City debt is within legal limits
The city of Fort Dodge is about $108 million in debt, but homeowners won’t be paying all of that off with their property taxes, according to the local government’s fiscal officer.
Jeff Nemmers, the city clerk and finance director, added that the amount of debt that will be paid off with property taxes remains within a constitutionally imposed limit.
Nemmers explained the city’s debt Thursday evening during a meeting of the Well-Informed Webster People. About 10 people attended the session at the Light of the City Conference Center, 2175 180th St.
He was joined by Deputy City Clerk Dawn Siebken, who explained her role in keeping records, preparing City Council agenda packets and getting financial information published as legal ads.
According to Nemmers, the city’s debt consists of these elements:
$54 million that will be paid off with sanitary sewer revenue.
$30 million that will be paid off with property taxes.
$22 million that will be paid off with water bill revenue.
$970,000 that will be paid off with tax increment financing revenue.
$248,000 that will be paid off with Lakeside Municipal Golf Course revenue.
The level of debt jumped from the 2012 amount of about $74 million in large part because of borrowing needed to pay for providing water and sanitary sewer service to the ag industrial park known as Iowa’s Crossroads of Global Innovation, the city clerk said. He added that companies in the industrial park will pay off the debt incurred to install the utilities needed to serve their plants.
”I want to be very clear that they’re paying for their share,” he said.
The city must comply with a constitutional limit on the amount of debt that is to be repaid by property taxes. For Fort Dodge, that limit is now about $51 million, according to Nemmers. He said with the total amount of such debt now at about $30 million, the city is at about 62 percent of its constitutional debt limit.
Councilman Kim Alstott said the city additionally has a rule limiting its debt to 80 percent of the constitutional limit.
For the current fiscal year, the city levies a property tax of $4.40 per $1,000 of taxable value to pay off bond debt. That levy will remain the same when the new fiscal year begins July 1.
The city was able to save $814,911 over a decade by refinancing $8.2 million worth of bonds earlier this year.
Nemmers said the refinancing won’t bring in any more money, but it will reduce the amount of money the city pays for debt service.
”Our amortization schedule will go down,” he said. ”We’ll be paying less in interest.”
Asked if the money saved by refinancing could be used to pay off other debt faster, Nemmers replied, ”In theory you could, but it wouldn’t make a material difference.”
He also offered a summary of some of the city’s other accounts.
The 1 percent local option sales tax generated about $2.5 million between the beginning of the fiscal year on July 1, 2012, and the end of April. About $1.9 million has been spent in that same time period.
”The trend has been positive,” Nemmers said.
Harlan and Hazel Rogers Sports Complex and the aquatic center have been losing money, according to Nemmers.
He said the sports complex lost $156,6341.11 in the last fiscal year and has lost $65,945.22 so far this fiscal year. But he said the complex generates sales and hotel-motel tax revenue for the city.
The aquatic center lost $35,267.20 in the last fiscal year, according to figures presented by Nemmers. It has lost $88,510.79 so far this fiscal year.
Although Lakeside Municipal Golf Course lost $67,037 in the last fiscal year, it’s showing a profit of $38,735 so far this fiscal year, he said.