Joys of the Enterprise Fund by David Wright

When most folks think of funding city and water district projects---- big reservoirs, it is enough to cause acid reflex ---or maybe a large yawn. To sort out hundreds of millions of dollars worth of money movement from general operating accounts, general funds, capitol reserves, DDA corporate handouts, much less enterprise funds is just not like Monday night football.

In truth, there are some funding operations that deserve a little inquiry. One such operation is Enterprise Funds. What makes them so intriguing is that they are set up to go around the Tabor Amendments. Tabor is a constitutional amendment refered to as the Tax payers bill of rights . If government entities want more taxes, the public is by law supposed to approve them. Now mind you, there are some other items in this bill that are suspect, but this part of it is interesting because it necessitated the “need”  for Enterprise funds, a handy way to get around public approval of new indebtedness.

If a community or a district wants to build a large reservoir to enable more growth, it generates the capitol for the project by selling Revenue bonds and placing the proceeds in an Enterprise Fund. Of course, once spent, it is debt--many millions of dollars that has never been voted on by the people! 

 The debt has to be paid back. The community will pay it with any one of a number of revenue streams, but most commonly, at least for projects that are made to enable development, by growth fees of one sort or another. The reason being,  growth needs to pay for itself. That all makes sense. There is a little catch of course, and that is if the growth revenue stream should slow, then another stream must be found. That stream will be user fees. Now wait a minute. Does that mean that you will now be paying for the water to enable growth? Certainly does. Did you ever get a chance to vote on that? I don’t think so.

There is even a stranger part. Every time there is a reasonable survey requesting a list of local citizen’s greatest concerns for their quality of life, RAPID GROWTH is frequently no.1. Does it seem strange that it might be possible that you will be asked to pay for something that enables rapid growth---something the majority of the citizens do not like?

There is more. When a community has a long term debt that is paid for with growth fees it means that community is committed to long term growth. If the growth slows and the debts can’t be paid, and the users are angered over increased user fees, the town fathers are going to be out there crying, and in some cases flashing good bribe money to get more growth in town, that is the same growth that much of the public lists as undesirable! The community is trapped.

There is more. I would ask, is it possible that a community can commit to a long term debt to be paid with growth fees and that length of debt service will  actually go beyond the projected build out? Say, build out is projected to be in 12 years, but the note is for 30 years.

In summary, enterprise funds are set up to prevent the public from having a vote on massive indebtedness. If the funds in the accounts are being used for projects to enable growth, prolong it and you are paying for it, is that what you want?