Killeen property owner pocketbooks will feel the pinch for years if two proposed bond packages from the city and Killeen school district are approved by voters in May.
On Tuesday, the city announced its intent to float a companion bond to pay for infrastructure tied to new facilities outlined in the district’s proposed debt package.
The district’s plans include the construction of a sixth high school and a slew of middle and elementary schools to keep up with expected student population growth in the coming decades.
At the very least, the city expects to issue $46 million in debt to pay for four major road improvement projects, but that scope could change dependent on the whims of the Killeen City Council — which will have to cobble together a bond proposal by Feb. 13 to make it on the May ballot.
Regardless of the council’s decision, the city could find itself chasing after the district if the district’s bond passes and the city’s does not. That scenario will be at the center of the council’s decision making in the next two months.
What we know
Killeen City Manager Ron Olson offered few details Tuesday on what a potential bond package would include, but the city outlined four major road projects that would be necessary to accommodate the school district’s planned facilities.
Those projects, by city-assigned priority, include:
• Expansion of Chaparral Road from two to five lanes — $21.5 million
• Expansion of East Trimmier Road south of Stagecoach Road from two to five lanes — $7 million
• Expansion of West Trimmier Road between Stagecoach and Chaparral roads from two to five lanes — $7.9 million
• Expansion of Featherline Road between Stagecoach and Chaparral roads from two to five lanes — $9 million
The total cost for all four projects — the baseline principal amount for a proposed bond — is $45.6 million.
What the city has not yet disclosed, in part because the council has not yet discussed it, are any other projects that will be included in the bond proposal.
City officials have long considered using bond proceeds to fund road improvements throughout north Killeen, specifically along Rancier Avenue leading east from the east gate of Fort Hood. But if the city wanted to “link votes,” as Olson put it, between the city and district bonds, the city’s proceeds could be tied to infrastructure that only services the school district’s new facilities.
If the city does not link its bond to the district, that opens the possibility of a citywide road improvement bond that could include wishlist items such as Rancier Avenue or Watercrest Road, which the city has highlighted as a top repair priority.
The city currently holds $252 million in municipal debt, according to the Texas Bond Review Board.
Alternatively, the city could propose a bond — as it did in 2002 — that includes road improvements and facility construction.
In that year, the city brought forward four general-ballot propositions that amounted to $69 million in debt and raised the city’s property tax rate by 15.6 cents per $100.
The city has highlighted a new Bob Gilmore Senior Center as a priority, but other options include renovations to City Hall and the construction of new fire stations in southwest Killeen to maintain the city’s Tier 1 fire insurance rating.
The city is expected to discuss what will be included in the total bond proposal at a coming workshop and special meetings yet to be scheduled.
Taken by surprise
Olson said Tuesday the city and district had been in discussion on possible bond issues “for months,” but council members seemed surprised by the sudden proposal from the city.
Councilman Gregory Johnson said it appeared the city was being “dragged along” by KISD’s bond proposal.
“The left hand doesn’t know what the right hand is doing,” Johnson said in an email Tuesday. “There’s a lack of coordination between the City of Killeen and KISD in regards to growth.”
Johnson highlighted his call for joint meetings between the council and district that have gone unheeded since his election to the council in May 2016, saying the two entities chose to operate independent from one another rather than cooperate.
“KISD shouldn’t dictate the City’s growth,” he said. “The City is ultimately reasonable for that in partnership with other government entities and market conditions. I’m not going to rush to raise taxes and fees on citizens or go to the bond market without thoroughly analyzing the situation.”
However, Councilman Jonathan Okray said Tuesday the council needed to be decisive and not ignore the city’s seemingly inevitable growth to the south.
“What’s happening is reality is happening,” Okray said. “It’s called growth.”
Councilwoman Debbie Nash-King said the city needed to identify a solution immediately.
“The elephant is out,” she said. “KISD has come to our home and told us what’s coming.”
The last time the city issued a voter-approved bond was in 2002, the same year the district last issued its own bond package.
Since then, however, the city has issued a number of revenue bonds, which are paid back through utility ratepayer money, and certificates of obligation, which are meant for emergency scenarios — both of which do not need voter approval.
Will it pass?
If the council does put a bond up for voter approval in May, it will hope its short campaign to boost taxpayer confidence in the city’s financial controls has paid off.
The city is in the midst of overhauling its financial policy in light of a $394,000 external management audit completed in August. The new policy formalizes long-term budget strategy, limitations on issuing debt, and the promotion of better control and oversight of city assets and funds.
As recently as 2016, the council was mired in a slashing spree after a preliminary budget presentation showed a projected $8 million shortfall. Though the council cut enough to bridge the gap, seeds of distrust were sown in the minds of residents who showed up by the dozens to public hearing sessions in late summer.
Despite the reworked policy, a bond issue in May could put some of its stipulations in jeopardy from the start.
The city’s policy would push the city to keep level or decrease the percentage of its property tax rate dedicated to debt service to a goal of 25 percent. The city’s current percentage dedicated to debt service is 34.2 percent.
That means if the council proposed a bond in May, it will come with a property tax rate increase to be compliant with internal policy. Without a dollar figure, its unknown what the associated tax rate increase could be.
Councilman Jim Kilpatrick feared that if the city did not raise its property tax to stay consistent with its new polices, it would immediately put the city on bad footing with residents.
“We’re going to speak double-talk to our citizens,” Kilpatrick said Tuesday.
The city already has one of the highest property tax rates — 74.98 cents per $100 of taxable value — in a group of 12 comparable municipalities, according to city records.
The two cities in Killeen’s “benchmark” group that have higher rates are Copperas Cove, at 79.79 cents per $100, and Waco, at 77.62 cents per $100. The city’s benchmark group includes Lubbock, Amarillo, Pasadena, Mesquite, McAllen, Waco, Abilene, Beaumont, Temple, Cove, Harker Heights and Belton.
In 2007, the city’s property tax rate was set at 69.50 cents per $100.
Meanwhile, KISD has already assured an associated tax increase for its debt issue, with a steering committee-recommend price tag of $426 million. Together, the two bonds could significantly increase the typical Killeen resident’s total property tax rate of $2.497 per $100.
Alongside the city and school district, property tax is levied by Bell County, the Bell County Road Division, the Clearwater Underground Water Conservation District, Central Texas College and Bell County Water Control and Improvement District No. 6. Not all properties in Killeen are in the WCID No. 6 jurisdiction.
The city’s tax rate ranked 204th highest out of 1,214 municipalities in the state of Texas in 2016, according to the Texas Comptroller’s Office.
What if it doesn’t pass?
The worst-case scenario for the city would be a KISD bond passing while the city’s did not.
In that case, the city would have to scramble to identify funds for road infrastructure to reach KISD’s newest facilities while facing the increased likelihood of traffic jams in south Killeen.
On Chaparral Road, the city has projected the traffic from KISD’s planned facilities — including a possible sixth high school near the intersection of Chaparral and Featherline Road — would put around 4,000 drivers on the road at peak hours.
The road as currently constructed can accommodate only 2,000 vehicles in that time span, the city said.
While the council inquired on aid options for those projects, Director of Public Works David Olson warned Tuesday any possible funds would likely not be available before the district’s new high school went online in 2022.
“To be honest with you, relying on federal funding to address a need that’s on our timeline is not feasible,” he said.
The city currently has a proposal for Chaparral Road improvements filed with the Killeen-Temple Metropolitan Planning Organization, a clearinghouse for regional transportation projects applying for federal funding, but the project is not on the organization’s current three-year cycle.
The city also said it was pursuing funding options through the county — which owns the majority of Chaparral Road — and Harker Heights, which sends students into KISD schools, but David Olson said the county was experiencing similar funding issues for transportation projects.
Ron Olson said, simply, the city was not prepared for a school district bond to go before voters.
“We have worked to bring a balanced budget and set up long-term planning,” Ron Olson said. “What we’re talking about today immediately complicates that situation.”