Local bond measures won at Oregon’s May 16, 2017 special election. Although results have yet to be certified, and are therefore still preliminary, $1.5 billion of general obligation bonds were approved by voters across the State. By election measure, 62% of the issues were approved; however 83% of the total requested par amount was approved. For a special election, these results compare favorably with the November 2016 general election, which approved $1.76 billion of issuance. Oregon typically sees more ballot measures during general elections, which are held in November of even-numbered years. However, even the 2014 general election only produced $615 million of potential new supply to the bond market.
In 2008, Oregon voters approved Ballot Measure 56 which repealed a law requiring more than 50% of a county’s registered voters to vote in bond measure elections held in May and November. This has benefitted local governments with bond measures and local citizens supporting those measures. According to election results compiled by the Oregon Secretary of State, no Oregon counties received more than 50% of ballots from eligible voters. Josephine County had Oregon’s highest voter turnout this election, with 46.36% of registered voters casting ballots. The County’s large turnout was largely attributed to several local option levies including a public safety levy which was approved following 5 separate failed attempts at elections from 2012 to 2016.
The majority of the bonds approved were for school districts making capital improvements to existing facilities and constructing new facilities to accommodate enrollment growth. School district’s accounted for over 90% of the total requested amount and over 70% by number of measures. Most notably, Portland Public Schools passed its $790 million construction bonds, which is the largest bond any local government has placed on a ballot in Oregon history. Overall, this election should provide a substantial amount of supply to the bond market, particularly following the success at the November 2016 general election. Collectively, the elections approved over $3.26 billion of new bonds, with many of these issues of acceptable size and credit quality for the portfolio.
Voters also appear to be less price-conscious, given the high percentage of measures passed with relatively high taxes rates. Of the measures presented with estimated tax rates over $1.00 per $1,000 of assessed value, 75% were approved and both measures over $2.00 were approved. However, certain governments continue to face opposition. Mt. Hood Community College’s $75 million issue to build a new technology center and seismically upgrade campus buildings was defeated by 57% of voters. This marks Mt. Hood’s sixth defeat for a bond since 1974.
Nevertheless, given the success of recent elections, local governments are already making plans for the November 2017 election. In a unanimous vote, the Hillsboro School District board approved a plan to present a $408 million capital construction bond on the November ballot. The District is issuing the bonds to finance capital construction related to an anticipated 2,000 new students expected to move into the District over the next several years.
Vice President, Municipal Bond Analyst
Kirkpatrick Pettis Captial Management