Finance staff recommends cautious approach to a 2026 bond; $750M cap proposed, option to delay to 2028

Financial Services Director Kim Olivares briefed the committee on the city's debt capacity and scenarios for a potential 2026 bond program, emphasizing modeling assumptions and recommended limits.

Olivares said the city currently has approximately $2.4 billion in outstanding general obligation (GO) debt and substantial authorized but unissued (ABU) amounts tied largely to transportation and affordable housing programs. She described modeling assumptions — 3% annual assessed value growth and conservative 5% borrowing cost — and illustrated taxpayer impacts under several scenarios. "At this current rate, it's about $14.14 and 34¢ for every $100,000 of debt that you issue that impacts the taxpayer on an annual basis," she said, and staff modeled scenarios that ranged to about $758 per typical taxpayer by FY30 if a $1 billion program were added to current ABUs.

For planning purposes, Olivares recommended not exceeding $750 million for a 2026 bond program or delaying to 2028 to allow current ABU spending to progress and to preserve delivery capacity. She noted delivery challenges on mobility projects and that prior off‑cycle bonds (2016, 2020) have left transportation with a large remaining balance. Staff also recommended limiting program durations (six years) and avoiding one‑off bond spikes that strain delivery.

Councilmembers pressed for more detail on which projects remain in ABU balances, peer comparisons, issuance history, and the credit‑metric assumptions behind the modeling; staff agreed to provide further breakout data, historical issuance rates, and assessed value growth history. Olivares said the bond advisory task force remains engaged and staff can refine options, including a smaller or phased program that targets departments with capacity to deliver.

No bond authorization vote occurred; the committee asked for follow‑up analysis to inform a later decision.