What is the infrastructure bond proposal?
The City Council is considering an infrastructure bond measure for the November 2022 ballot that would provide up to $300 million in projects without an anticipated increase to the City's targeted tax levy rate for bonds.
The City has approximately $2 billion of infrastructure assets that need routine maintenance, improvements and expansion. Due to previous bonds expiring over the next several years, the City is in a unique position to issue $300 million in general obligation bonds over the next 10 years keeping a level tax levy rate at no more than $1.28 per $1,000 of assessed property value. The general obligation bond measure requires voter approval.
The long-term bonding strategy, as recommended by the Finance Committee and approved by the City Council in October 2021, addresses four basic premises:
- Maintain a consistent levy rate for taxpayers over a set period.
- Issue debt in a timely and strategic manner.
- Decrease ongoing expenses related to deferred maintenance.
- Provide new investment for community benefit, with City Council and community oversight.
The most urgent bond-eligible need is replacement of the City's fire trucks and apparatus, and equipment. Following the investment in fire protection, project categories are streets, bridges, and sidewalks; parks and recreation facilities; affordable housing and shelter; public facilities; and information technology infrastructure. Many of these priority spending areas will be defined through community engagement.
Why a bond?
Like other local governments, the City of Salem issues bonds to pay for expensive infrastructure. Bonds must be approved by voters and are paid back with property taxes. This is almost like a homeowner taking out loan to make improvements to their home. Some of the City's existing bonds will be completely paid back in the next several years.
What can we fund with a general obligation bond?
Bonds can only be spent on capital costs, defined as the cost of land and "other assets having a useful life of more than one year, including costs associated with acquisition, construction, improvement, remodeling, furnishing, equipping, maintenance and repair" but excludes expenditures of "routine maintenance or supplies" (Oregon Constitution, Article XI, Section 11L).
We're planning ahead – for the next 10 years – for our capital project needs, positioning City-owned infrastructure and facilities for years to come.
December 2021/January 2022
- Steering Committee meets to consider principles to guide prioritization of projects and criteria for inclusion in the measure. These criteria may include:
- Readiness – can it be accomplished within the timeframe
- Distribution across City
- Relative funding among project categories
- Community engagement on priorities for inclusion in bond measure, to create community-inspired project list, followed by polling
February 22, 2022
- City Council Work Session on community feedback for bond priorities, and
- City Council direct staff to prepare for November 2022 ballot measure for City Council's consideration.