McCalpin’s Unofficial Guide to Municipal Bonds
by William "Bill" McCalpin

Changing What Bonds are Used For

When a vote on the bonds is put to the public, the bonds are collected into categories of related work. That is, all the street projects will be placed into one proposition for the voters, the parks and recreation projects into a separate proposition, and so on. The reason for this is that on the one hand, State law prohibits the City from spending bond money for a totally different use than was presented to the voters, but if the use is broadly defined, then the City has some discretion to reallocate money within a category as conditions change. For example, the City staff develops estimates on how much various projects will cost, but until the bonds are actually sold and the City has the money, it can’t finalize the contracts and so the costs may change. In addition, costs may radically change for external reasons, ranging from a collapse in the economy (so construction costs are much cheaper) to a municipal building planned for renovation burning down first.

See
this section of the Government Code that states that a municipality can’t use unspent bond funds for another purpose, without bringing it back to the voters in another election.

On the other hand, here are some Attorney General opinions that state that municipalities have discretion to modify how the bond money is spent, within the parameters and scope of the commitment made to the public at the time that the bonds were sold:
JC-0127   
GA-0481   

However, note that in
Letter 98-060
, the Attorney General points out the difficulties raised when the description of how the bond money is to be spent to too specific. In this case, a city called for a bond election for “improvements to a city’s existing civic center” only later to realize that the civic center could be torn down and rebuild better with the same amount of money. The Attorney General ruled that because the city could have said that the bond money was either for “improvements to a city’s existing civic center” or for “construction of a new civic and convention center”, the fact that the city said only that the money was to be used for improvements meant that the money could not be used for anything else, including building a new civic center.

Editorial Note: McCalpin's Unofficial Guide expresses no opinion on the 2010 bond election or any bond propositions – it is purely informational for all residents. All of the information expressed in McCalpin's Unofficial Guides is purely the opinion of the author. The Richardson Echo publishes this as a service but does not endorse nor refute its contents.

Copyright © 2010 by the Richardson Echo

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