Cost Savings Won’t Lower The City’s Debt – See A Debt Comparison Courtesy Of The Texas Comptroller

Cost Savings and Future Costs

Council sang the praises of city staff at the January 7th meeting for some cost savings – the cost for change orders for the Municipal Facilities was reduced to $302,516.  So far the cost for the new structures, estimated in 2017 to run about $19 million, is now close to $21 million, paid almost entirely from bond funds. Many residents felt the new City Hall and Civic Center were not necessary.

Still to be completed is the demolition of the old city hall, the construction of a new Civic Center, parking lots,  landscaping, and miscellaneous costs.  The project manager, Michelle Jordan, will be moving on to a job in the private sector.

Mr. Leech and Mr. Andrews also explained that the projected cost for 47,000 feet of new water lines actually covered costs for the installation of 70,000 feet of lines. Whether that’s a cost savings or simply over-estimation of the original cost is debatable.  However Mr. Andrews stated there’s still 75,000 feet of old water lines to be replaced, at an approximate cost of $12.5 million, and the City is out of bond funds for this project.

Some questions about the waterline replacement and other Public Works projects: why are 3 or 4 contracts required? 

We have no-bid contracts awarded by the city manager to engineering firms for Design and Construction Administration and for Third Party Review and Inspection (or sometimes Construction Management), then finally a request for competitive bids for the Construction contract.

This process has been in effect for the past several years and is used for almost every public works project.

Does this mean the design engineer and the construction contractor cannot be trusted to perform the work properly, so another engineering firm must supervise them?  Does the design engineer have any responsibility for oversight of the construction?

Click for a list of Current Projects -Third Party contractor in brown – $1.5 million

Is no one with the City of Bellaire responsible for these projects, does the City have to rely solely on outside contractors?  If so is there a less expensive solution?  Have there been cases of fraud or negligence by engineers or contractors in the past? 

The extra contracts on the current list of projects added $1.5 million to the cost.  (See the list of projects on the spreadsheet a left).  Is this standard procedure for other cities similar in size to Bellaire


Texas Comptroller’s Debt At A Glance

How does our Debt Compare?  Find the full report here.

With the discussion of another bond issue for infrastructure improvements it may be time to consider the following:

Bellaire’s debt is greater than at any point in the city’s history, and much greater per capita than similar sized cities. The chart at the right lists debt of similar sized cites as of August 31, 2017.  Per the 2019 City Budget, by the end of FY2019 Bellaire’s principal will be $129.8 million. 

The problems with Bellaire’s debt began 10 or 15 years ago when City Councils regularly lowered the tax rate as our housing stock became more valuable.  While tax cuts are always welcomed those Councils continued to spend freely on discretionary projects and then promote bond issues when funds ran short. 

Even though drainage has been a priority long before Tropical Storm Allison flooded more than 1400 Bellaire properties in 2001,  a large portion of bond funds since then have been expended on non-discretionary projects. 

We needed a new swimming pool and got an aquatic center.  Deferred maintenance on the police/courts building and city hall/civic center led to a decision to build new facilities instead, at $21 million and counting.  Our aging wastewater plant could have been upgraded over time, but the city council voted to spend $8 million on it as part of a $12.8 million contract to Siemens.  All funded by bonded debt.

The lost revenue from the tax cuts could have funded pay-as-we go capital improvements, or accrued in a Capital Reserve fund for future cash expenditures.  Instead almost a quarter of the annual budget will be paid out for debt service in 2019 and more debt is suggested.  Meanwhile West University, slightly smaller in size, has reduced its debt to $38.5 million and barring another bond issue will be debt free in 10 years.

Of the $54 million 2016 Bonds for Better Bellaire bond issue
$4.5 million was spent on new water meters we could have lived without, with an expensive AMI management system that includes a customer portal still not available for resident access.  Meter line leaks are reported all over town since the installation.
$8 million
went for repairs to the wastewater plant, repairs that could have been paid with cash over time.  The plant was in operation and in compliance with the TCEQ.
$5.6 million was added to the funding for the new municipal facilities and
$4 million was budgeted (but not spent) for stand-alone sidewalks.

Over 40% of the bond funds was committed to projects other than drainage or streets, and this  Council and City Manager are spending down the 2016 BBB funds just as fast as they can.  We will be out of available funds before the next election.

Now we’re told we desperately need another $47 million dollar bond issue in 2019 and perhaps $36 million more in 2022 – for “our most critical infrastructure needs: streets and drainage, water and wastewater”.  Even as council debates unnecessary and expensive additions to the  project on Spruce and Fifth. 

Then what?  Are we to believe that Bellaire will be in such great shape that another bond issue won’t be needed for the next 30 years?  I hope so, because without a lot of tax increases there won’t be much revenue available to pay for expensive proposals after we pay for the debt.

Some residents are still dealing with flooded properties, and others continue to live on the second floor of their homes.  So many Bellaire homes suffered flood damage that for sale signs in front yards often include phrases such as “Did Not Flood” or “Never Flooded”.

As a result, our tax base valuation declined in 2018, requiring an increase in the property tax rate from $ .4149 to $ .4313.  This translates into a tax increase for residents whose HCAD appraisal values remained the same or increased.

Why mention these things?  Because what we are promised in bond issue promotions and what we actually receive are often quite different.  And although Bellaire has a lot going for it, no one can foresee the future.

How much debt is too much?  Could we reach a tipping point?  We need to stabilize and then expand our revenue streams, which are primarily property taxes and water bills.  But a downturn in the economy, a decline in property values, another natural disaster, and we could see a further reduction in our tax base. 

Even if none of these things occur isn’t it time to consider how to pay down our debt, not increase it?  Whatever surprises 2019 may hold, financial prudence is called for.


The Texas Comptroller Transparency information:  https://comptroller.texas.gov/transparency/local/debt/city.php?cityname=Bellaire&citysubmit=GO

Bellaire’s Bonded Debt will be $129 million by the end of FY2019
With interest the debt runs about $180 million.

Email your thoughts or opinions to the Mayor and members of City Council in care of our City Clerk, Tracy Dutton, at tdutton@bellairetx.gov and request that she forward to City Council.

About Jane McNeel

Bellaire resident since 1956. Email: bellairebcc@gmail.com. Find more information on 'About This Site' in the main menu.
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