Debt Capacity

We need a new thread so I will take a comment I was going to put below and start up a new conversation.

The comments made in a previous thread about debt and bonding capacity of a city are a real issue.  I remember really clearly attending meetings with city leadership just after the Sonics left. We were working to fill a $75M gap in the funding of our facility using a tax package that would have been bundled into convention center expansion and paid for with a combo of tourist taxes.

When we started the process we were looking at using something like $7M/year out of an available $28M/year available bond capacity.   This was the section of our bonding capacity not designated for essential services or existing payoff, but the "extra" left over that is used for economic development and misc. city investments.  Basically we were looking at using 25% of that contingency fund to build the arena, leaving another $21M available for other things

It was a gloomy meeting when we found out that revenue was down and that instead of $28M to play with there was about $10.5M in that available pool.  All of a sudden we were looking at using 70% of the available money, leaving only $3.5M/year left in revenues to cover our bonds.  The legitimate question of "can the city afford it?" was asked and it was hard to be definative in the answer.

Nobody wanted to hear it and nobody bothered to tell that story.  It is simple for the public to believe that Nickels screwed us or that Howard stabbed us in the back.  It is very hard for people to just understand that this is a immensely difficult task and that sometimes it is just really hard to get big things done.

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