Forwarded on behalf of Wally Swan --
In answer to the statement in the Star Tribune that adding debt load from
the Library Referendum would not have an effect upon the city bond rating:
According to Standard and Poor's (January 2000), the average net debt per
capita for 32 AAA rated cities is $1,750, although some latitude is granted
based upon the other major factors that go into making up a bond rating
(e.g. larger cities may have a bit more debt based upon other major rating
factors such as administration, economy and finances, with an average of
$1,883 per capita for larger communities). The direct indebtedness per
capita for general obligation bonding in Minneapolis will be $2,948.34 (for
all year 2000 sales as of December 31, 2000). Neither the use of debt
scheduling (adding segments of the $140 million Library Referendum over a
multi-year period to the aggregate debt of $1,131,118,438 as of the end of
year 2000) nor the designation of the $140 million Library Referendum as
"infrastructure" will prevent insightful rating agencies from looking at
their usual ratios and numbers regarding per capita level of debt and the
aggregate total of debt .By way of comparison, one might compare the end of
year 2000 Minneapolis general obligation debt (plus the $140 million Library
Referendum debt) to the Hennepin County general obligation debt of
$1,610,553,000 (Fitch, July 29,1999). Hennepin County has three times the
population of the city of Minneapolis, has considerably more resources, and
its per capita debt load is clearly dramatically lower.
Wally Swan
Board of Estimate & Taxation
Forwarded by David Brauer, List manager, Minneapolis-issues
