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Staff warns bond servicing assumptions may be strained after appraisal decline
Summary
City staff told council the bonds were sold assuming about a 10% annual rise in property values; the lack of growth this year weakens that assumption and could affect the city’s ability to service debt, staff said.
Staff told the council the city sold bonds under the assumption that property values would grow about 10% annually, an expectation that did not materialize this year, which could complicate debt servicing. "When we sold our bonds, we sold our bonds with the anticipation that the city would experience a 10% increase in property value every year," Johnson said, noting the city must still service 30‑year bond debt regardless of the current appraisal trend.
Johnson pointed to specific local valuation losses — he cited a past roughly $10,000,000 drop when apartments on Richards Road lost value — to illustrate the practical risk of relying on steady valuation increases. The council discussed options to respond, including using fund balances for capital projects and carefully aligning operational increases with available revenue.
