Manhattan City Manager Ron Fehr says the city is making some progress in paying down its debts.
In total, the city has about $260 million in total obligations. Fehr says the city is not required to, but issues its utility debt, most of which is lower than some of its other obligations and are coming due within 10 years. Fehr says the city issues general obligation bonds for those rather than traditional utility revenue bonds, due to lower interest rates.
“When we structure those bonds in that way, they are calculated as part of our overall debt service limit and we have a debt service report that illustrates that. It’s something we’re looking to convert off of the debt service load if we need to. I don’t think we’re going to need to,” Fehr said.
Overall, Fehr says the city has some flexibility before reaching its debt limit.
Mayor Wynn Butler says the city is about $60 million away from reaching that threshold. A decade ago, Butler feared the city would reach $300 million in debt.
“That’s when I ran in 2011 and as Ron said, we’ve been driving that back. I hope we can get it down about $10 million lower than where it is now over the next couple years if we keep the idea of better interest rates and as we retire some (debt), let’s not add more,” Butler said.
Butler says the city has averted any crisis with the passing of the new sales tax last fall as well as the current sales tax, which sunsets at the end of 2022 and has paid down the debt by roughly two mills each year.
Any idea that annexing the Green Valley/Blue Township area in southwest Pottawatomie County will help relieve the city of its debt obligations in the future are misguided, says Mayor Butler.
“I’m very skeptical that this it would bring in any relief money wise. I think it’s going to cost us money,” he says.
The city is in the midst of a feasibility study that will weigh the pros and cons the city would have in annexing all or a portion of the township, which it has heavily invested infrastructure to in the past. Butler says it might be beneficial to residents by having better quality water and sewer lines through annexation. But he wouldn’t support annexation if a majority of the roughly 4,000 residents there don’t want it.
The infrastructure, while built out, is largely in need of improvement, according to Fehr.
“It’s very under-serviced, no fire flows on the existing system. It’s an area that drastically needs to be improved to improve services there,” he said.
He cited the example of when the city extended services to Heritage area on the city’s east side.
Results of the study will be shared with city commissioners this summer.