City Debt

The City has prudently issued a modest amount of debt over the years, maintaining a sizable debt capacity and consistently following a conservative fiscal management policy, which is reflected in the highest possible bond rating from Moody's Investors Service: Aaa (“triple A”) rating on the City’s unlimited tax general obligation (UTGO), or voted, bonds and limited tax general obligation (LTGO), or non-voted, bonds. Only two other cities have a Aaa bond rating from Moody’s: Seattle and Bellevue. A high bond rating enables the City to secure lower interest rates, thereby reducing debt service costs. 
 
The City can issue five types of debt which have legal limits set by the State.  The five types of debt include:

1. Voted general obligation bonds
2. Non-voted general obligation bonds
3. Revenue bonds
4. Lease debt
5. Loans

For the purposes of the legal limit debt calculations, leases and loans are included with the non-voted general obligation debt limits.  A schedule of all the City debt classified by type is included later in this section.

• Schedule of Debt Outstanding
• Schedule of Debt Capacity

Voted Debt

Voted debt must be approved by registered voters via a ballot measure, with an additional (i.e., excess) property tax levy dedicated to paying the annual debt service costs. Voted debt has typically been used to fund large public buildings and to buy land or open space. The City currently has no voted debt outstanding.

Non-Voted Debt

Non-voted debt must be approved by the City Council, with the general tax revenues of the City used to pay the annual debt service costs. Non-voted debt includes not only bonds but also any loans and lease obligations of the City. The active issues are described below.

2004 MICEC Construction – In 2004, the City issued $2.0 million in councilmanic bonds to partially pay for the construction of a new community center.  The new center was completed in December 2005.  To save on interest costs, this bond issue was refunded (i.e., refinanced) in 2013.

2009 LTGO South Mercer Play Fields – In 2009, the City issued $1.0 million in LTGO bonds to fund capital improvements at the South Mercer Playfields.  To save on interest costs, this bond issue was refunded in 2017.

2009 LTGO Sewer Lake Line – In 2009, the City issued $9.4 million in LTGO bonds to fund a portion of the sewer lake line replacement project.  To save on interest costs, this bond issue was refunded in 2017.  Sewer utility rate revenue are being used to repay the long-term debt. 

2011 LTGO First Hill Water Improvements – In 2011, the City issued $1.5 million in LTGO bonds to fund a portion of a the water system improvements project in the First Hill neighborhood.  Water utility rate revenues are being used to repay the long-term debt. 

2012 Fire Apparatus Lease (Velocity Pumper) – In 2012, the City Council authorized the purchase of a Velocity Pumper Truck from Pierce Manufacturing through a 10-year lease purchase financing agreement with Municipal Asset Management for $619,547.

2013 LTGO Fire Station Construction and Equipment – In 2013, the City issued $4.9 million in LTGO bonds to fund the replacement of Fire Station 92 and a Fire Rescue Truck.  The annual debt service is being funded by a 9-year levy lid lift approved by voters on November 6, 2012.

2015 Fire Apparatus Lease (Mini Pumper) – In 2015, the City Council authorized the purchase of a Mini Pumper Truck from Pierce Manufacturing through a 9-year lease purchase financing agreement with Municipal Asset Management for $341,295.

2018 Fire Apparatus Lease (Enforcer Pumper) – In 2018, the City Council authorized the purchase of an Enforcer Pumper Truck from Pierce Manufacturing through a 9-year lease purchase financing agreement with Municipal Asset Management for $732,778.

Public Work Trust Fund Loans

In addition to the above debt, the City has one long-term loan outstanding as of the end of 2018.  Public Works Trust Fund loans are low-interest loans (1% interest) administered through the State of Washington Department of Community Development.  In 1985, the legislature made provisions for this program using the Public Works Assistance Account, which is funded by the Motor Vehicle Excise Tax (MVET) collected by the state.  To qualify, jurisdictions are required to do the following:

1. Impose the ¼ of one percent real estate excise tax;
2. Have developed a long-term plan for financing public work needs;
3. Be using all local revenue sources which are reasonably available for funding public works; and,
4. Have an adopted comprehensive plan.

 Schedule of Debt Outstanding 

Debt Capacity

The debt capacity of the City is limited by law. Below is a chart showing the computation of the debt capacity as of December 31, 2018.

Note: General purpose debt may not exceed 2.5% of total assessed valuation (AV).  Any non-voted debt reduces the margin available for voted general purpose debt.