What will $250 million bond for Panther Island project mean for property taxes?
April 15,2018
Star-Telegram article by Gordon Dickson
Supporters say the proposed Panther Island project will reinvent Fort Worth’s city center, making it a residential and commercial jewel with a picturesque river walk.
Opponents say it’s a billion-dollar boondoggle, a project that has already eaten up more than $100 million since 2004, with little to show for it — other than the ongoing construction of three bridges over dry land.
On May 5, voters will decide — perhaps once and for all — whether it’s worth the time and money to finish the proposed 800-acre island north of downtown Fort Worth.
A proposition on the ballot seeks permission to issue $250 million in bonds to cover the remaining unfunded portion of the $1.17 billion project, including among other things the acquisition of land, the re-channeling of 1.5 miles of the Trinity River and the construction of flood gates and water storage areas.
On the ballot, the measure is listed as Tarrant Regional Water District Proposition A, and is described as a measure for “flood control and drainage facilities.” Panther Island isn’t mentioned by name.
Early voting begins April 23.
Officials at the Fort Worth Chamber have formed a political action committee — dubbed “Our Community, Our Future” — to persuade voters to approve the project.
No formal opposition to the project had surfaced as of Friday, according to the Texas Ethics Commission website.
But a handful of voters have been turning up at public meetings to ask questions and cast skepticism toward the project.
’Not put a dime on it’
Among them is William Wright, a retired investment adviser who lives in west Fort Worth. Wright isn’t convinced the city’s growth projections for the land making up Panther Island are realistic.
Panther Island is part of a special tax district (known in city records as a tax-increment financing district, or TIF) in which property taxes collected within the district boundary can be spent directly in that same area, rather than city-wide. As property values go up, additional property tax money is generated, and much of that money can be used to pay back bond debt without raising the property tax rate.
But Wright isn’t convinced with city projections showing that property in the Panther Island tax district (known as TIF No. 9) will rise from its current level of $469 million to $2.5 billion by 2044. If those projections are wrong, the Tarrant Regional Water District could come up short in the amount of money needed to repay the bond debt. Wright worries that the result could be higher property taxes for everyone in the Fort Worth area, or perhaps even higher monthly water bills.
“If I were an investor looking to buy this (bond) issue, I’d take one look at it and not put a dime on it,” Wright said in a phone interview after one of the recent public meetings. “You’re betting on the come that these people are going to build things that are taxable and they’re going to have enough money to pay off the bonds. If things don’t work out, the water board will have to pay them off from its assets.”
’Looking for a better way’
Supporters of the project say the property value estimates are conservative and safe as a basis for repaying bonds. The Tarrant Regional Water District, which is overseeing the Panther Island project along with its subgroup, the Trinity River Vision Authority, forecasts that $774.4 million in property tax revenue will be collected in the tax district for the project by 2044 — which would be way more than needed to cover the $250 million in bond principal and interest, as well as a $200 million loan already taken out for the project.
Plus, the improvements are needed to improve the flow of flood water through the heart of Fort Worth. When the existing levee system was build in the 1960s, Fort Worth only had about 350,000 residents, but today there are nearly 900,000 residents and suburban development upstream has dramatically increased the flow of storm water during severe storms, said Jim Oliver, water district general manager.
If the bond election were to fail, the first option would be to simply delay the Panther Island project by a few years, which could lead to higher construction costs, Oliver said. But ultimately, if Panther Island were not built, the water district might eventually have to consider building higher levees and buying more private property for water storage, something that not only could lead to higher property taxes but would be a missed opportunity to build a beautiful new neighborhood with a river walk, he said.
“We would probably have to raise the tax rate by 8 cents ... to do it,” Oliver said last week, describing what it might cost to raise the levees during a presentation to the Fort Worth Chamber. “We’re looking for a better way,”
Today, the water district’s tax rate is 1.94 cents per $100 valuation, one of the lowest rates of any local government agency in Tarrant County. At the 1.94-cent rate, a property with a taxable value of $100,000 and no exemptions would pay $19.40 per year to the water district.
Water for 1.7 million people
The water district tax is paid by property owners within the district’s boundary, which includes most of Fort Worth , Azle, Edgecliff Village, Westworth Village, Westover Hills and part of River Oaks.
The district provides raw water for more than 1.7 million people. Many cities in the Dallas-Fort Worth area pay the water district for their water, and then charge their residents for it on monthly water bills.
The water district manages Lake Bridgeport, Eagle Mountain Lake, Cedar Creek Lake and Richland-Chambers Lake as well as more than 150 miles of water pipelines, 27 miles of levees, more than 72 miles of Trinity River Trails and a 2,000-acre wetland.
The bond money is needed partly because the water district didn’t receive all the natural gas proceeds it had hoped for from exploration and drilling in the area, after natural gas prices plummeted and Barnett Shale activity dried up.
Also, costs for parts of the project that were originally penciled in as obligations of the federal government, which oversees the nation’s waterways and must approve any flood-prevention measures, are no longer going to be covered by Uncle Sam.
And finally, new standards have been created to prevent levee failures — as happened in New Orleans after Hurricane Katrina — and those come at a significant additional cost.
But if voters can be persuaded to go along with the bond election, the infusion of additional revenue will help ensure the project is completed by 2028, said Jim Lane, water district board member.
This report includes information from the Star-Telegram archives.
Gordon Dickson: 817-390-7796; @gdickson