What are bonds?

Cities fund major projects in several ways. One way is through voter-approved General Obligation (GO) bonds. GO bonds give cities a tool to raise funds for capital improvement projects that are otherwise not funded by city revenue.

How do bonds work?

General Obligation bonds are proposed and voted on in citywide elections. If voters approve a bond proposition, bonds will be sold to investors backed by the full faith and credit of the City of Beaumont and paid off using city property taxes -- both on homes and businesses.

Bond debt can be compared to a home mortgage that is repaid over time, while Operations and Maintenance (often called “O&M”) expenses are like the daily household expenditures that are paid for immediately, such as groceries. Like buying a house, major capital improvement projects, such as park, road, or library improvements, have a long useful life, so their cost is spread out over many years and paid for by current and future citizens who use them. The debt is typically financed over a 20-year period.

When voters approve bond propositions, the city does not issue all of the debt immediately. Instead, debt issuances are spread out over several years according to the annual spending needs of the bond program. By monitoring the annual spending needs and not issuing all the debt at one time, the city can keep the debt service tax rate more stable from year to year.

WHat projects can the money be spent on?

When bond propositions pass, cities are under legal obligation to spend bond funds on projects specified in the proposition that voters approved. In other words, bond funds cannot be spent on projects not specified in the ballot language that voters approved.

What projects are being considering?

The City Council has appointed a Bond Advisory Committee of 17 citizens from across the community to sift through potential projects, listen to citizen feedback, and make recommendations to City Council later this summer.

Whether or not to call a bond election and what specific projects should be listed will ultimately be decided by City Council.

To learn more about the Bond Advisory Committee, their progress, and how you can get involved, click here.