05/28/2020

Oregon Local Bond Measure Election Analysis

by

In the May 2020 election, Oregon residents approved almost $340 million of general obligation bonds, substantially more than the $180 million approved in May 2019, Although results have yet to be certified, and therefore still preliminary, the bonds approved by this election are in high demand as investors seek high quality tax-exempt investment alternatives.

There are four scheduled election dates in Oregon each year: the second Tuesday in March, the third Tuesday in May, the third Tuesday in September, and the Tuesday after the first Monday in November. In November 2008, Oregon voters approved Ballot Measure 56, which repealed a law requiring more than 50% of a county’s registered voters to vote in bond measure elections held in May and November. As a result, the May election has become an important election to follow for new bond measures.

By election measure 64% of the bond issues were approved; however, 75% of the total requested par amount was approved by voters. Oregon typically sees more ballot measures during general elections, which are held in November, of even-numbered years. Accordingly, the current election falls flat versus the 2019 November general election, which approved a healthy $820 million of new supply.


The relatively strong election results came as a surprise due to severe public health measures implemented in March to combat the rapid spread of COVID-19 having an unprecedented economic impact on Oregon and the United States. Furthermore, the day of the election, the State of Oregon Employment Department announced the State’s unemployment rate rose from a near-record-low 3.5% unemployment in March to a record high 14.2% in April, after 266,600 jobs were lost in the first two months of this pandemic. Furthermore, voter turnout has improved substantially to an estimated 46.4% from 34.1% in the May 2018 primary election.

Another indication of the strength of the election was the passage of Centennial School District’s $65 million construction bond issue. The measure was previously turned-down four years ago with only 44% of district voters approving the measure. Preliminary results indicate 53% approval of the measure. The bonds are being issued to make improvements the District’s schools, including renovating and replacing: roofs, boilers, foundations, windows and flooring. These projects are estimated to create operational savings and efficiencies by upgrading HVAC systems, lighting fixtures and plumbing. District is also adding gymnasiums to four elementary schools that currently have no dedicated gym space to meet new State P.E. requirements.

However, the COVID-19 pandemic did result in four local governments withdrawing their bond measures from the ballot. The result was Oregon voters had the total par amount available for consideration reduced by over a third. The most significant withdrawal was the City of Bend’s $190 million transportation capital construction bonds. The bonds were to be used to make a variety of traffic flow improvements to key corridors and intersections and make certain neighborhood safety improvements such as adding sidewalks and safe crossings near schools and parks.

A significant marketing point for several of the schools issues was the Oregon School Capital Improvement Matching program, which is a grant program offered by the Oregon Department of Education, supporting communities that pass general obligation bonds for school improvements. An example from this election is Canby School District, which asked voters to approve a $75 million bond, which if approved, will be matched by an additional $4.7 million from the state. Measures such as this present a value to property taxpayers, since a portion of the project is funded by the matching grant. Canby’s measure is currently passing, with over 60% of votes approving the measure.

Overall, this election will provide a significant source of additional supply to the market, and we will thoroughly analyze and consider all of the bond issues. Bond issuance this year has been off to a slow start, with many offerings being delayed due to economic concerns. While this election will help alleviate some of the supply concerns, we expect that issuance will be at approximately the same level witnessed in 2019.