City needs voters to help free funds to pay debt, save millions
Ballot questions are sometimes confusing. So I want to provide you with more details about Boulder City’s upcoming ballot question.
Boulder City Question No. 1 seeks permission for the city to use capital improvement fund money, as it becomes available, to pay down the city’s raw water line debt. To understand the purpose of this request, it’s important to first understand not only the raw water line debt but also the city’s financial plan and how the capital improvement fund works.
The raw water line was constructed in 2001 to increase water delivery capacity necessitated by increased demand. In 2006, the city refinanced the raw water line debt in the principal amount of $33,470,000 with a variable interest rate between 4.25 and 5 percent.
In the past 10 years since refinancing, we’ve paid down the principal balance by approximately $6 million, but we’ve also paid over $13 million in interest. The current principal balance is still over $27 million, with almost $12 million more in interest remaining to be paid through 2036.
However, under the leadership of former Mayor Roger Tobler and former City Manager Vicki Mayes, the city established a financial plan in 2010 that focuses heavily on debt reduction, a plan that the current City Council and staff have continued to support. As a result, we’ve recently paid off three multimillion-dollar debts — namely, the two Boulder Creek golf course debts and the third intake debt.
Our fourth and sole remaining debt is the raw water line debt, which the financial plan also addresses. Specifically, the financial plan recommends increasing our annual debt payments by $750,000 beginning on the earliest allowable date, which is fiscal year 2017-18. If we do that, then we’ll retire this debt eight years early and save almost $3.5 million in interest.
But in order to do so, we need a funding source. And the capital improvement fund is a logical source.
The city charter requires that all revenue generated from the sale of city-owned land and 20 percent of the revenue from city leases be deposited in the capital improvement fund. Miscellaneous sources such as interest income and fixed asset sales also help fund the capital improvement fund.
In recent years, most of the funding has come from leases, primarily our many solar leases but also the Cascata golf course lease, the Bootleg Canyon Flightlinez lease, and communication site leases. These leases typically inject at least $1.8 million annually into the capital improvement fund, and that number is expected to increase as more solar project phases become operational.
So why can’t the city just tap into these funds when needed? Because the charter also requires that any capital improvement fund expenditures be approved by registered voters. Hence the reason for the current ballot question.
You may be wondering why you should vote to approve this request. One obvious reason is that it will be a giant step toward paying off our sole remaining debt and making Boulder City debt-free. Being debt-free isn’t something that very many municipalities can boast. In fact, I’m not aware of any who can.
Saving ourselves millions in interest is another conspicuous reason. A third reason is that rather than depleting our utility fund to pay lenders, we’ll instead be able to pay ourselves by using the millions in interest savings for other much-needed projects like replacing our aging electric infrastructure.
And, finally, one of the most important reasons to approve this measure is that it would give the city more tools in its toolbox when faced with annual budgetary challenges. Every year there’s only so much money to go around, so too many projects and programs get kicked down the road to future years. In fact, as far as I can tell, limited funding options is one of the main reasons why prior councils repeatedly postponed urgent utility infrastructure needs in the past. They were simply hamstrung to do anything else.
Approving this ballot question will help further at least three of my five Mayor’s Vision goals for 2016, including continuing to get our financial house in order, picking up the pace to get out in front of pressing challenges on the horizon, and ultimately being more business friendly by making the city a more inviting destination.
Hopefully this article also furthers a fourth Mayor’s Vision objective, which is crystal clear communication about what the city is working to accomplish and why.
And if you’d like even more information to help you make an informed decision, my door is always open to discuss your input and questions. Thank you for your continued support and for all you do to make Boulder City such a wonderful place to live.
Rod Woodbury is mayor of Boulder City. He has been serving on the City Council since 2011 and is the president and managing shareholder of his law firm, Woodbury Law.
