T or C’s third $790K tranche of $3 million G.O. bond approved for issuance

In 2022 the people of T or C approved the spending of $3 million in general obligation bonds–$2 million for water and sewer projects and $1 million for street projects. 

The city has already issued $790,000 in 2023 and $790,000 in 2024 and will now issue another $790,000 very soon–before 2025 is gone–since the third tranche was approved at the Nov. 19 city commission meeting. The final and fourth tranche will be for $630,000, which adds up to $3 million, and will be issued in 2026. 

By IRS law, the city has four years to issue the whole $3 million. There are deadlines for when a portion of each tranche must be spent or designated to be spent on a specific project. If you want those details, go to this link on the city’s website. It took City Manager Gary Whitehead and Public Information Officer Carrie Gaston a month of working on this part of the website, and it shows. The pie-graph image that illustrates this article is from those pages and gives a breakdown of what has been planned so far for the expenditure of the 2025 bond issuance. There are similar pie graphs for the 2023 and 2024 tranches. Very nice work and stellar transparency and reporting: https://torcnm.gov/city_blueprint/bonds/index.php 

As you can see from the bond pie charts at the link above, the bond money has made a big difference in having cash for engineering, emergencies and cash matches for water, sewer and related roads projects, which make up most of the $60 million the city has on the books for capital projects over the next four years. For a breakdown of that $60 million or so, see: https://sierracountycitizen.org/final-t-or-c-2025-2026-budget-is-90-million-one-third-operations-two-thirds-capital-projects/ 

The G.O. bond debt shifts some of the pressure away from ever-increasing water and sewer utility rate increases: https://sierracountycitizen.org/water-and-wastewater-rates-are-going-up-even-more/ 

Property taxes are a progressive tax, unlike utility rate increases, which hit the poor very hard, since water and sewer utilities are a necessity. The 2020 census estimated the city’s poverty rate at about one-third, so it is important to put a bit more of the burden on property owners to pay for about 60 years of infrastructure neglect. 

But it’s not as if we have highfalutin neighborhoods and correspondingly high property values in T or C. The Department of Finance and Administration’s Local Government Division sets the city’s property taxes for both city operations and for city debt related to G. O. bonds by looking at the city’s overall assessed property value. If values are moderate, taxes are moderate. 

Nevertheless, T or C’s property values are increasing–perhaps because of the water and sewer and road repairs. The city’s bond consultant, Bosque Advisors’ Managing Principal Mark Valenzuela, attributed part of the city’s increase in property values to those repairs about a month ago during a report at a city commission meeting. 

In a recent report, Valenzuela looked at assessed (we are taxed at one-third of the total value, per state law) city property values from 2020 ($103.8 million) to 2025 ($124.5 million). He pointed out that property values went up about 5 percent each year. That means the city’s bonding capacity–4 percent of the assessed value per state law–is now nearly $5 million. 

See the Bosque Advisors’ report at the end of this article. 

So, dear T or C property taxpayers, this part of the article may be of particular interest to you. 

According to the Bosque report, the whole $3 million in G.O. bonds, issued in four tranches, will cost about $550,000 in interest and bond-issuance costs from 2024 to 2048, with taxes remaining at 3.50 mills, except for the first year, which was 2024. 

The tax was supposed to start in 2023, but some mishap at the DFA let the first year lapse, the 2024 tax having to make up for lost revenue. The 2024 mill levy was 4.535 mills. The city collected almost $556,000 from the 4.535 mill levy in 2024 and almost $436,000 from the 3.50 mill levy in 2025.

Even without projecting a continued 5 percent increase in property values through the life of the debt, ending 2048, the city will have nearly $7.5 million in excess revenue from the 3.50 mill levy. 

Given that the city’s bonding capacity is $5 million now, that it is a progressive tax helping to keep utility rates down and that the city is facing many millions more in infrastructure repair, the city is going to ask the people in the 2026 election to vote on another G.O. bond question. 

In a conversation with the Citizen, City Manager Gary Whitehead said, “As good stewards of the first bond issue, I hope our community continues to look at what we’re asking for and authorizes us to continue issuing G.O. bonds under the same terms and conditions that would not increase the tax rate.”

Whitehead pointed out that many government taxing entities, including our local school district, go back to voters every four years. These entities issue bonds with the goal of keeping debt payments and tax rates about the same, funding long term capital projects that improve and maintain infrastructure and property values. 

If the voters do not approve a second G.O. bond, Whitehead said the DFA’s Local Government Division would probably lower the city’s debt tax and  the city would pay the debts off early. Each tranche’s debt guarantees that investors are assured 10 years in interest payments. 

The 2023 tranche would probably be paid off by 2033, the 2024 tranche by 2034, the 2025 tranche by 2035 and the 2026 tranche by 2036, shortening the debt life and saving interest payments instead of paying them through 2048.