Bloomington OKs $4.3M in bonds for capital projects, property owners to pay more tax as a result
On a 7–2 vote at its regular Wednesday meeting, Bloomington’s city council approved the issuance of $4.3 million of general obligation (GO) bonds in order to complete several capital projects.
The bonds will be repaid through an additional property tax rate of $0.0678 per $100 of assessed value, on top of the existing debt service tax rate of $0.0743, to bring the total debt service tax rate to $0.1421.
The cost of the GO bond issuance to the owner of a house with an assessed value of $200,000, would work out to around an extra $70 in property tax owed.
The idea of GO bonds was outlined to city councilmembers in late September, after being unveiled a month earlier.
The two councilmembers who dissented on the vote were Dave Rollo and Andy Ruff. Their reasons were based on a lack of specificity in the project descriptions, and a lack of direct city council control over decisions about some of the projects.
Presenting the city’s case for the GO bonds at Wednesday’s meeting was controller Jessica McClellan. She was joined by the city’s bond counsel, Thomas Cameron, with Quarles & Brady the city’s financial consultant, Matt Frische, with Reedy Financial Group.
Financial considerations: Tax rate
In the state of Indiana, the city’s fiscal body chooses the amount of revenue (that is, the property tax levy), not the property tax rate. The needed rate is calculated based on the amount of revenue chosen, and the amount of the total assessed value.
But state law limits the amount of levy increase from year to year by imposing a maximum levy growth quotient (MLGQ), which is 4 percent this year.
Bloomington’s city council decided to increase the levy by the maximum 4 percent, which yielded $1.43 million more in 2025 for the general fund and the parks fund. The overall net assessed value for Bloomington property has increased this year by about 12.8 percent.
That means the tax rate that is required in order to generate just 4 percent more revenue in 2025, is not as high as the 2024 rate. (A smaller percentage applied to a bigger amount, can still yield a bigger amount.)
So there is “room” between the lower tax rate that property owners would see in 2025, if no GO bond were issued, and the 2024 rate. In detail, the 2024 basic rate of $0.7308 is made up of a $0.5686 general fund rate and a $0.1622 parks rate. That basic rate will drop from $0.7308 to $0.6737, due to the increased assessed value, but still generate 4 percent more revenue.
Even at the lower rate, the combined general fund and parks property tax revenue will rise from $35.77 million to $37.20 million. Factoring in the other bits that make up the total rate, property owners would see an overall city tax rate drop from $0.8635 to $0.7957.
That difference of $0.0678 in rates is where financial advisors see an opportunity—to generate additional revenue, while maintaining the same rate.
At Wednesday’s meeting, Frische summed up the perspective of financial advisers like this: “The last thing we want to do is to allow the tax rates to decrease.”
The idea is that once property taxpayers are accustomed to a rate, it’s easier politically to “maintain” the rate, even though the effect of rate maintenance can be a substantial increase in the amount of tax paid and the amount of revenue received by the government.
Frische told the city council, “Constituents do not like when you raise taxes, obviously.” Frische described the approach of issuing GO bonds as using an opportunity to fund necessary capital projects, while at the same time just maintaining the tax rate.
Projects to be funded
On Wednesday, city council deliberations focused on how much latitude there is to deviate from the list of projects that accompanied the ordinance.
A question from councilmember Matt Flaherty to bound counsel Thomas Cameron drew out the fact that if a project is given a specific description in the project list, it’s not possible to swap in a similar project.
Flaherty set up the question to Cameron like this “There’s six pretty specific parks department projects. One is roof replacement at Woodlawn Bryan Park shelter.”
Flaherty’s question: “Would roof replacement at a shelter other than Woodland Bryan Park shelter be allowed?”
Cameron’s one-word answer: “No.”
It was projects that did not have specific descriptions that drew concern from supporters and opponents of the GO bonds alike. For Flaherty, the concern was that administration might not live up to the commitment implied by the list item: “Projects included in the Bloomington Transportation Plan/Safe Streets for All Plan.”
Flaherty cited past bond issuances that had carried with them the expectation that projects would be completed that were not, in fact, completed.
One example given by Flaherty was a 2018 bond issuance (branded as bicentennial bonds), that were in part supposed to create a non-motorized connection between Miller-Showers Park through Lower Cascades Park, to give Bloomington High School North students a way to get to school without driving a car. That non-motorized connection still does not exist.
A second example given by Flaherty was the issuance of bonds in 2022 to fund public safety projects, including the purchase of Showers West to create a combined police and fire headquarters. When Bloominton mayor Kerry Thomson’s administration took over this year, the Showers West project was scaled back to include just a fire department headquarters.
Flaherty described his understanding of the city’s bond counsel’s advice as meaning that if Showers West were not used for any public safety purpose, then that would be a violation of the ordinance that issued the bonds. Flaherty concluded that the city had “escaped that legal problem essentially on a technicality” by putting the fire department headquarters in the building.
Flaherty described the situation as an issue of “good faith.” He added, “I can say for me personally, and I know some of my colleagues, that pretty severely eroded trust with this administration in the early months.”
Flaherty indicated he would support the bond issuance, but added, “I can’t imagine voting again on something with this level of flexibility, if we get burned again.”
For Rollo, the concern was not so much that projects on the list would not get completed, but that the city council would not have enough control over which projects were chosen.
Rollo was concerned that another neighborhood greenway project like Hawthorne-Weatherstone would be undertaken, without requiring the city council’s approval. The Hawthorne-Weatherstone project, in Rollo’s council district, saw strong opposition from immediate neighbors along the route, but wound up getting built, without the council’s explicit approval.
Rollo’s initial focus was on this list item: “Community traffic calming projects.” Hawthorne-Weatherstone was a traffic calming effort. City engineer Andrew Cibor indicated that the list item was supposed to refer to “resident led” projects as opposed to “staff led” projects. Hawthorne-Weatherstone was a “staff led” project.
But council president Piedmont-Smith pointed out to Rollo that projects like the Hawthorne-Weatherstone greenway were a part of the transportation plan, which gets a general reference in the project list. Piedmont-Smith told Rollo, “If you want to avoid spending any money on neighborhood greenways, then you might have to look at [the transportation plan item] as well.”
A counterpoint to Rollo’s concern about projects getting undertaken without additional explicit approval from the city council came from the public mic. Bloomington resident Greg Alexander told the council, “Staff not only has your permission, but your legal mandate to implement these projects.”
Alexander continued, “If you want them to spend the money differently, the correct technique is to modify the policy.” Alexander added, “Starving them of funding because you disagree with the policy is bad governance.”
Rollo later responded to Alexander’s point by saying he had tried to change the policy. Under Rollo’s proposal, the city council would have had direct oversight of the neighborhood greenways and traffic calming program. That proposal failed on a 4–5 vote in May of 2023.
Rollo said he was not concerned about what he called a “nominal addition” to the city’s existing debt. But he is concerned about the fact that the council has no “final say” about specific projects.”
Ruff agreed with Rollo, saying, “I’m not comfortable with the lack of specificity. He called the Hawthorne-Weatherstone greenway “a tremendous missed opportunity” and a “misallocation of scarce funds.”
Councilmember Hopi Stosberg responded to concerns about the lack of project specificity by pointing out that in the project list is due to the fact that the “Safe Streets for All” plan has not yet been adopted.
Stosberg pointed out any project the administration undertakes will include engagement of the public. She encouraged councilmembers who have concerns about any particular project to participate in the same process that engages the public.
Even though the council’s adoption of the “Safe Streets for All” plan appeared on the city council’s agenda for Wednesday, it was postponed. A new version with several changes—none of them radical—had been provided to the council shortly before the meeting. The adoption of the “Safe Streets for All” plan is now set for Dec. 4.
