City of Windthorst issues bond debt for TCU, Dallas & more

Pratt on Texas“How A Tiny Dairy Town Is Helping Fund Projects At Major North Texas Institutions,” was an intriguing headline in the Texas Standard. It’s about 400-resident Windthorst, south of Wichita Falls, the little crossroads with the beautiful church on the hill.

Alexandra Hart wrote what the small dairy community of Windthorst “is the source of more than $230 million in bonds for the city of Dallas and elsewhere. The town “has issued bonds for several projects, most notably the Dallas Arboretum, Texas Christian University and the Jesuit College Preparatory School of Dallas.”

Peter Simek, a D Magazine editor was quoted as saying: “Basically, small towns or any towns, any cities, are legally able to issue bonds on behalf of various types of private organizations, nonprofits and the like, as long as they have the approval of the local municipalities.”

Simek says the town’s approach to generating revenue is legal, but it’s “one of those odder, more idiosyncratic corners of the municipal finance world. There’s a little bit of a cut: depending on the size of the bond, they get anywhere from $10,000 to $30,000.”

I find the overall idea… bad public policy and something the next Legislature should make illegal.

This “idiosyncratic” deal appears, at least in my cursory understanding, to put local taxpayers on the hook for debt if the outside institution doesn’t meet its obligation. For Windthorst it’s likely a good deal because should all go south it could just cease to exist and likely not seriously damage the lives of its residents.

I find the overall idea of local government issuing bond debt for outside unrelated non-government entities, getting them tax breaks not otherwise available and retaining the risk for unpaid debt, bad public policy and something the next Legislature should make illegal.

Until then, keep this quite or your local officials will start trying to finance a new amusement park for Phoenix or Chicago, telling you it is all safe, so they can get their cut.

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