City agency has huge debt
The South Lake Tahoe Redevelopment Agency is looking at alternative methods of financing future projects.
“We want the projects to move forward, but we can’t finance them like we have in the past,” said agency member Tom Davis.
The redevelopment agency is $106 million in debt, officials report, and is using hotel and property taxes to pay these debts, but with revenues and expenses at near equal levels, the agency has almost reached its maximum level of debt.
The city has the ability to borrow about $7.2 million more, which would keep its debt service contribution below 15 percent, a figure that, if reached, could hurt the city’s credit rating.
As a result, the agency will look primarily toward developer financing of projects.
“The bottom line is if any projects are to go forward then the developers are going to have to come up with a lot of money,” said agency member Bill Crawford. “The city cannot afford to go into any more debt.”
As of now, the city pays 11 percent of its general fund for debt service. But that figure is dropping and could be as low as 10 percent in the next two to three years, assuming the city doesn’t incur any more debt, said City Manager David Childs.
“Over the next couple of years the city’s bond capacity will increase,” he added.
Childs said because of the enhancements made through redevelopment, investors are more likely to put their own money on the line for future projects and the redevelopment agency’s financial role will diminish.
As of now, the agency is not in a good position to incur any significant amount of debt. But by 2005 the agency is expected to refinance bonds on the Park Avenue project – a project which is expected to start generating positive revenues by 2003 – and incurring debt could again become a possibility.
The redevelopment agency is re-evaluating priorities, which comprise three key elements: enhancing public access to the lake; decreasing traffic congestion, which could come in the form of a monorail; and increasing tourism during the shoulder season, which could be accomplished with a convention center, Von Klug said. The entire cost of the convention center is estimated at $200 million.
Agency members will discuss priorities again on March 20.
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