin with, the city was not borrowing very much money -- and, in turn, not investing very much in its own infrastructure in 2000. The same had been said in 1994. "El Paso has less bonded indebtedness than any other major Texas city, according to a survey by the Texas Municipal League," wrote El Paso Times reporter, David Crowder ("Survey: Bond indebtedness no big problem in El Paso," 5.6.94). The report showed El Paso came closer to Corpus Christi, a city half El Paso's size, when it came to outstanding bonds.
[Remember, only $26 million in GO bond debt had been incurred since 1994.]
The 2000 bond committee realized the reason for this low investment rate was two-fold:
- A reluctance by City Council to use certificates of obligation to fund basic infrastructure needs -- as it would be considered a tax increase by voters; and
- The tendency of voters to only vote for basic needs in bond elections, and reject quality-of-life issues, out of a concern that too much debt was being incurred at once. [As in the 1994 election]
For years, El Paso had been financing its basic infrastructure through a lose-lose process.
So, on December 9, 1998, Ad Hoc Bond Committee Chairman Dee Margo wrote in a letter to Mayor Ramirez and Council members (letter):
Infrastructure reconstruction, improvements, and construction are an integral part of on-going City developments. Without adequate street networks, flood control systems, and fire and health department facilities, the City cannot operate, much less sustain growth or economic development of any magnitude. These types of capital projects must be carried out by City leadership as a routine part of the City's operations. Funding should be debt instruments to distribute costs among all benefiting users, as explained by Mr. Chapman [OMB] and the specific instruments should be Certificates of Obligation.
Regarding big-ticket quality-of-life issues, Margo recommended the following:
Quality of life initiatives, such as expanded and improved Parks and Recreation, Zoo, History Museum, and Library facilities, on the other hand, are amenities which should be reviewed by voters.
With this two-pronged approach in place, the committee spent the next year developing and promoting what would become a very successful 2000 Quality-of-Life Bond Election; and the city began passing COs to fund basic infrastructure projects.
As mentioned above, a $42.3 million issue was approved on March 7, 2000 to fund paving unpaved streets and roads, resurfacing paved streets, drainage improvements, constructing and rehabilitating emergency facilities, including fire stations, and traffic control signals.
And Luther Jones spoke against it.
On April 11, 2000, City Council approved, by a 7-1 vote, the sale of $39.2 million in certificates of obligation to leverage $22 million in state highway projects, for street repairs, and to purchase office equipment. The lone vote against the sale was West-Central Representative Rose Rodriguez.
Rodriguez had been a legal assistant for Luther Jones before winning election to office.
On May 30, 2000, City Council approved the sale of $22.5 million in certificates of obligation for street and drainage improvements that included Airway and George Dieter. This time the vote was unanimous.
A Two-pronged Step Backward
In the FY 2003 city budget, $37.5 million in certificates of obligation -- to be paid back with property taxes -- were included. The COs were approved to fund street resurfacing, fire stations 33 & 31, the Edgemere extension design and ROW acquisition, the acquisition of land for health care facilities, traffic control devices, and other basic infrastructure needs consistent with the two-pronged approach recommended by the 2000 Ad Hoc Bond Committee.
Also included was a $500,000 feasibility study to remove the railyards from downtown, relocated them away from the central city, and replace them with a central park that would control annual flooding in the central residential area. While the cost of the study represented 1.33% of the FY 2003 COs to be paid back with property taxes and .1% of the city's approx. $500 million budget, the implications of the study had the potential to redefine our central city for the better.
This study became the foundation for Joe Wardy's campaign for Mayor in 2003 -- "Do you want a downtown mayor? or a neighborhood mayor?" Wardy campaigned strongly against what he perceived as the abuse of certificates of obligation in city fiscal management. In a campaign mailer, he wrote:
Most importantly, I oppose the practice of borrowing money without voter approval. Like you, I believe that the voters should approve all long-term debt the old fashioned way with voter consent in a bond election. I do not believe that the City or any other government should issue certificates of obligation and spend it as if on a shopping spree with someone else's money.
In the election, Wardy was greatly supported -- and some would say mentored -- by Luther Jones. In fact, another Jones-supported candidate, Robert Cushing -- candidate for West-Central District 2 -- had this complaint in his mailer:
Long term debt is created without voter approval ($80 million in the last 12 months).
And, ironically, he added shortly thereafter:
Street repairs are years behind schedule.
[Perhaps he didn't understand that funding street repairs on schedule would send city spending through the roof -- but what are facts in a campaign.]
More recently, Jaime Olivas -- Jones-supported candidate for County Commissioner, Precinct 1 -- sent a mailer to voters with this message:
The flagrant disregard of our taxpayers and our future taxpayers such as our children and grandchildren reflected in the extravagant use of debt without voter approval (also known as certificates of obligation) and perpetual tax increases must stop.
Given the incredible consistency in message through time by separate individuals -- in varied offices -- supported by Luther Jones, it begs question, why such disdain for COs as a debt instrument?
The answer takes us to the beginning of the story -- to 1990.
A Lesson Learned
In 1990, Luther Jones was the County Judge. And a young County Commissioner, named Martie Georges -- now Martie Jobe -- also served on the court.
According to El Paso Times reporter Ken Flynn, in 1990, the County commissioners voted to build an International Aquatics Center and shot down a proposal to let voters decide whether to spend $10 million to $12 million on it. ("Proposal meets recreational requirements, experts say; Feds unlikely to fight arena at Ascarate," 10.21.02).
Throughout the following year, a bitter battle ensued between the project's supporters -- Luther Jones, Martie Georges, and Orlando Fonseca -- and the project's detractors -- Charles Hooten and Rogelio Sanchez.
Yes, Jones supported expending public funds without voter approval -- and then he paid with his job. He lost in the 1990 Democratic Primary to Alicia Chacon. But, before leaving office, Jones and Georges were determined to get the aquatics center done. They moved forward, and in the process, threw the county's finances into havoc.
By December 1990, a grand-jury probe was underway in the 34th District Court, after the jury received a letter from Stan Roberts Jr. and a petition with 400 signatures. The jury was charged with investigating allegations that as much as $600,000 were illegally bled from county funds to help make up a $5.14 million cash payment for the $10.6 million aquatics center project.
Peter Brock, a reporter and columnist for the El Paso Herald-Post, wrote this at the time, regarding the allegations:
It's also no secret that if the letter of the law was not violated by raiding county accounts for the Aquatics Center -- then certainly the spirit and intent of the law was violated, twisted, crushed, drowned, impaled and incinerated. ("Stench coming from the Aquatics Center isn't chlorine," 12.12.90)
In 1991, voters overwhelmingly rejected the aquatics center -- 23,825 to 7,672. Silverton Construction, hired to build the center, sued the county and settled the lawsuit for $1.6 million; and as part of the settlement, agreed to build the scaled-down version of the pool we have today.
The lesson learned for Luther Jones -- it appears by the campaign materials inspired by him -- is that public funds should never be expended without public approval. This public policy has nothing to do with the due diligence of the 2000 Ad Hoc Bond Committee -- with support of El Paso's business community -- and everything to do with a swimming pool.
And if you thought you had heard the last of that aquatics center, County Commissioner Betti Flores, another Jones-supported candidate, had this to say at her victory party:
There are so many questions to be asked, and there is so much to be done that was started years ago -- like the Olympic Aquatics Center.
Last Thoughts
Now, we're back to square one; and what we have before us is the same thrown-together bond package, mixed with basic infrastructure and quality-of-life issues, as all the years before 2000.
We'll see if voters feel pressured to approve basic infrastructure items over quality-of-life items. We'll see if voters trust its government and vote to approve any of the propositions at all. However you decide to vote, the fact will remain that many of these items are needed -- they are fundamental to the maintenance of our city, much less its improvement.
And, one would have thought, maintenance of the city is the fundamental job for those we elect into city office. But, as it appears, it isn't this year.
Emanuel Anthony Martínez
