Image: Lame duck Montgomery County Judge Craig Doyal.
Conroe, March 30 – Precinct 2 Montgomery County Commissioner Charlie Riley and lame duck County Judge Craig Doyal have the opportunity to make good on a promise they’ve repeatedly made and would literally save many tens of millions of dollars in the process, if they just put the Decimation of Hope Highway, the well-known moniker for the approximately $85 million, 3 mile, TX 249 Tollway they want the County to construct and finance. By financing the TX 249 Tollway with general obligation bonds, as opposed to revenue bonds, Riley and Doyal could give Montgomery County voters the opportunity to vote up or down on the controversial project while saving approximately $23,869,358 in interest payments over the likely 25-year payout for the bonds.
On September 18, 2018, during a presentation to the Magnolia Area Republican Women at Magnolia High School, Calvin Russell, husband of a Republican Precinct Chair from Magnolia, asked Riley, “Commissioner, are you for or against [having a voter referendum on the proposed tollroad] and why?” Riley answered, “I’m not for or against it. The county attorneys said we couldn’t put anything like that on the ballot for a referendum for any opinion.” He paused and then added, “I would always want someone to be able to vote on something like that.”
“I would always want someone to be able to vote on something like that [the proposed tollroad].” – – Charlie Riley, Precinct 2 County Commissioner, September 18, 2018.
The Golden Hammer asked a financial analyst, who is very, very, very close to the Montgomery County government and has close ties to the investment banking community to provide an analysis of how much it would cost to pay for the $85 million, 3 mile Tollway, if financed with general obligation bonds versus revenue bonds, the latter of which are financially riskier and, therefore, must pay a higher yield to bondholders. The analysis provides a striking answer to the question, based upon current market conditions.
If the County government issued $85 million of general obligation bonds, well under the County’s remaining debt limit of $13 billion, according to Montgomery County Auditor Phyllis Martin, the County government’s taxpayers would have to pay interest at a rate of 3.62% over 25 years under current market conditions for total debt service of $129,747,191. Now, let’s be fair about this issue (as always). With general obligation bonds, while the toll revenue could support the debt payments, if they failed to do so, the taxpayers would be obligated through the County government to pay for the bonds.
It is important to note that Doyal, Riley, and Precinct 1 County Commissioner Mike Meador supported the use of general obligation bonds to finance the tollroads presently known as the State Highway 242 flyovers!
If the County government issued $85 million of revenue bonds, the County government would have to pay interest at a rate of 3.91% over 25 years under current market conditions for total debt service of $153,616,549. With revenue bonds, while a default in the debt payment stream would not obligate the County government to pay for the bonds, as a practical reality, the County’s citizens would face the necessity of paying that debt, because otherwise an odious group of investors, such as Arab businessmen or the government of North Korea, could purchase the entire Tollway for a tiny price out of bankruptcy and jack up the toll rates. That’s precisely what happened with a tollroad in the Austin area which went into bankruptcy: an odious group of private investors purchased the tollroad and made a killing on huge tolls.