Go KC Q&A

WRITTEN BY: Rod Richardson
PHOTOS BY: City Communications

For inquiring minds: answers to questions about the GO KC bond projects

Kansas City residents have $800 million reasons to be optimistic about the way our city is going to look and feel over the next 20 years. The bond proposal that voters approved in April 2017 paves the way to fund capital improvements for streets, sidewalks, flood control and other infrastructure needs residents have clamored for over the years.

Capital improvement projects may include new construction or renovation of city buildings, reconstruction of streets, repairing or constructing sidewalks as well as making public areas ADA compliant. These long-deferred projects are easy to recognize because they carry the GO KC brand. Here are some frequently asked questions that may help you better understand how this works:

Q: What is a general obligation bond? General obligation bonds are municipal bonds that provide a way for state and local governments to raise money for projects that may not generate a revenue stream directly. They are called general obligation bonds because they are not backed by a specific revenue-producing project or asset. Instead, they are backed by the “full faith and credit” of the issuer. This means the bonds are backed by the state or local government’s ability to tax, and to raise taxes if necessary, in order to pay bondholders.

Q: What is the impact on my property taxes? The bonds will be repaid through a property tax increase. For a household with a $140,000 home and a $15,000 car, the property tax will average an additional $8 each year, rising to an average of $160 in year 20. This is an average, so in some years the increase will be higher, in other years it will be lower.

Q. What GO KC projects have already started? Multiple groundbreakings and ribbon-cutting events have been held across the City, with more scheduled through the spring and summer. Check out kcmo.gov/gokc for more, including a YouTube playlist of videos that highlight these events.

Q: Why does the City need to borrow funds to pay for public infrastructure? Why not use cash or existing taxes? Cities borrow funds to pay for infrastructure with a long useful life, rather than using current cash. This means the current generation does not pay the entire bill for an improvement expected to have a useful life of 50 years or more; rather, users pay their share over time. This allows cities to use their other resources to pay for vital services including public safety. Finally, in the case of general obligation bonds, property owners are asked to pay for the improvements with property taxes as property values throughout the city will benefit from the additional public investment.

Q: The City was granted $800 of general obligation bond authority, but can it sell all of the bonds at once? The City plans to sell on average $40 million of bonds each year for the next 20 years. While it is technically and legally possible to sell the bonds in any pattern, several practical issues make that unlikely, including impacts to the City’s credit rating, property tax rates, and the ability to spend funds in accordance with IRS guidelines, which require proceeds from bonds issued on a tax-exempt basis to be spent within a short time frame.

Q: How much is allocated for Year One? City officials designated the GO KC projects that would roll out in the first year, largely based on projects already in the capital pipeline. The City Council authorized spending $44.6 million in the first year.

Q. Where is the list of projects scheduled for Year One? The GO KC projects scheduled to begin in the first year can be found at kcmo.gov/gokc. This online portal was created so that residents can keep track of updates.