BY ALEX WUKMAN | FME News Service |
BELTON — The Bell County Commissioners Court unanimously approved a resolution directing county staff to publish a notice about the city’s intent to issue up to $35 million in certificates of obligation in May. The funds will be used to upgrade and expand the Bell County Expo Center.
Certificates of obligation are a type of bond that counties can issue to address short-term and emergency needs without having to go through the usual process of calling a bond election, according to the Texas Municipal League.
Although voter approval is not required, the sale of the bonds can be stopped if 5 percent of the total voters in the taxing area sign a petition and submit it prior to approval of the ordinance to sell such certificates, according to the Texas Bond Review Board.
The commissioners opted to go with certificates of obligation instead of a bond election for fiscal reasons, County Judge Jon Burrows said.
“Elections can only be held periodically, and the longer we wait, the more it could cost because the interest rates in the bond market could go up,” he said. “This way we can take advantage of historic low interest rates.”
Also by acting now, the county will be able to take advantage of its AA-plus credit rating, which is being reviewed by Standard and Poor’s, according to County Commissioner Bill Schumann.
“Standard and Poor’s came to us and said that they wanted to take another look at our credit rating,” Schumann said. “We provided them with all the information they asked for, but we’ll still have our credit rating for this issuance.”
The proposed $35 million in new debt will not affect Bell County’s property tax rates, Commissioner Tim Brown said.
The proposed expansion will add a multipurpose arena, which will free up the Expo Center’s 6,000-seat dome for additional events, add air conditioning and expand the exhibition hall. County commissioners believe the additions and upgrades might increase the Expo Center’s direct economic impact by as much as 40 percent to 50 percent per year, Schumann said.
“Right now the Expo Center brings in $12 million to $13 million in direct economic benefit per year,” he said. “The additions could raise that amount to as much as $20 million.”
While the expansions and upgrades might increase the number of visitors that come to Bell County each year, the bonds will not offset the cost of operating the Expo Center.
“Texas law prohibits using bonds to pay for operational costs,” Commissioner Richard Cortese said. “That’s why we were trying to get the hotel/motel tax passed.”
Many people throughout the area erroneously conflated the proposed countywide hotel/motel tax with the proposed expansion and renovation of the Expo Center, Schumann said.
“The hotel/motel tax and the Expo Center expansion are two separate conversations we’ve been having,” he said.
The hotel/motel tax bill, proposed by the Bell County Commissioners Court, would have added 2 percent to room rental rates throughout the county to create a permanent revenue stream of $1 million per year to replace the $750,000 of annual ad valorem taxes the county uses to subsidize the Expo Center.
The creation of that fund would have allowed Bell County to remove the Expo Center, which operates at an $800,000 per year deficit, from its books. The Expo Center functions as a loss leader for the county, Brown said.
“The Expo Center is a major, regional economic generator,” he said. “The benefits don’t show up on the balance sheet of the center itself, but rather in the receipts of the restaurants, hotels, retails shops and other businesses that benefit from the traffic generated by the center.”
An analysis of the Expo Center’s economic benefit, commissioned by the county in 2008, estimated that the facility contributes another $15 million in indirect economic impact to the county, Brown said.
“Spending $800,000 per year to add $30 million to our local economy sounds like a good investment to me,” Brown said.
While many local individuals do not oppose the county continuing to support the Expo Center, they are opposed to what they see as an end run around the voters by using certificates of obligation.
“Anyone who knows me knows that I’m in favor of securing voter approval before entering into debt,” said John Galligan, a local attorney who was a vocal critic of the construction of the Bell County Justice Center in 2003. “It doesn’t surprise me that the commissioners would use certificates of obligation to construct the expansion; they did it several times before on the Justice Center.”
Local governments’ continued attempts to circumvent the will of the voters are “one of the reasons why people don’t go to the polls anymore, they’ve lost faith in all levels of government,” Galligan said.