Debt, the musical
Okay, maybe not a musical per se (the song rights would strain our poor little budget), but I do have a little song-and-dance for you about the city’s debt.
As part of her continuing series of budget “chalk talks,” Interim City Manager Ann Marie Gallant laid out the nitty gritty details of the city’s debt to date (the information is also contained in our city budget, by the way). Here’s the deal:
All told, the city’s got about $140 million in debt on the books through 2033. With interest, we’re looking at almost $365 million. Of course, there are several different types of debt, and the money to pay it off comes from different places. Let me try to walk you through it.
The biggest (and probably most controversial) amount is tax increment debt. Including interest, we owe $151.7 million for bonds we have issued to improve out business and waterfront districts. The bonds are paid with increased property tax revenues that are generated by the improvements that were made. (After those are paid off, the money goes to all the places it normally goes – state, county, city, schools.)
We’ve also got $24 million due against lease revenues at Alameda Point.
Next up are bonds that are secured by land. That $134.1 million is paid with special assessment dollars in Harbor Bay, Marina Village and Paragon Gate.
The city’s got about $9.6 million in “general obligation” debt (we’ll pay $20.8 million when you include interest) for our libraries. That money gets paid back through property taxes. We’ve also got bonds for City Hall, police headquarters and the sewer system. That $34.2 million gets paid back by the departments the debt was issued for (and in the case of City Hall, that means every department that uses city hall pays a little piece).
Legally, there are limits to how much debt the city can carry, though certain kinds of debt – including tax increment debt – aren’t applied to that limit. The California Constitution (Article 16, Section 18 if you’re looking) says cities can’t incur more debt in a year than revenue.
All told, we’ve got $15.9 million due this year, with about $5 million for redevelopment bonds, $7.9 million of it land-secured debt paid by special taxes and assessments, with the remaining $3 milion distributed among those other categories.
As far as I can tell, there are no legal limits on the amount of tax increment debt municipalities can incur. I know the amount that the folks at development services say they will bond up to – $184 million – was based on the amount of property tax revenue they think development at the site will generate.
“We do have an interesting debt portfolio and we are managing it well,” Gallant told the council the other night.
For fellow nerds only: I put together a little spreadsheet with some of the numbers from Tuesday night, and you can view that right here.