For Immediate Release:
For Immediate Release:
We’re in the early stages of next year’s budget preparations and in looking at our investment earnings, the Budget and Finance Department reported a glimmer of good news.
It turns out that we’ve been able to increase our investment earnings 250% from 2013 to 2017.
Admittedly some of that is due to the slowly climbing interest rates in 2017, but the bulk of our gains come from the re-organization of our investment portfolio following the advice of our investment bankers.
Here’s a look at the interest earned by year:
What I’m not showing is that we made $1.4 million in investment earnings (just on bank CDs) back in 2007.
At least we’re making us some ground back.
Last week Kent City Council authorized the annual refinancing of the City’s outstanding debt at their Council meeting.
It turns out for the last 5 years or so, short term debt rates have stayed so low that it made financial sense for the City to refinance the debt annually rather than locking in to longer term debt.
Staying short has saved the City at least a couple hundred thousand in interest payments that we would have had if we had locked into long term rates.
Our short term refinancing for 2018 is $5,145,000 — which led to the question, how much did we start with and what did we borrow it for?
The City’s Finance Director provided that answer:
$ 2,200,000 – originally borrowed in 1996 for Service Center Acquisition
$ 910,000 – originally borrowed in 1998 for Fairchild Ave. Improvements
$ 450,000 – originally borrowed in 2001 for City Administration Offices
$ 4,300,000 – originally borrowed in 2001 for Main Fire Station
$ 1,200,000 – originally borrowed in 2004 for Sanitary Sewer
$ 1,650,000 – originally borrowed in 2012 for Alley5/Streets
$ 3,500,000 – originally borrowed in 2017 for Safety Center
After budgeted principal and interest payments this year the total remaining principal outstanding on all of the above will be $5,145,000.
Using those figures, the City has been able to pay down about 64% of the debt that we’ve issued over the last 20 years.
Using debt, especially when interest rates are low, is a prudent financial strategy to maximize funds but it’s always nice to see that debt get paid off.
As we head in to the 2019 budget season, we’ve been starting to review some of our traditional community metrics, including construction investments going on in Kent.
From a revenue perspective, the City only receives a small fraction — about 5 cents on the dollar — of property taxes but property investments are still a good indicator for the overall health of the local economy.
Generally speaking, when investments are up, the economy is improving — and the City will receive income taxes for construction workers while they’re working in Kent and that helps the City’s bottom line.
Whether investments are going up or down is somewhat relative because it’s tough to compare anything to the enormous investment that coincided with the downtown redevelopment. Everything seems down after that era.
In the 11 years prior to the downtown redevelopment (1999 thru 2010) commercial construction investment in Kent averaged $6.5 million a year. Coinciding with the downtown redevelopment in 2011 and 2012 commercial investment jumped to an average of $55 million/year (an increase of 745%).
In 2017, the mix of new public and private investment kept construction investment levels approximately double the pre-downtown redevelopment 10 year average but well below our 2011 peak.
What we think that means is that Kent is holding it’s own, is viewed as an investment worthy community, but we don’t want to let ourselves get complacent.
I post a lot on the Blog about new businesses, job growth, and new investments in Kent.
Those are good news stories on their own but there’s also good news stories behind those stories.
Besides providing great places to go out and eat and enjoy time with friends and family, economic vitality contributes to the City’s tax base which allows the City to turn around and provide some financial assistance for program areas that can make a difference in people’s lives but have limited funding.
We don’t look at economic development as the end goal as much as it is also the means by which the community can have the opportunity to invest in services that are in high demand but struggle with funding.
In Kent’s strategic plans dating back over 25 years the Kent community has always placed a high value on helping people in need. That’s a great aspiration but affording it on a fixed budget is difficult.
Local social service agencies have stepped in to fill a big part of the gap but there’s always more needs than resources to fulfill those needs.
Thankfully, as the City’s economic base has grown, it has reduced some of the day to day stress on the budget and as a result the City is able to allocate funding to assist people in need through local service agencies.
Here’s a summary of the 2018 City Social Service Funding: