City financial adviser warns CIP could require higher debt levy if projects are not rescheduled

Travis Squires, the city's financial adviser, told the Burlington City Council at its Feb. 23 work session that the city's near-term finances look sound but that the capital-improvement plan (CIP) will require decisions about timing and funding if the city keeps every project on the current schedule.

Squires said recent valuation growth has improved Burlington's leverage but that specific projects — notably the Cascade Bridge and Fire Station No. 3 — are driving the city's borrowing plan. "We're not going to borrow for money that you get grants for," he said, explaining why staff models both grant and non-grant scenarios.

The adviser summarized the city's debt profile and modeling: roughly $43.7 million in outstanding debt with scheduled paydowns, a constitutional debt limit equal to 5 percent of actual valuation (Squires cited the city's debt limit and policy targets), and a modeled debt-service levy in the neighborhood of $3.79 in the scenarios presented. He said the model assumes some use of tax-increment financing (TIF) but that releasing less TIF for capital will shift pressure to the debt-service levy. In the scenario that leaves the CIP unchanged and reduces TIF reliance, "you'd probably look at the need to increase the debt-service levy 25 to 30 cents in order to fund the plan in its entirety," Squires said.

Squires also flagged near-term choices: the timing and size of borrowings for Cascade Bridge, sequencing of the Fire Station No. 3 borrowing, and whether to use contingency or borrow only the amount needed up front. He recommended conservative structuring (avoid excessive backloading of principal-only years) and indicated staff will continue to fine-tune the five-year plan and consider staging projects or shifting more costs into TIF if appropriate.

On state-level policy, Squires briefed the council on multiple property-tax reform proposals moving through the legislature, including a Senate study bill (identified in the briefing as SSB 3001) and other proposals that could change how cities grow levies or cap operating budgets. He said the city will continue modeling the local effects and coordinate with the Iowa League of Cities.

The council asked follow-up questions about TIF use, the timing of potential bond sales and how valuation growth affects levy calculations. Squires' presentation did not include a council vote; he said staff will return with updated timing and refined numbers as the budget and levy-notice calendar proceed.