Wednesday, October 14, 2009

Ketchum electoral facts and fiction


Charles Conn, Larry Helzel and Curtis Kemp are three of the four members of the Ketchum City Council.

By CHARLES CONN, LARRY HELZEL and CURTIS KEMP

It is election season and self-motivated erroneous claims about Ketchum city finances are flying as thick and sticky as an early snowstorm. There are electoral wannabees propounding the story that Ketchum is fiscally mismanaged, drowning in debt and broke. It was even said at the recent candidates' forum that the Ketchum city and Urban Renewal Authority debts were "a disaster." Since none of us are running for office, we would like to set the record straight with some facts.

Ketchum's liquidity ratio (the cash available over expenses—our ability to pay our bills) is 870 percent. That means we have nearly $9 on hand for every $1 in bills, which is far in excess of our competitor resort towns, which average 510 percent. Park City's is 140 percent. Ketchum is not broke.

A medium-term measure of fiscal responsibility, general fund reserves as a percentage of annual operating revenue, is 9 percent and growing, despite lower local-option-tax and construction-sourced revenues. The Government Financial Officers Association recommends a ratio of between 5 and 15 percent. City administration achieved these increasing reserves by managing costs down while maintaining services. Ketchum is not mismanaged.

Ketchum's total city debts amount to a $1.4 million, voter-approved street equipment bond—about the price of a garage in Northwood. This represents a 0.05 percent (5/100ths of 1 percent) debt to assessed value ratio. To put this in context, competitor resort communities have debt ratios that range from 0.35 percent (Steamboat) to 2.25 percent (Telluride). That's right, Ketchum has the lowest debt ratio. Ketchum is not drowning in debt.

Ketchum's URA, which is a separate entity, has $5.56 million in debt that was incurred in buying properties around the city core and completing improvements on Fourth Street to revitalize our downtown and ultimately add affordable housing. This debt is 82 percent secured by real assets. Moreover, the URA currently generates $496,000 in revenues, well in excess of the estimated $380,000 in annual costs to fully pay off that debt over the next 20 years. As the value of properties in the URA increases, or new areas are added, this revenue will grow and payoff will come faster.

This URA financing mechanism comes from tax dollars that would otherwise go to the county. That's right—the city revitalization projects funded under this facility come at no incremental cost to the city's citizens. To be clear, if the URA debts or assets went away, your taxes would not go down. The URA is currently valued at $101 million—a massive sum for our city to create attractive public spaces and housing for our citizens and visitors to enjoy. The URA is not a disaster, it is a gold mine.

Let's summarize: Ketchum is not mismanaged, it is not drowning in debt and it is not broke. The URA, an example of tax-increment financing used nationwide, is a fantastic funding mechanism to provide public benefit without incremental costs.

Local politics is hardball—we understand that. But democracy works best when citizens are told the facts and then can choose representation based on differences they perceive in candidate philosophies, management approaches and personalities. Fair play with the facts is the best approach to responsible government.




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