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Ballot Issue A

    a. Members of the community contend that Ballot Issue A is not necessary because TABOR (the Taxpayer’s Bill of Rights) provides that refunding of existing debt at a lower interest rate does not require voter approval.

RESPONSE
For a conventional refinancing of existing debt at a lower interest rate, voter authorization is not necessary.  However, there are many nuances involved in the District’s existing financial obligations and debt that require voter authorization.  For example, the District has existing leases that are annually appropriated obligations of the District—these are financial obligations of the District but are not considered “debt” under TABOR.  This means they were never voted by the electors before they were entered into because voter authorization is not required where the obligation is annually appropriated and does not constitute “debt” under TABOR.  However, if the District is able to find financing that has better terms on a multiple fiscal year basis, including a lower interest rate for the leases, voter authorization IS required in order to refund these leases and this is a refunding which is not included within the exceptions provided in TABOR. 

In 2009, the District was able to secure a loan through the State for 2% for a portion of its construction project.  If a similar opportunity presents itself this year or in the future, the District will only be able to take advantage of this opportunity if voter authorization has been granted.

The District also has a general obligation bond that is outstanding.  The bond accrues interest on an annual basis at the rate of 5.25%.  In 2014, the rate will increase to 8.5% unless the District is able to find better terms before that time and refund the bond.  In the event the District is able to find an interest rate lower than 8.5% before 2014, but such interest rate is higher than the net effective interest rate (which is a complicated bond calculation but basically somewhere below 8.5% but higher than the current 5.25% and currently probably somewhere around 7%), the District will require voter authorization to refund the bond.  This is because the new interest rate, although lower than 8.5%, is higher than the net effective interest rate.  Right now the bond market is seeing competitive interest rates and it is possible that the District would be able to refinance its debt for an interest rate lower than 8.5% (but higher than the net effective interest rate) that would result in an overall debt service savings of hundreds of thousands of dollars over the life of the bond.  This cannot be done without voter authorization.

TABOR limits the times during which voters can approve certain tax, debt and refunding questions.  In even numbered years, such as 2010, voters can approve the authorization in May or November.  However, in odd numbered years, voters can only approve such measures in November.  If Amendment 61 passes, such elections will be permitted only in November of any year.

    b. Members of the community contend that Ballot Issue A is really a tax increase and not a refunding question.

RESPONSE:  
This simply is not true.  TABOR requires that all questions—tax, debt and refunding—be written a specific way.  Article X, Section 20(3)(c) (a specific provision of TABOR) requires that all taxes or bonded debt questions begin “SHALL (DISTRICT) DEBT BE INCREASED (principal amount), WITH A REPAYMENT COST OF (maximum total district cost)…?”  There is no way to avoid this language.

What is important to focus on for all TABOR questions is the purpose for which the question is being voted.  For example, if people look at the fifth line of Ballot Issue A, it reads: “FOR THE PURPOSE OF REFUNDING, PAYING, OR DEFEASING, IN WHOLE OR IN PART, BONDS, NOTES, OR OTHER FINANCIAL OBLIGATIONS OF THE DISTRICT”. If this question were authorizing new debt and monies for improvements and other items, it would state something to the effect of: “FOR THE PURPOSE OF PAYING, REIMBURSING, OR FINANCING ALL OR ANY PART OF THE COSTS OF ACQUIRING, CONSTRUCTING, RELOCATING, INSTALLING, COMPLETING, AND OTHERWISE PROVIDING, WITHIN OR WITHOUT THE BOUNDARIES OF THE DISTRICT, A COMPLETE POTABLE AND NON-POTABLE WATER SUPPLY, STORAGE, TRANSMISSION, AND DISTRIBUTION SYSTEM, INCLUDING TRANSMISSION LINES, DISTRIBUTION MAINS AND LATERALS, IRRIGATION FACILITIES, AND STORAGE FACILITIES, TOGETHER WITH ALL NECESSARY, INCIDENTAL, AND APPURTENANT FACILITIES, EQUIPMENT, LAND, AND EASEMENTS, AND EXTENSIONS OF AND IMPROVEMENTS TO SAID FACILITIES”.