As we originally reported, the University Medical Center of El Paso (UMC) is asking county commissioners for the authorization to issue $345 million in certificates of obligations. Certificates of obligation, or COs as they are commonly referred to are taxpayer-funded bonds that government entities, like UMC, issue to fund growth and operations. The COs, unlike other taxpayer-funded bonds are not voter approved. UMC has argued that the CO’s are necessary and less expensive for the taxpayers. However, the issue of transparency in the process remains.
On June 14, 2022, the UMC Board of Managers voted unanimously to ask county commissioners to begin the process to issue $400 million in COs. The vote was held on Tuesday, and county commissioners were expected to vote on the request two days later, on Thursday. After we broke the story on Wednesday, questions about the issuance of non-voter approved debt and the process UMC undertook were raised. When the county commissioners met to discuss the request, they tabled the request until next Monday, June 27, 2022.
County commissioners are expected to vote on the request to begin the process for issuing the non-voter approved debt. In Monday’s meeting, UMC is asking county commissioners to approve posting the notice to issue the debt. Unlike in the previous meeting, the county commissioners agenda item includes a UMC presentation for the request and the order authorizing the notification.
Issuing certificates of obligations requires two steps. The first, which is scheduled for Monday, starts the process with an official notification to be made in the newspaper of record stating that UMC expects to issue certificates of obligation. That notification starts a 45-day clock in which voters can object to the issuance of the non-voter approved debt. After the 45-day window, the county commissioners can then vote to issue the non-voter approved debt. The only obligation that UMC and the county commissioners have before they can issue the debt is to post the notification in the newspaper after they approve the UMC request. Before they vote on issuing the debt, which cannot happen sooner than 45-days, the county must post another notification in the newspaper as to their intent at least 30-days before they take a vote on the request.
Because questions about UMC’s transparency were raised about their request, county commissioners asked UMC officials to take public input on their request. According to the backup material added to commissioner’s agenda, UMC has undertaken to hold several public meetings and allow for public input. To what extent UMC intends to encourage civic participation is unknown. However, publicly they have promised county commissioners to explain their request to the voters.
Questions of Transparency Remain
The process UMC took to vote on the certificates of obligation by voting to ask county commissioners to post the request only two days before they were asking for the commissioners support and the lack of specificity as to the amount and lack of backup materials in the public postings have led to criticism of a lack of transparency.
Publicly, UMC officials have said that they are requesting $345.7 million. However, the official notification, which is included in the backup material, and is the legally required document that begins the process does not state that UMC intends to issue $345.7 million in certificates of obligation.
UMC officials have not identified how they intend to use the extra $54.3 million for. The original amount was $400 million, and after they told county commissioners they only intended to ask for $345.7 million, they have yet to revise their document even after county commissioners tabled the measure to have UMC explain their request.
Moreover, UMC have argued in their presentation that it will cost the taxpayers of the community $56.80 annually, or $4.73 monthly starting next year and ending in 2033. Starting in 2034 and ending in 2048, UMC argues that the county’s taxpayers will pay $28.70 annually, or $2.39 a month. The problem with that figure is that it is based on a mythical house valued at $100,000.
Zillow, an online listing of houses for sale, listed 1,090 houses for sale on June 25, 2022. Of those 971 listings were agent listings. Sorting the listings by sales prices shows only 15 houses priced at $100,000 or less. One listing at 713 S. El Paso appears have the wrong price of $1 shown on the listing. Several other listings under “other listings” show a price of $0. Zillow states that the average cost of a home in El Paso is $195,146. Realtor.com says that the median listing price is $249,000. Other realty tracking services also list the average price of houses to be in the $250,000 price range.
Thus, a $100,000 home valuation is unrealistic. The more accurate number would be the $195,000 as reported by Zillow. Using the conservative price point of $195,000, it would cost an average El Paso taxpayer $110.76 a year, or $9.23 a month for the first ten years and $55.97 a year, or $4.66 a month for the last 14 years required to pay off the proposed debt.
As readers can observe, this is almost twice the amount that UMC shows in its disclosures to the public.
El Paso News Unveils New Online Tax Tool
Because of the complexity of how taxes are assessed, exemptions are applied and the mathematical gymnastics that taxpayers are expected to make to determine how much a proposed bond issue or tax rate is going to cost them, we have decided to create an online tool to help you decipher what each proposal means in dollars.
Our online tool allows a registered voter to lookup how much they pay in taxes each year for their property and what a proposed bond measure like the one UMC is making will cost them. Readers can access the tool for free by clicking here. The tool can always be found on the top black menu of our publication.
Because county commissioners are set to vote on Monday to authorize UMC to notify taxpayers of the proposed non-voter approved bonds, we have decided to pre-launch our tool before we had finished adding all the taxing entities. Readers can assess what UMC’s proposed certificates of obligation will cost them should they be issued this year. We will be adding the other taxing entities in the coming days.
El Paso taxing entities will be starting to discuss next year’s budgets in the coming weeks. Part of the discussion will be what to set their tax rates at. Tax rates are what determines how much a property owner pays in property taxes. Just keeping the tax rate even does not mean that taxes do not cost more because the taxes are based on the property values as well as the tax rate. As valuations rise, so do the taxes. As taxing entities begin to discuss their tax rates, El Paso voters will be able to quickly determine what it means for their pocketbooks.
Our online tax tool is the first of many new voter empowerment tools we have planned.
Martín Paredes became a partner of Politico Campaigns, a political campaign management firm, in June 2022. The views and opinion expressed in our publication are those of Paredes and do not necessarily represent the views of the firm or its other partners. El Paso News is funded primarily by Paredes, in part by donations from readers and online advertisement. Politico Campaigns plays no role in our reporting. El Paso News has an open editorial policy encouraging any author to submit any article from any point of view for consideration to be published on El Paso News.