General Obligation bonds, or “GO bonds,”  give cities a tool to raise funds for capital improvement projects that are otherwise not funded by City revenue, such as roads, bridges, bikeways and urban trails and parks. As a result, GO bonds are typically used to fund capital improvement projects that will serve the community. If voters approve a bond proposition on an election ballot, the City is authorized to sell bonds up to the amount indicated in the proposition language to fund capital improvement projects that meet the public purpose of that bond proposition.

GO Bonds are proposed and voted on in citywide elections. If voters pass Proposition A, bonds will be sold to investors backed by the full faith and credit of the City of Kyle’s excellent AA- bond rating and paid off using city property taxes -- both on homes and businesses.

The City’s outside financial advisors used what they describe as “very conservative” assumptions when analyzing tax impact. To protect the City, the staff and advisors modeled the tax impact as if there were an economic downturn in the Kyle area, with new commercial and residential construction (and, thus, new tax base creation) slowing to a fraction of past levels or current trends.

Under this scenario, the projected tax increase if Proposition A is approved by voters is $0.0917 cents per $100 evaluation. That translates to about $25.87 per month for the average priced single family home in Kyle. If current growth trends continue or accelerate, the cost per average home might be significantly less than modeled, as proved to be the case with the City’s last transportation bond in 2013. Likewise, if there were to be a major economic depression or a population decline, then the tax rate could increase more than nine cents — or the city council could delay projects and the sale of the authorized bonds. 

The City’s outside financial advisors used what they describe as “very conservative” assumptions when analyzing tax impact. To protect the City, the staff and advisors modeled the tax impact as if there were an economic downturn in the Kyle area, with new commercial and residential construction (and, thus, new tax base creation) slowing to a fraction of past levels or current trends. 

The projected tax increase is $0.0917 per $100 valuation. That translates to about $25.87 per month for the average-priced single-family home in Kyle. If current growth trends continue or accelerate, the cost per average home might be significantly less than modeled, as proved to be the case with the City’s last transportation bond in 2013. That price could also be higher, if, for example, the City quit growing altogether or lost homes and population.

Not all the road work can be done at once, so the financing will be broken up into several bond sales. City council has discretion over when those sales happen. 

The City of Kyle works to maximize the annual capital improvement budget each year, but like most cities our size with rapid growth, infrastructure needs are often greater than what annual funding can support.

Bond debt can be compared to a home mortgage that is repaid over time, while 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 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.

The City of Kyle is under legal obligation to spend bond funds on projects specified in the proposition that voters approved in November of 2022.