Victoria MN Newspaper-City Scoop

Floor to Ceiling

She said that in the next year and a half, there is new debt in the amount of $9,900,000 being proposed -- with $6,000,000 plugged in for the new City Hall and Public Works Facility. Their repayment, she said, would be through a 20-year bond and the city's annual debt service on the facilities would be $428,500 with the current interest rate.

The remainder of the debt is in Special Assessment bonds for the reconstruction of Aster Trail, the 2014 street project, and the Wasserman Sewer Extension.

Nearly half of the city's total projected debt in 2014 -- $38,990,000 -- is in General Obligation Special Assessment Bonds, which means they are being repaid over time by the benefitting property owners. Street and water assessments are usually financed over 15 years. User Fees and Tax Levy and the two biggest sources of repayment.

"How much debt can we afford?" she asked, and pointed to the Finance Committee's recommendation that the net tax-supported debt should be less than 1.5% of a city's estimated market value. According to Carver County, the total estimated market value of Victoria is $1,020,440,000 (over $1 billion) for taxes payable in 2014.

"How close are we to the 1.5% limit for 2014?" was her next question. Kelly said the city is currently at .54%, but with the new City Hall, Public Works Facility, Aster Trail and 2014 street improvements, the number rises to 1.28%. "This leaves a cushion of $2.2 million for unforeseen opportunities or challenges in 2014," she said, adding, "There is nothing planned at this point."

Where will Victoria be in future years? She pointed out that the city debt/market value ratio decreases each year, to .85% in 2012 "based on the Long Term Financial Plan." Also, according to that Plan, the city can maintain or perhaps improve level of services and improvements without increasing the tax rate. The current tax rate is 39.5% and the Plan projects no increase in the tax rate.

However, because property values are increasing, increases are projected for the city portion of property taxes: $200,000 home ($21/year), $300,000 home ($32/year), $600,000 home ($96/year).

The Discussion

Said Councilmember Tom Strigel, in regard to water user fees that repay the debt of General Obligation Revenue Bonds, "When it comes to water, I feel it's a tax rather than a user fee. People don't have a choice with a water fee like they do with a fishing license fee, for example."

Councilmember Jim Crowley identified eight issues that he said are so important to a Debt Management Policy that a 4/5 or unanimous vote should be required in order to change the policy. He said he'd like to "tie a Council's hands" when it comes to changing a policy.

Stated City Attorney Mike Norton, "You can't bind future councils. It's only a policy."

Councilmember Crowley said he didn't like the arbitrary changing of city policy.

"That's what we do every day," said Councilmember Lani Basa, "but we're not arbitrarily doing these things."

"I want a binding policy for the sake of the taxpayers," said Councilmember Crowley.

"I agree," said Councilmember Strigel.

Said City Manager Don Uram, "There are projects out there, roads like 78th Street that some day we're going to have to fix."

Councilmember Joe Pavelko said the city should have money for roads and for what government essentially does, but not for water parks and nonessentials. He said, in any case, the city should wait until it has the cash to pay for things, that there is no limit to not spending or saving.

Mayor Tom O'Connor said that would be like a family not buying a house until they had the cash to pay for it. "Almost nobody does that," said the mayor.

Discussion will continue in October on adopting a Debt Management Policy.

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