Potential Negative Impact on Jersey Village’s Credit

Assumptions (from FY 24-25 document and prior discussions):

• Tax Base: $1.357 billion (2024).
• CO Amount: $44M ($20M water/sewer, $24M Civic Center).
• Current Debt: $15.405M (outstanding tax-supported debt).
• Total Debt Post-COs: $59.405M.
• Tax Rate: 0.787% (2024-2025) + 0.2291% (COs at 5.5%, 40 years) = 1.0161%.
• Debt Service: $1.971M (existing) + $3.11M (COs, 5.5%) = $5.081M/year.
• Economic Context: Static FM 1960 area, no significant growth.
• Governance: Transparency issues, vague CO notices, no voter approval.

Scenario Factors:

1. High Debt Burden: 
   • Debt-to-tax-base ratio: $59.405M / $1.357B ≈ 4.38%.
   • Annual debt service triples from $1.971M to $5.081M, straining reserves.
   • Impact: Agencies (Moody’s, S&P) view this as high for a small city, risking downgrade (e.g., A to A- or BBB+).

1. Revenue Strain: 
   • Static economy (FM 1960 decline) limits tax base growth.
   • Tax rate increase (0.2291%) pushes total to 1.0161%, potentially causing taxpayer pushback, reducing collections.
   • Impact: Revenue shortfalls could trigger a negative outlook or downgrade, as seen in Jersey City’s A+ downgrade from deferred debt.

1. Governance Failures: 
   • Vague notices and no voter approval
   • Fund diversion (e.g., Civic Center overspending) or poor audits could erode trust.
   • Impact: Agencies penalize weak governance, potentially dropping rating to BBB range, increasing borrowing costs.

1. Economic and Project Risks: 
   • Civic Center ($24M) seen as non-essential, yielding low economic return.
   • Static economy fails to offset debt, unlike Bridgeland’s growth.
   • Impact: Speculative projects and no growth exacerbate downgrade risk.

Potential Outcome:

• Downgrade: From assumed A/AA to BBB+ or lower (e.g., 2-notch drop).
• Consequences: 
  • Borrowing costs rise (e.g., 6–7% for future bonds vs. 4.5–5.5%).
  • Tax impact for $450,000 home: $918–$1,031/year (COs, 40 years) could increase further with higher rates.
  • Budget strain limits services, deterring investment in a static economy.
• Tax Impact (CO vs. GO): 
  • CO (5.5%, 40 years): $1,031/year (no exemption); $825/year (20% exemption).
  • GO (5.0%, 40 years): $975/year (no exemption); $780/year (exemption).
  • Downgrade could align CO rates with higher-risk bonds, negating GO savings.

We are hosting a petition signing event on Saturday June 14th from 9am to 6pm at our home at 8325 Achgill Street

Help us raise awareness of our mission and programs by sharing our website, social media pages, and events with your friends, family, and colleagues.