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Finance director frames debt limits, urges pay-as-you-go to shrink capital wait list
Summary
At the Federal Way City Council retreat, Finance Director Steve Groom laid out the city’s legal debt capacity and argued that paying cash for routine capital needs — ‘‘pay as you go’’ — reduces long-term costs and interest expense. He warned that existing revenue volatility and ongoing commitments leave little room for new debt without tradeoffs.
Federal Way — Finance Director Steve Groom told the City Council at its retreat that the city technically can still issue more debt but should be cautious because borrowing doubles project costs once interest is included.
Groom said the city’s legal capacity is roughly 1.5% of assessed value minus outstanding debt, which on Federal Way’s current assessed base translates into a theoretical maximum on the order of tens or hundreds of millions of dollars. “Just to issue debt for $1,000,000 we would add $773,000 in interest,” Groom said, using an example amortization table he presented.
Groom said the city’s current outstanding debt portfolio includes balances for…
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