Mayor talks Metro and money

The new Metro board was confirmed by City Council last week, they were sworn in yesterday, and while we don’t yet know exactly what direction they’re going to take, we know what their marching orders are.

Mayor Annise Parker says she is willing to consider allowing the Metropolitan Transit Authority to retain funds that pay for city transportation projects once Metro’s new leadership has restored public confidence in the agency.


Since 1987, Metro has made mobility payments totaling more than $1.6 billion — 25 percent of its 1-cent sales tax — to Houston, Harris County and other cities in the Metro service area. The payments are to continue through Sept. 30, 2014, under terms of the 2003 referendum authorizing Metro to build five new light-rail lines.

Any discussion of asking voters to permit Metro to retain this money would have to include Harris County and the 14 other cities in Metro’s service area that receive the payments, Parker said. Each entity also has its own agreement with Metro on how the funds are paid.

“If, at some point, it becomes necessary for Metro to make a claim on these dollars, then we’ll absolutely have the discussion, but I’m not interested in unilateral disarmament,” the mayor said, adding that this discussion won’t happen until the new board members have re-established Metro’s “reputation for credibility.”

The transition team report on regional coordination goes into the credibility and trust issue in some detail, if you haven’t read that already. Philosophically speaking, I’d like to see Metro get that quarter of a cent back. I think a transit agency should be funding transit, not street repair in Hunters Creek or wherever. I expect that the other entities in Metro’s service area will be reluctant to give up their share of those funds, however, no matter how well Metro does at rebuilding trust. Still, I look forward to that conversation.

The 2003 referendum limited tax-based debt for the rail system to $640 million, and the agency said recently it intends to issue $2.6 billion in bonds for rail construction. Metro officials say they can support the balance of the debt with sources other than sales taxes, but some local officials and Metro critics are skeptical of this.

Parker said Metro might have to ask voters to increase the debt limit.

I believe “some local officials” refers to John Culberson; there may be others, I don’t know. It’s still the case as far as I can tell that the only people truly pushing the idea that Metro can’t issue those bonds without there being another referendum are those who don’t want to see light rail get built. Which doesn’t mean they’re not right, but it does mean I have no particular reason to take their word for it. I wish the Mayor had elaborated a bit more about that in her comment, but I suspect she’s just saying it can’t be ruled out. We’ll just have to see what the new Board does and go from there.

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6 Responses to Mayor talks Metro and money

  1. Charles, let me see if I understand your reasoning.

    You contend generally that the moral justification for Metro’s light rail plan is the 2003 referendum.

    The referendum specifically limited Metro’s tax-based debt to $640 million for light rail construction.

    Metro is proposing to issue $2.6 billion in debt without any source of non-tax funds that would come even close to servicing that level of debt.

    And you think that may be alright without another referendum because “the only people truly pushing the idea that Metro can’t issue those bonds without there being another referendum are those who don’t want to see light rail get built”?

    Please tell me that you are kidding.

  2. I’m not sure why you’re confused, Tom. The referendum said Metro couldn’t issue one type of bond in excess of $640 million. They’ve announced their intention to issue a different type of bond. Some people, all of whom are longtime foes of light rail, say that’s not what the referendum allowed. These same people who once claimed that the words “Westpark Corridor” meant that the University line could only be built exclusively on Westpark are now complaining that Metro is interpreting the referendum too literally. So yeah, I don’t trust their motives, and I’m not taking their word for it.

  3. Charles, here is the 2003 referendum language:

    Here’ the ballot language on the measure:

    “Authorization of Metro to issue bonds, notes, and other obligations payable, in whole or in part, from 75% of Metro’s sales and use tax revenues in an aggregate principal amount not to exceed $640 million for Metro’s transit authority system, including the Metro Solutions transit system plan, which includes construction of extensions and new segments of Metro’s rail system known as “MetroRail,” approval of such plan and construction of MetroRail and commuter line and dedication of 25% of Metro’s sales and use tax revenues through Sept. 30, 2014, to street improvements and related projects, as authorized by law.”

    So, Metro is authorized “to issue bonds payable . . . from 75% of [its] sales and use tax revenues . . . not to exceed $640 million for Metro’s transit authority system, including [the light rail system].”

    Metro is proposing to borrow four times that much without any other source of revenues to service the debt. That is a clear violation of the referendum.

    Why should the fact that some opponents of light rail point this out make any difference?

  4. Greg Wythe says:

    Actually, Tom, you conveniently omit a few facts.

    The ballot language you quote does not suggest that METRO may only take on $640M in overall bond debt and not a penny more for anything else. In fact, it does mention the exact type of proceeds that are limited in being bonded toward. That’s a point that Kuff raises and you fail to address in your response.

    The fact is that only $174M is coming from that pool. $202M are from a bond obligation that the state government explicitly excludes from the $640M limitation; and $866M is from a general obligation bond (which the referendum language does not cover).

    I’m pretty sure you knew this since it was reported in the Chronicle recently:

    So the fact that the argument is made by people who oppose light rail suddenly seems to matter. You can argue the merits of whether METRO should be taking on that level of debt. That might be a more honest debate, but I suspect the bond rating companies are a more authoritative source. But the referendum language is not the limiting factor here, as you and other light rail opponents have argued.

  5. Greg, but isn’t Metro’s level of debt the real issue here?

    I read the Chron article that you hyperlinked and it explains little other than Metro’s rationalization for raising more debt than what it is authorized to incur.

    Why do you presume as correct Metro’s contention that state legislation somehow preempts a referendum debt limitation?

    Similarly, given that Metro does not have non-tax revenue that is close to covering debt service on $866 in general obligation bonds, from where do you expect Metro to provide the credit enhancement to sell those bonds?

    But my main point is that these are legitimate questions that Metro has not answered and the fact that opponents of the light rail program are largely raising them doesn’t change that fact.

  6. BTW, Greg, I miss your blog. When are you going to bring it back?

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