If I were running for council, make no mistake I would make our city’s exploding debt my number one issue in relationship with quality of life bonds. As Ellis points out on Sunday in his column, an indoor pool would be nice (and I agree) but how are we going to pay for it?
Did you know the city’s current or authorized debt of more than $400 million exceeds the state’s debt? I didn’t until recently. South Dakota’s debt obligations are a little north of $310 million. And the governor has proposed paying that down this year by 20 percent. Sioux Falls has more debt than the state.” 90 million more debt!
That is almost $2,500 of debt for every resident. It is an interesting thought for SF residents that they are on the hook for $710 million total debt between the state and the city! And the city wants it’s citizens to embrace more debt with an indoor pool. And that is the real issue here.
Am I opposed to the city bonding more debt? No, but those kind of loans should be reserved for NEEDED infrastructure projects and emergencies, not swimming pools. We can still maintain and have quality of life projects in Sioux Falls (snowgates for example) but we must budget for them while trying to pay down our current debt.
You.
Should.
Run.
“That is almost $2,500 of debt for every resident. It is an interesting thought for SF residents that they are on the hook for $710 million total debt between the state and the city!”
This is a tad misleading. In your first sentence you break down the total debt by Sioux Falls resident, yet in your second you just lump all the state debt together while putting in on SF residents.
The truth is that $310MM the state owes isn’t just a Sioux Falls expense, so to be fair you would need to divide that by the number of SD residents (845,000). Since Sioux Falls contains around 160,000 of those residents (19%), you could say we (SF residents) also owe about 19% of the debt or around $59MM.
So every resident of Sioux Falls in theory owes about $370 to the state and $2500 to the city or about $2870 each. Still a massive pile of debt, and I was surprised to learn the city has more debt than the state (and no plan for that to change anytime soon).
Thankfully the city gets its funds primarily from sales taxes, and there is a very large metro area paying those taxes rather than just the residents themselves, so we can thank our neighbors in Tea, Harrisburg, Lennox etc. for keeping the street lights on.
To your larger point though, I tend to agree we should focus on needs rather than wants while managing our debt. Just because we can bond for something doesn’t mean we should. That is a recipe for disaster.
When an entity (be it a person, a government, a company, whatever) starts funding normal operations with debt, watch out. Debts always carry interest, meaning that future income must always grow at least as fast as interest. This is a Ponzi scheme.
Also, funding new infrastructure and infrastructure maintenance out of sales taxes (or debt backed by sales taxes) is another dangerous practice, since it divorces usage from costs to users. StrongTowns had a nice blog post about this: link.
Time to go around and around on the pros and cons of the pool again!
Hey, it’s a credit card mayor. He lives on the indebted backs of others. I buy everything I can on line or in Minnesota. It just ticks me off to pay city sales tax that support foolish projects.
I now accept the indoor pool. If the city wants to build it on federal land that’s part of the VA, great. It will be seized later and become an indoor swim therapy center for veterans only. Hurry Mike, I (a veteran) can’t wait to use it for free.
Scott, I know people will turn this into a pool debate, but let’s try not to go there. There are many projects the city wants to bond for. Spellerberg and the EC are just the breaking point. If the city is successful getting an indoor pool at Spellerberg, their plan is to build more indoor pools. This crazy spending/borrowing trend has to end on all unneeded projects.
A little song dedication to our mayor
http://www.youtube.com/watch?v=FItdgMQCYVI
Why don’t we just fund the new indoor pool and any future indoor pools by establishing a Regional Center under the auspices of the USCIS.
Perhaps the current USCIS Chief Adjudicator could assign a jobs creation multiplier of lets say 30 (similar to the 29.+ multiplier handed to the gaming industry in SD by the USCIS) to this new economic development SF Pool Program Regional Center. Now, based on this multiplier if the new indoor Spellerberg pool could potentially hire lets say 30 life guards on a full time basis that would mean the following math:
30 FT x a multiplier of 30 = 900 direct and indirect jobs
Since the USCIS in the past has only required 10 jobs (either direct or indirect) to be created for each $ 500,000 invested in a Regional Center, then it is conceivable we could raise about $45,000,000 for a new SF Pool Regional Center; which would be more than enough to pay down our current City debt and build a new indoor Spellerberg Pool and even more indoor pools down the road as we hire more lifeguards and create more direct and indirect jobs ….. See how it works? It is just that easy!….. jk ……
Ellis for MAYOR!!!!
I really enjoy his writings. The best line from the article.
‘By most-used, the metric I’m using is a facility that operates most consistently near its capacity. The new events center? Not even close. That thing will spend most of its existence storing air.”
Nice work Ellis
Ellis – your column is about 3 years too late. Where was this analysis during the EC lovefest?
I agree debt should be for infrastructure first. A little perspective though, Ellis neglected to include over $2.5 billion in state debt through the various authorities like housing,health, etc. If you’re going to compare all debt at the city level including revenue funds to the state’s debt levels, you have to include state revenue-based debt as well.
Oooooh $2,875.00 – Soooo much – nyet! My personal debt is somewhere around $500,000. Peanuts.
Where was this analysis during the EC lovefest?
On becks cutting room floor.
Ruf what you do in your personal life is your business, many of us don’t wish to have others putting the rest of us in debt for their toys.
When I go to the polls in April 2014, I will be basing my vote on these numbers.
All information has been taken directly from the consultant’s report (see siouxfalls.org).
Page 28: This is the scenario the consultant has recommended:
Option 5: Large Indoor 50 meter by 25 yard competition pool with springboard diving and a separate 3,750 sq. ft. indoor leisure pool with current channel, and waterslide.
Page 38: Capital Cost of a Large Indoor Pool
Project Cost $18,519,000 (this has increased to 19.4m per Director of Parks and Rec, Don Kearney-Council Work Session, July 17, 2013)
Attendance
80,104
Operating Costs:
2013
Revenue 355,823
Expense 1,048,552
Operating Cashflow -$692,729
2014
Revenue 364,598
Expense 1,074,766
Operating Cashflow -$710,168
2015
Revenue 373,483
Expense 1,101,635
Operating Cashflow -$728,152
2016
Revenue 382,477
Expense 1,129,176
Operating Cashflow -$746,699
2017
Revenue 391,582
Expense 1,157,405
Operating Cashflow -$765,824
The capital cost of the indoor pool ($19.4m) will require bonding.
According to the consultant’s numbers, the OPERATING COSTS for the indoor pool for the first five years alone, will be $3,643,572.
As a way of illustrating this number, our community could have SEVEN new neighborhood parks for the $3.6m!!
cr – okay, so we get it – you made up your mind months ago. That door is closed in your mind – it ain’t openin’ again.
Positive reinforcement
rufusx on 01.29.14 at 8:48 am
cr – okay, so we get it – you made up your mind months ago. That door is closed in your mind – it ain’t openin’ again.
rufusx, I have been out in the community talking about the consultant’s numbers ever since they were presented in March 2013.
One of the major things I have learned from being involved in past successful ballot issues is REPEAT, REPEAT, REPEAT!