2010 Woodlands Bond Issue Announced

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The Woodlands, TX (March 24, 2010)… The Board of Directors of The Woodlands Township issued $34.8 million of tax-exempt unlimited tax bonds today with an average interest cost of 3.82 percent.

The Woodlands Township Chairman of the Board Nelda Luce Blair said, “Our financial plan assumed a five percent interest rate, so this issue is going to yield significant savings to the taxpayers.”

The Woodlands Township’s Financial Advisor Drew Masterson said, “This rate is one of the lowest I’ve ever seen.”

The sale of today’s bonds comes after the voters in The Woodlands approved three different bond propositions on November 3, 2009, to fund fire services, park improvements and refinancing of association line of credit. The sale of the bonds included a very favorable bond rating of AA by Standard & Poor’s. The S&P noted The Woodlands Township’s strong economy, good financial management and limited future debt as strong positives for the rating, according to Chairman Blair.

“We’re very pleased to issue these bonds,” Chairman Blair said. “We are very pleased with our bond rating and very pleased with the interest rate. The voters in November asked for us to move in this direction, and today’s sale is reflective of their wishes, which ultimately benefits the taxpayers of The Woodlands. The passage of all three bond propositions shows that residents said that parks, pathways, fire stations and lower debt are important to their quality of life, and that they understood that these bonds will make those things possible.”  

The winning syndicate underwriters in a sealed bid process included Southwest Securities, Citi, EdwardJones, Wells Fargo, and Stephens. These firms prevailed over three other bidders. Bonds were offered by the underwriters to initial investors at rates ranging from 0.73 percent in 2011 to 4.33 percent in 2030. Bonds can only be offered by the underwriters through the Official Statement, which will be posted on The Woodlands Township Web site.

The first proposition approved by the voters addressed fire department needs. Proceeds from the sale of the bonds will be used to construct two fire stations, purchase related fire equipment for these stations, provide payment of any emergency services district (ESD) debt allocable to the Township upon removal of certain territory from the overlapping taxing jurisdiction of the ESD, and any related issuance costs.

The second proposition approved by the voters addressed The Woodlands Township’s Parks needs. Proceeds from the sale of the bonds on the second proposition will be used for the construction of new parks and pathways pursuant to the Recreation Facilities Development Agreement and Construction Management Agreement assumed by the Township from The Woodlands Association, Inc. and The Woodlands Commercial Owners Association, Inc.

The third proposition approved by the voters addressed the refinancing of existing debt obligations from the community associations. In accordance with the terms of the Transition Agreement, the Township assumed certain debt obligations from each community association and related service companies on January 1, 2010. Proceeds from the sale of the bonds will be used to refinance existing debt obligations of $19.080 million assumed by the Township from the community associations and The Woodlands Fire Department, Inc., and to pay for bond issuance costs.

Click here for additional details. 

The Woodlands Township Web site is at www.thewoodlandstownship-tx.gov.

Census 2010 - how important is it to us?

The simple answer - VERY! It is a trillion+ dollar issue, and the related decisions based on the Census endures until the next census in 2020! That is a long long time. We in Texas (and especially Montgomery County) are part of the few states and counties that are growing rapidly. We have the responsibility to ourselves to make ourselves known to the Census Bureau. The U.S. Census was established to count people so that they could be represented by our government which is for the people and by the people. I am a partner on the team, having taken a certification class, so I am able to "see" the process, and I feel comfortable with the process.  The process is important and safe. Ten questions will be asked in ten minutes lasting for ten years.

Census Day will be April 1st. Questions will be answered on what your household is anticipated to be on that day. For example, if your child is going to get married and leave the household, that "child" should be interviewed separately, so that person can establish location and their residence situation independently.

Forms will be mailed to your home in March. Census workers will subsequently be visiting the homes of people who have not answered the questionnaire.

Every year, some $300 billion is distributed to states and communities based in large part on census data. In a high growth area, typically there are financial issues associated with the growth and maintenance of infrastructure and projects that are required, which would not normally be required if the population was stable and self sufficient. We need every person to be counted so that we get our share of the funds. The government's representation in decision-making for those funds is reorganized based on the resultant numbers.

How is the process safe? Do you know that if there is an illegal activity observed by a census taker at the home where that person is conducting business of the Census Bureau, the census worker is sworn to not report what was seen? He is not exempt from being summoned to court, but he will not cause any issue with the law. The worker is not an arm of law enforcement, nor responsible in any way for what he sees at your home.

The purpose of the visit is strictly to count people, nothing else, leaving the household as he found it, without any risk to the inhabitants. It is all about numbers - identifying the number of potential volunteers for community services, the number of voters, demographics of voters and residents for government programs and grants, etc etc. Numbers! Numbers to help the community, with no risk! The only risk is not being counted - then you have failed to help your community, your government to make decisions, to represent you. So please, do your part and get the word out to those on your mailing lists and social networks. This is a national effort, and you have the opportunity to promote the process.

Montgomery Population Changes - Redistribution of Districts in 2010

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Every ten years, the U.S. census is taken, and from that census, county districts are redrawn based on population. New numbers have arrived prior to the 2010 census;these are predictions of the census results based on data collected by the U.S Census Bureau and the state. As many people here know, Montgomery County is a hot spot for growth, ranking high  in job and population growth. The county has been exploding this decade  (2000-2008). CNN Money Magazine stated in 2007 that the jobs have grown 38.3% from 2000 to 2007, ranking Montgomery County at 16th in the nation. The county is predicted to grow in population by a whopping 82% in this decade! This is significant and is a driving factor for planning action in this county. The country is taking notice of this.


Our County Judge, Alan Sadler, has assessed the distribution of this growth and believes there will be only one precinct that will be expanded to balance population growth in 2010. That will be a  minor change. Precinct 3 should not be affected! Based on predictions released today, precinct 3 should remain status quo in area coverage in 2010. The reason for minimal change is that the population increases have been uniform throughout most of the county in this decade. The judge is getting a jump start on planning for next year when any redistribution must occur. He pointed out that our county growth in the 70's and 80's had significant impact on district boundaries but in 2000, there was not much change and in 2010, we can expect even less change. This is a booming county overall. No longer is it just a booming south county.

Newly available data is also exposing demographic change in our  county. Of special note, our Hispanic population has been far below that of Harris County. Now the Montgomery County population boom is notably drawing on an increased influx of Hispanics, probably in all economic sectors. The Anglo population percentage is noted to have grown about 51%, where the Hispanic community will have grown by 128% over the past decade!  As a comparison, the Harris County growth of Hispanics from 2000 to 2008 was  about a 19% increase.  Demographic statistics will show Anglos at 77% of the population and the Hispanics at 18% of the population in Montgomery County. Other ethnic/racial groups are a much lower percentage of the overall population. By comparison, Harris County will have roughly about 36% Anglo and 39% Hispanic (based on 2008 population estimates). Statewide, Hispanics make up some 36% of  the population, putting us below the average. All of these statistics are based on the assumption that the 2000 Census is fully correct and that the data from births and immigration in subsequent years represent the population changes.

So what does all of this mean? Let's just take it in its simplicity. First, Montgomery County is growing at a tremendous rate. That translates to schools, roads, home development, commercial development, jobs, and other infrastructure expansions required to sustain the growth if current residents are not to be crowded out. Fortunately we are seeing a rise in employment even in this downturn of the economy. The numbers also show us that Spanish as a first language is on the rise in our county. That has significant implications in study programs in our schools, labeling of products and signage in commercial areas. It is an important factor in considering the future of our county.

From everything I have seen, I doubt if we will know how many of the Hispanics are eligible to vote. Assuming everyone is legal, the number of Hispanic voters may be different  since Resident Visas do not give a person the right to vote. Voting influence of the community may not be as high as the commercial influence the Hispanics will have on  our economy.

Although the current economy has slowed home and commercial sales,  it has not stopped our growth. That growth also affects inflation by normal laws of supply and demand. The county remains a desirable place to live, work and play, and the commercial community is playing that up by attracting more and more businesses to the area. With all of that factored into the vision of the future, we can't help but feel there is no stopping this momentum. Our county judges are being challenged with this day after day. We will have more to say about this in coming days in the Commentary.

Woodlands Township 2010 Budget Public Hearings

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As we take each step towards the first budget for the township, more residents are waking up to the opportunity to influence the outcome. Last night, the public hearing at The Woodlands Emergency Center proved to be a more informed, more aware, less emotional group than the previous town hall meeting on the same subject. Assimilation of the budget by more residents is producing more interest by people without political agendas, such as incorporation. To some people incorporation is the solution to all issues, but ask those who live in cities and see what they say. When the time is appropriate, we will consider incorporation, bringing to the table the pros and cons of following that path. One person at the meeting last night even volunteered to go to the City of Houston and renegotiate the agreement with that city to incorporate The Woodlands before 2014. This is supposed to fix our "policing problem".

In all reality, we do not have such a problem. The Woodlands is a safe place, but it is now an urban community that will have crime regardless if it is a city or not.

So putting the political aspect aside and just looking at the issues of the budget, many of the residents and board members are taking a fresh look at it. Don Norrell presented a fresh view of the same budget but this time had an alternative financial proposal that was discussed with the Sheriff's office. It is doable and in my opinion, the preferred alternative. I believe The Woodlands as a whole welcomes the redistricting proposal and wishes to act independently from the county which has significant budget issues this year and probably next year as well, limiting what we can do. That is, I believe we want to get on with it and fund what is required so that we have our own district with supplemental contracted deputies in 2010, not wait until 2011 and not have a phased approach to reach that vision. One of the suggestions in Mr. Norrell's alternative is to discontinue the patrol contracts with Shenandoah and Oak Ridge. Instead, use those ($0.5mm) funds for the extra $1.5mm dollars required to implement the project at the beginning of 2010. It was suggested that the remaining funds come from other undetermined projects that would be deferred by one year.

The trend of thought seems to cap the budget as it has been proposed, at 32.8 cents per $100 evaluation. It appears that the board asked to keep it there. That is a reasonable approach to me but we should be conscious of the public view of the budget and make adjustments to mitigate their (our) concerns.

The other project which needs adjustment is the Indian Springs fire station. Indian Springs is a mature village, now completed for quite some time. Many of the homes in the village were built in the 1990's. For five years, the plan has been to build a fire station for the village in 2010. That seemed like eternity as residents watched the service continuously decay as the traffic increased on Gosling and The Woodlands Parkway. The eastern side is served by station #2 at Research Forest and Gosling, so the trucks must deal with the congestion to reach the village. The response averages about 8 minutes. The maximum average of most fire fighting units is 5 minutes, that recommended by the insurance standards board (ISO). The current ISV level is not acceptable. In the proposed budget, the station is scheduled to be built in 2011. That means the village station remains in the long range plan. Another way to look at it is: the station has been delayed in favor of one in a developing village. Since the budget item has been scheduled by the WCA for years, the transition agreement has faulted on a critical service level. Therefore, we see this as a problem related to the 2010 transition to a new government. We would likely have a fire station in 2010 since the WCA and TWA acted independently on their projects. Last night, I was there to represent the concerns of Rush Haven residents. There were also residents from Trace Creek subdivision who have a similar service response. They also are concerned along with the entire ISV village board.

Personally, I was pleased to at least see the township board receiving and considering resident concerns. More than that, I was pleased to see the president of the Township working the residents' issues. That gives us all some hope and tells us that it is worthwhile to attend and provide our opinions and input to the board. I thank the chair person, Mrs Nelda Blair for being very patient with everyone. A great deal of passion was expressed, whether just perception or real, about the service levels of policing and the priorities in the budget.

Hopefully the board will realign budget priorities to meet the expressed needs of the community.

Woodlands Township Budget Scope and Overview

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The Proposed 2010 Budget includes the funding of The Woodlands Township and the Community Associations of The Woodlands’ services and staff, along with funding for The Woodlands Fire Department, The Woodlands Convention and Visitors Bureau, and includes an enhanced community-policing plan, as well as continued infrastructure development.

Its scope includes long and short term needs of the community. The idea is basically to maintain the current level of quality services and to enhance selected services. A process has been established through a strategic plan to ensure the efforts are directed towards long term strategic objectives. These include replacing aging facilities, maintaining a very large number of assets, and creating a flexible financial environment in which to succeed.

The budget includes the combined services of the Community Associations and The Woodlands Township. The Woodlands Fire Department will continue as a separate not-for-profit corporation and will be funded entirely by the Township Board of Directors. The Community Associations’ assessments will be replaced with a Township property tax levy. All responsibilities and obligations of the Community Associations will be assumed by The Township on January 1, 2010.

“These are historic times for The Woodlands,” said The Woodlands Township Chairman of the Board Nelda Blair. “This budget will reflect the needs of the combined organizations of The Woodlands Township and the Community Associations of The Woodlands, including combining the staffs, centralizing responsibilities and improving efficiencies. Quality of services will remain the same or be enhanced as the two organizations combine as of January 1, 2010.”

Basic services provided in the Proposed 2010 Budget include:

• Covenants Administration assumed from the Community Associations’ responsibilities
• Parks and Pathways - 110 parks and 180 miles of pathways
• Aquatics - 13 swimming pools, 50% funded by revenues and 50% by fees
• Waterway maintenance - pathway, fountains and park
• Fire and EMS - 6 fire stations with related trucks and equipment and 110 firefighters
• Enhanced Law enforcement - 54 deputies with proposed reorganization and delivery of services
• Neighborhood Services - from existing services by the associations
• Security services - in Town Center
• Convention and Visitor Bureau - special events
• Economic Development - partnerships
• Refuse collection and recycling
• Streetlights
• Roadway and entry maintenance
• Capital projects - replacement of aging or non-serviceable equipment
• Capital projects - new parks, pathways, fire stations
• Debt service - existing debt refinance and financing new projects

The Woodlands Township has four primary funding sources¹:

1. Property tax of $37.9 million - will replace Community Associations’ assessments
2. Sales and Use Tax of $30.1 million – general operating fund plus Houston, Conroe agreements
3. Hotel Occupancy Tax of $3.5 million - sole use is for the convention center
4. Other Revenues of $5.6 million
5. Bonds or loans for large capital projects

The property tax levy will replace the Community Associations’ assessments, which fund these services:

• Community policing
• Covenant enforcement
• Parks and pathways maintenance
• Aquatics
• Neighborhood services
• Garbage collection/recycling
• Community maintenance
• Administrative services
• Capital asset replacements
• Capital asset additions
• Operating reserves
• Debt service
• Community relations

The Woodlands Fire Department costs were previously funded by the Community Associations’ assessments and will now be funded through Township Economic Development Zone (EDZ) fund which is sourced by sales taxes.

The sales tax is expected to generate approximately $30 million annually. Approximately $15 million of the annual sales tax collections will be used to fund the cost of The Woodlands Fire Department previously funded by Community Associations’ assessments. The remaining funding from the sales tax collections (approximately $15 million) will be used to fund (1) Regional Participation Agreement funding to Houston and Conroe, (2) debt service and annual expenses including:

• Economic Development Zone debt service
• Town Center security
• Convention and Visitors Bureau
• Community event promotion
• Economic development promotion

Service enhancements included:

• Expansion of existing community policing program (over a two-year period)
• Initiation of a group sales operation - use existing personnel
• Initiation of a centralized purchasing operation - use existing personnel
• Program for capital reserve funding
• Program for economic development reserve funding
• Funding for assumption of water taxi service

Provision for three reserve accounts are proposed in the event of potential downturns in sales tax and hotel occupancy tax collections.

• Operating reserve – 20% of operating expenditures
• Capital Asset replacement reserve
• Economic Development reserve

Resources
¹ Township 2010 Budget webpage

Woodlands town hall meeting August 2009

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The second town hall meeting, since the Township was formed, was directed at the 2010 budget. Residents did participate in comments after the budget proposal prepared by the township and association staff was presented. Like usual, some were ultra critical and others who had special concerns. The Township continues to have a few people totally submerged in their quest for a city government. Most residents don't really care, so long as their quality of life is maintained or improved and they don't have to spend their hard earned money for something they can get otherwise. There remain issues in the community as we regularly discuss here on this website, but where is there any place without issues? So what said the people in this meeting? The responses are cataloged, but I can't say that I captured all of the concerns expressed.

1. Swimming pools are not open at convenient times for working residents who want to enjoy the amenity with their families. Suggestion - open later, close later (8pm). I suspect Parks and Recreation will be looking into this suggestion. People do use the pools early in the summer, but the need to be open later is probably a valid point for some pools, maybe not all.
2. Seniors need help with the rising cost of living here. We need a senior tax exemption. The Township has been working on this issue. Tom Campbell has been a very big proponent. I too hope for relief!
3. We have a problem with crime here. Let's have a surge in law enforcement, similar to the Iraqi surge. Get it fixed now! This was in response to the two year plan in the budget. I will write an article specifically on this subject soon. It is much more complicated than this, and we need to have a detailed plan to deal with the recent and future issues.
4. Stolen car in driveway. "I moved away from a place that had crime and came here to get away from it. I bought a new car, and it was stolen out of my driveway here. I thought this was a safe place." This is of course a valid concern, and we all are on board in concert with this gentleman; however again, the issue is complicated and needs discussion and planning. Residents have a role in this too. It is not just a problem for policing or for the Township.
5. Another concern about policing budget. We don't want to overspend on the issue. Shouldn't we be looking at efficiencies of our current deputies first? There may be improvements that would not require so many deputies. For example, reporting using our park WIFI installation, or working to reduce false home alarm calls, or working to have our citizens take on some responsibility themselves for the rash of crimes such as locking their home and cars. I will address policing issues in a coming article.
6. Unnecessary Spending - playground equipment was recently changed in Capstone Park. New equipment is not as durable as the old equipment, and the old equipment did not need replacement. This appears to be a waste of money. We don't need to replace equipment just to replace it. Make it last for its lifetime.... I have been a bit concerned about this also. However, as Claude Hunter responded, equipment is often changed out for safety or regulatory reasons. The reason for this particular instance was unknown.
7. Another concern stated for lack of tax exemptions for the elderly. We have lived here a long time and want to stay but there is no tax exemption for those of us over 65 (over 70).
8. Museum and cultural amenities. the Township is lacking in its effort to bring a museum here. Can't we have funds allocated to that effort? A teacher and long time resident brought this issue to the table. There were several women who seemed to come together to express their concern at this meeting. Nelda Blair asked them to return to the podium to discuss it further; another lady did that later. A clothing store is going to occupy the place in the mall where the museum is currently located. The Houston Museum of Fine Arts will cease operation at that location in September. The Woodlands will no longer have a museum. There is no plan to find a place for it. Nelda responded that the mall operates separately and the Township has no influence on its business. "We cannot get to Houston to visit the museum there. We need a museum here." For sure, in my opinion, there is a need to have a satellite museum north of Houston, more accessible to residents here. Something more may come of this during the budget process.
9. Understanding of bonds. You are proposing a 32 cent tax and a bond of $45mm. That is a huge tax! This was just a misunderstanding of the purpose of a bond election proposal. The statement may help the Township to sell the bonds to the public. Bonds are used to finance the investment over a long period of time, keeping taxes low. The items in the bond are mostly what would have happened if we had remained as associations instead of a taxing government. The difference is that these projects would have been financed through loans, or taken out of accumulated treasuries. The Township has to follow government regulations and must seek the least cost solutions for capital projects so that taxes can be kept flat. The bonds will allow us to pay the debt over about 20 years instead of 4 or 5. An assumption that the bonds will pass is included in the 32 cent tax rate. There will be no added tax for the bonds.
10. Not a municipality. If we were a municipality, we probably would not be having these problems. Why are we reinventing the wheel? Let's be a city!!! Renegotiate the agreement with Houston! Well, there is a plan to study and formulate a proposal for a long term governing body. What will be done will be for the benefit of the community, not blindly do something because everyone else does it. We have a schedule and have appropriated funds in the budget for the study. 2014 is the earliest in the agreement when we can be incorporated. Personally, I do not see this gentleman's point. let's go forward and not backward. Everyone is on-board to look at this issue, and everyone knows there are pros and cons. Are we not a community of intelligent people? Let's move forward with our plan. Everyone understands the issues with policing. We will probably not have lower taxes when we become a city, more likely higher taxes. The Township has made great progress and now we have a proposal to reduce taxes with more policing. I don't know what more to ask for that being a city would solve.
11. Not sufficient financial reserves. We need to raise the tax one cent to obtain sufficient financial reserves. I have been in city governments and seen much better reserve plans. We have significant assets here and must be able to protect and replace them. Personally, I hope the plan is sufficient. I do not want higher taxes. This will no doubt be discussed in future budget meetings.
12. Ice Rink. We had two views. (1) Lessen the priority. It is not required. Let's instead promote private enterprise to take on the challenge. It has not been a profitable venture in the past. (2) Keep the priority. We could do a great deal to promote the sport of ice hockey in the area. Make the rink full size capable for sports competition. Rinks are a premium in the Houston area. We have to travel across the city for one. Area sports clubs will want to use it. It can be profitable. Personally, I can see both views. Before the township sets out on this, the project has to be properly sized and framed so that we don't end up with a problem. We should stay out of business ventures ourselves and find private money for them. It could be considered just another park amenity. We do need such facilities for our children. We don't need to be the recreational facility for North Houston. Why can't there be other places in North Houston with a rink? Is this really something the Township should invest in? It would be a draw for business in Town Center and would produce sales tax money though. Should residents be footing the bill? This is controversial, so make an excellent business plan for a well thought-out project, and I would support it.
13. Law enforcement - We have a serious crime problem here. Consider immediate measures to fix the problem. No additional comment from me. I will address seperately.
14. Veterans Park - we have taken this issue to the associations several times before. This is an opportunity for the Township. We do not have a place to go here to honor our veterans. Please plan a park in the budget for us to have a veterans park! Don't you think this is a reasonable request? I do.
15. Can't we finance the assets longer than 20 years, more along the line of the life of the asset, say 30 years? Don Norrell responded, "yes but investors need more security at the General bond rates. We would have to pay more interest for a higher risk bond."

The comments above came from residents in almost every village. I was happy to see so many people participate. It sounded like the voice of the community, and as one resident put it afterward, "we speak out and all ideas are respected and considered even though some of us disagree on some issues." This is the way it should be. Where there is one nugget, there is likely others. A I stated in a prior article, this presentation revealed a great deal of work and thought. Everything I see is logical. There is tweaking to do, and I for one, hope to see a few things changed but nothing dramatic.

Resources
¹Proposed Annual Budget Fiscal Year 2010 presented by Norrell
²2010 Budget proposal from Commentary viewpoint

Financing Woodlands Township Capital 2010-2014 Bonds

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The Woodlands Township Executive Committee voted today to send a bond proposal strategy for a long-term debt management plan to the Woodlands Township Board, for consideration at the July 22nd meeting.

The Township five-year plan will include a number of projects requiring long-term financing. The proposed construction of a new office facility for The Woodlands Township operations is purposely not included in this list, but does not indicate that the project will be neglected in the plan. The project planning and review of facility options and alternatives is still underway and financing options will be considered at a later date.The plan is to reduce the cost of financing Township projects in this time of low cost money, and does not address the 21 million debt of the Economic Development Zones (EDZ) 1-3, which funded the construction of Town Green Park and partially funded the construction of Market Street, among others. These debts are addressed in separate funding programs.

Construction projects in the plan and the refinancing of existing debt include:

Bond Proposal for financing major capital projects in five year plan	Amount $mm
Total estimated Capital Budget 2010-2014	47.6
Refinance TWA and WFD debts	8.0
Refinance WFD Station #6 and Fire Training Facility debts	11.6
Construct Creekside Fire Station	3.4
Construct Indian Springs Fire Station	3.7
Reconstruct Grogans Mill Central Fire Station	6.4
Purchase fire trucks and equipment for new stations	2.5
Construct new parks and pathways in five year plan (Creekside and Town Center)	12.0

The most viable financing option requiring long-term financing, with voter approval, is the issuance of General Obligation bonds (“GO bonds”). GO bonds are backed by the issuing party and carry an irrevocable commitment - the authorizing body (Township) will levy a property tax sufficient to fund the annual debt service requirements for the life of the issued bonds. This enables large projects to be carried for many years, committing but reducing the immediate tax impact of the projects.

GO bonds are typically tax-exempt bonds issued for a period of 20 years or less. They are rated by national rating agencies and are eligible for municipal bond insurance. Considering the Township’s large property tax base and the relatively low outstanding debt, The Woodlands Township should receive a favorable rating and qualify for municipal bond insurance.

Projects and refinancing will be discussed as part of the 2010 budget and five year plan. The first 2010 Budget Workshop is scheduled for 9 a.m. Wednesday, July 29, 2009, and the plan will be presented at the Town Hall Meeting on July 29, 2009. The final decision on the debt management plan will be considered by the Board in late August.

Woodlands Taxes and Budget 2010 - thoughts

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After reviewing the "alphabet soup" budgets of 2009, as a resident, I concluded that we needed some sort of consolidated view of them. So I generated one. Now I am sharing the experience with you and maybe you will have an easier time getting acquainted with this subject also. It is my hope that I can get more residents interested in this year's budget process. Later this month, the township will be providing us with information, but it may not provide an easy-to-assimilate view. So embedded in this article are several tools to help - a summary, several spreadsheets and some text of what I have learned. Also is a simple "what if" scenario on taxation. In late August, the township must complete its budget and establish a tax rate. Tom Campbell issued this communique just recently: "There are so many things to work on to complete the establishment of our new government that The Township will have six meetings on each Wednesday at 9 AM from July 22 through August. July 22 will be a regular business meeting. July 29 through August 19 will be budget work. August 26 will be a regular business meeting and the setting of the first property tax rate. Of Course, there will be public hearings announced on the proposed property tax before it is approved. However, you will have your chance to influence the development of this budget at the July 29 Town Hall Meeting."

Summary - Budget 101
This year, the budget process is earlier because of the taxing process. In past years, we operated independently and could schedule everything on a calendar year. Now we must account for the county's process and fit into their schedule. The township has to develop a budget now to set an assessment rate for 2010, in order for the county to administer the assessment process and collect taxes. Remember, we will receive a tax bill this year from the county, not from The Woodlands Association. That bill will contain the normal county and school taxes plus our assessment taxes.

The Woodlands Township will conduct a town hall meeting at the end of this month to present the budget and strategic plan. This will give residents an opportunity to give our feedback. I expect the township to link strategies to budget line items in order to place financial value on the strategic plan or value on the strategic plan, which is composed of community values. How that will be accomplished is unclear to me now. My guess it will be presented in a broad view of the plan. I am positioned to attempt doing the same and may do it in a separate article, just as a exercise to understand the fit and personally share with others.

For now, all I want to do is get the information to my readers and enable you to start formulating your own opinions on what needs to be done, on what tax rates are acceptable and what questions you want answered. I will share some of my own opinions as we go along.

According to my calculations, the consolidated 2009 budget totaled $63.9 million. The consolidated 2009 revenue from all sources was predicted to be $58.4 million. The deficit was made up with reserves as the associations began to execute their plans to dissolve themselves. The TWA had a budget carryover from 2008 and that was not included.

As most of you probably know, an expense budget is composed of two parts - (1) Capital - that which is an asset investment, adding value to the asset, and (2) Operations - that which is required to finance the operation of the asset. To levy a tax for required expenses, a taxing authority must establish what is needed to operate and what can be deferred. In our case, the revenue will be generated by a state sales tax and by an assessed value property tax. Other revenue is generated, just like it is for a resident, including fee collections, bank interest, and other sources. The business of running a municipal government is, in a single breath, to provide value to residents and businesses, to control expenses through leveraged service contracts & process management, and to provide services for safety and to preserve property value. It exists to provide a safe, economical and prosperous haven to live, play and work.

This last year of transition to a new government will bring four operations together under one umbrella operation. Today, the associations have a service company, The Woodlands Operating Company, which they share together, under contract. Service costs are proportionately allocated for the service company to recover its costs to administer the service programs under its contract umbrella. This accounts for the majority of expenditures in each association, but there are also direct costs. I will not go into this aspect of the budget at this time. You can look at the published budget sheets to review what is direct and what is not.

Budget for 2010
Currently, the township is preparing a budget for review by residents and businesses. Village associations are being queried for needed improvements in the villages, so that capital requirements can be determined and projects prioritized. This is the same procedure that has been followed for years. It is also preparing operational scenarios to determine tax rates. I want to be able to correlate the old to the new. As a reminder, we will go back to the original proposal in 2006 to form a township and remind ourselves what tax structure was "promised". Most of us knew at the time that there were some unknowns, and all we had were some rough estimates. Nevertheless, we developed expectations of how we could survive financially with a taxing authority. Many people were nervous about that. Nothing has changed as of this particular moment, but details are being collected and readied for presentation. We should expect government entity consolidation to create a number of opportunities for operational efficiencies within the next two years. I will refer to my original article which supported the formation of the township as the premise for bringing this up now.⁶ There is a need to hold our leaders to a responsible position on their promises. Our leaders include our precinct commissioner, our state representative, our state senator, our county tax assessor and others who helped to formulate the financial view of the proposed township and means to fund its operation. We wrote based on statements made, that we would realize a 31% direct + indirect reduction of assessments through this new organization. Right now, I doubt that we will realize this, based on what I have seen and heard, but from the numbers produced below, that realization seems feasible to me. We will be able to claim our assessment taxes to the IRS, but if you have already been doing that, you obviously will not realize any additional saving from that change in collection. I expect a 32% taxation rate, but hope for less. That will be about the same as before the township was formed. Now to present the spreadsheet.

Consolidated Budgets	WCA	TWA	WCOA	Town	Totals
	$mm	$mm	$mm	$mm	$mm
Operating Budget 2009	12.72	14.78	2.00	26.00	53.04
Parks Care and Administration	3.605	4.214	0.458	0.994	9.271
Solid Waste pickup/disposal	2.520	2.493	0.044		5.056
Streetscape Maintenance	1.070	0.918	0.289		2.277
Public Safety	1.069	1.415	0.247	4.675	7.406
Covenant administration	1.016	1.150	0.190		2.357
Firefighting and rescue	0.475	0.721	0.138	14.725	16.059
Streetlights Power/Maintenance	0.473	0.500	0.077		1.050
Other allocated	0.442	0.617	0.111		1.171
Neighborhood services	0.258	0.332	0.058		0.648
Community relations	0.201	0.258	0.043		0.502
Other expenses	0.053	0.056	0.001	0.045	0.155
Payments to Conroe, Houston				0.959	0.959
Transition to new govt				0.600	0.600
Marketing &economic development				0.933	0.933
Community&Environmental Svcs	0.218	0.284	0.050
General Administration	0.893	1.122	0.199	2.383	4.597
Other associations (Carlton)		0.186
Transportation (trolleys_etc)					0.00
Other_Operations&staff	0.429	0.517	0.094	0.685
Capital_Budget_2009	1.80	2.10	1.90	2.54	8.34
Park projects	0.702	0.808	1.891		3.400
Pathway Projects	0.750	0.578			1.328
Pathway improvements	0.000	0.335	0.008		0.343
Landscape improvements		0.080			0.080
Aquatics Facility Improvements	0.226	0.097			0.323
Signs/StoneWalls/Landscape	0.078	0.123			0.201
Athletic Facility Improvements	0.038	0.073			0.110
Other	0.003	0.003	0.004		0.010
Transfers and Capital				2.540	2.540
Total Budget 2009	14.52	16.88	3.90	31.08	63.92

Discussion

There are several assumptions made to produce this table. It is only created to put together the numbers from the published 2009 budgets^1,2,3,4 and provide a means to assimilate all of them in one concise view. I encourage all interested parties to review those documents as well, but this should be the quickest way to get your feet wet. Different account models are used in the association and the township. The association uses an older self-developed model, while the township uses a method known as the GASB method.⁵. In doing so, the township does not present the information in the same way, so I have chosen to do that as close as I practically could without losing information. The Chart of Accounts of all merging entities are being merged into one Chart of Accounts as part of the transition, so I hope to see this same information in a more readable format from the accounting system in the near future.

There are one time and ongoing expenses which are expected once again to be in the township budget. In 2009, we had a line item for $600,000 in the township budget as a one time expense. I did not back that out in my 2010 "guestimate". I did back out interest accumulated by the WCA financial reserves, since they no longer will exist. WCA had a low assessment rate for 2008 and 2009 because of their strategy to spend down the reserves before dissolving as a governing body. Therefore, to obtain an idea of what the income would be under normal circumstances, I normalized the income to an assessment rate of 32 cents per $100 assessment. I did that for WCA and WCOA. I also added in a guess for property value increases into the equation, as well as a guess for sales tax revenue growth.

Scenario I	WCA	TWA	WCOA	Town	Totals
...............................................	$mm	$mm	$mm	$mm	$mm
Normalization for 2010
Normalize WCA @ 0.032/100	13.62
Normalize WCOA @ 0.032/100			2.83
Reduce incomes from banks	(0.24)
Added  assessments guess	0.68	2.47	0.21		3.36
Added sales taxes guess (5%)				13.08
Guestimate income change	0.45	2.47	0.21	13.08	16.21
2010 guestimate Operating Budget					58.35
2010 guestimate Income					71.01
2010 guestimate reserve build					3.00
2010 guestimate available for capital					9.66

The scenario presented here has a large increase in operating budget for the first year of operation. That is, the consolidated budget is increased by 10% in the spreadsheet, yielding a generous $58.35 million operating budget, increased by more than $5 million. The scenario assumes a 10% increase over the 2009 normalized budget in revenue. There are certain complications in the changes that are to take place, so here we are just showing that income should be increasing by more than just sales taxes, but it is unclear how much, therefore the scenario assumption. An assumption is made that $3 million is sufficient for establishing a first year operational reserve. That will supplement the existing reserve. Then a capital budget exceeding 2009 is placed into the budget. If cuts are to be made at this time, it would likely be in the capital budget. As you will notice, I have not included a municipal office building for the government and will likely be part of the budget proposal. Another significant expected increase in service that will be costly will be the additional police protection likely to be proposed. I do assume we can become more efficient by this merger, so in 2010, I would expect to see contracts leveraged better and township operating costs reduced per household to begin the process of becoming more efficient.

So this is my current take on the budget, just to get my and hopefully your feet on the ground, to have a reference point for the coming discussions. I have not run additional scenarios but may do so soon. To expedite this information into the hands of residents, I will go ahead and publish this as it is.

Resources

¹WCA 2009 Budget
²TWA 2009 Budget
³WCOA 2009 Budget
⁴WoodlandsTownship 2009 Budget
⁵GASB Model of accounting
⁶Commentary Article on expectations of a new government - Tuesday Elections 2007
⁷My Decision and what I considered in reaching it

Let me know if you want more or have feedback on this subject. Most of you know how to reach me and if not, it is in my profile. If you want to post notes in Facebook, you are welcome to do so in The Woodlands Commentary. Just look it up in Facebook.