Understanding the Ballot for the Bond Election

Posted: April 19, 2018  |  5 min read

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Understanding the Ballot for the Bond Election


With the May 5th Bond Election just around the corner, and early voting starting next week, voters are looking to get a bit more clarity before stepping up to cast their vote.

One of the questions many New Territory residents have asked is how to understand the ballot language.

Ballot Language for the Bond Election

The official language on the ballot reads as follows, with a check box to mark ‘for’ or ‘against’:

Fort Bend County Levee Improvement District No. 7 - Proposition A
The issuance of $121,150,000 levee improvement bonds and the levy of taxes, without limit as to rate or amount, in payment of the bonds.

Fort Bend County Levee Improvement District No. 7 - Proposition B
The issuance of $121,150,000 refunding bonds to refund bonds authorized by Article 16, Section 59 of the Texas Constitution and the levy of taxes, without limit as to rate or amount, in payment of the bonds.

But what does that mean? 
Is LID 7 asking to issue twice the amount of $121,150,000 in bonds?  The quick and simple answer is “No”; each proposition above has a separate function and intention.  

Proposition A provides the authorization to LID 7 to issue bonds to finance the proposed projects.

Proposition B authorizes issuance of “refunding” bonds to refinance previously issued bonds at a lower interest rate, analogous to how a homeowner may refinance a home mortgage for a better interest rate. Refunding bonds will only be issued by LID 7 if interest savings can be achieved: new, lower interest rate bonds replace previously issued high interest rate bonds.

What does “[...] without limit as to rate or amount, [...]”  mean?
Some residents have also asked about the phrase “[...] without limit as to rate or amount, [...]” and what that means for property taxes. Simply put, this means that LID 7, when it issues bonds, can make good on its promise to the buyers of the bonds that it can levy whatever tax rate is required, depending on the values of taxable property in LID 7, to pay the debt-service payments when due on the issued bonds.  LID 7 will not levy more debt-service taxes than what is needed to pay the debt-service payments on issued bonds. An “unlimited tax” pledge to bond buyers helps LID 7 borrow at the lowest possible interest rates.

Bond Authorization vs. Bond Issuance

There is a difference between Bond Authorization and Bond Issuance. It can be difficult to understand the difference.

Bond Authorization
Think of Bond Authorization like a construction line of credit from a financial institution.  Bond Authorization is the bank notice that LID 7 has been approved to borrow funds
up to a certain amount to do the work LID 7 needs to do.  LID 7 can draw amounts (issue bonds), as and when needed, to complete the work, but LID 7 is not required to draw it all at once. Also, as LID 7 repays the line of credit (debt service payments on the issued bonds), LID 7 only pays interest on the amounts it has borrowed (in the bond market).  

Bond Authorization is a long term funding option for the proposed projects. It allows the Board of Directors ("Board") to issue bonds if and as needed on terms acceptable to the Board. Bond Authorization means issuing bonds is an option, not a requirement, and it may be done in installments (money is not borrowed until it is needed).

Bond Issuance
On the other hand, Bond Issuance begins with the Board making a decision that, after reviewing its funding options, it needs to borrow funds through the bond market to complete a project or projects.  The first step is that LID 7 submits a request (through a bond application report) to the Texas Commission on Environmental Quality ("TCEQ") to review and approve the proposed projects and the financial feasibility of the proposed issuance of bonds.  If the TCEQ approves the project and the issuance of the bonds, LID 7's consultants will then seek approval of the issuance of the bonds by the Texas Attorney General. If the Texas Attorney General approves the issuance of the bonds, LID 7 will issue the bonds and principal and interest payments on the issued bonds are paid over time with taxes levied on taxable property in LID 7.  This is how the "line of credit" previously authorized is provided to the District for use on the proposed projects.

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Understanding the Language

At first glance, the ballot language can be a bit confusing, but the Board wants to make sure residents know what they are voting for. The Board hopes this clears up any questions residents have on the ballot language. If you have further questions, please do not hesitate to contact the Board via the District website.


Interested in attending the FBCLID 7 Community Open House Meeting on April 24th?

Come to the Club at New Territory between 5:30 pm and 7:30 pm to view proposed project exhibits and speak with the engineers and the Board regarding the Bond Election.

Additional inquiries prior to the open house event can be submitted via the 
District website, or via email to bonds2018lid7@outlook.com.