Debt to Asset Ratio

Here is a current listing of the City’s outstanding debt amounts:

$9.1 million of General Obligation debt
$3.4 million of Full Faith and Credit debt
$1.5 million of Water Revenue Bonds
$14 million of Total Authorized Debt

In the fiscal year 2008-09 budget process, the Citizens' Budget Committee and the City Council approved $4 million of additional debt. Please note that although budgeted, the authorization of this debt is not yet approved.

To put this outstanding authorized debt amount into some perspective, the City's total assets expressed as historical cost, after accumulated depreciation, is $297 million.

The City's debt-to-asset ratio using $14 million is roughly 4.7 percent (if the additional $4 million from the FY 2009 budget is included, the debt-to-asset ratio is roughly 6.1 percent).

Another perspective to measure this debt amount is the State of Oregon's maximum debt level perscribed by ORS 287 for all cities. This State debt maximum says that cities may not have general obligation debt exceeding three percent of its real market value. For West Linn this maximum would be three percent of $4.5 billion or $133 million (this $14 million puts West Linn at 11 percent of this capacity measure; if the additional $4 million from the FY 2009 budget is included, West Linn is at 14 percent of this capacity measure).

The City's long-range financial plan also includes two possible debt issues in future years, which are estimates and are subject to further review and study in the future. The financial forecast for the Water Fund, includes $8 million of water revenue bonds for Bolton Reservoir improvements as per the Water Master Plan. The financial forecast for the Public Safety Fund includes $3.5 million for the possible construction of a new police station. It is typical in long-range financial planning to see possible bond issues, for certain plans that are being formed, and future improvements that may be necessary, scheduled out in future years. This helps facilitate financial planning and determining financial needs. Again, it’s important to reiterate that these are estimates only and are subject to the review and approval by future City Councils.

Debt levels of various other comparable cities are available online at other cities' websites. Maintaining a healthy ratio of debt is an important tool in sound and prudent financial planning. Debt is one of the main vehicles that cities use to fund necessary improvements and other capital projects. Certainly, keeping your total debt amount in perspective with the value of your assets is important, not to mention keeping perspective with what others cities' debt loads are.

In summary, at less than five percent, West Linn's total debt to asset ratio is fiscally healthly and a prudent ratio. Even with the addition of the $4 million in debt as adopted in the FY 2009 budget, West Linn's debt is financially responsible.