Please explain in detail why the city has $83.5 million in debt?

The City issues debt for infrastructure and large scale equipment that has a lifespan at least equal to the length of the debt (in most cases much longer). A taxpayer today is paying for the maintenance and upkeep of existing infrastructure, it would be an unnecessary burden for today’s taxpayer to pay the full cost of a road or sewer that will last 40-80+ years all at once. Despite the lifetime of the infrastructure being decades long, the average city debt is issued for only 15 years which reduces the amount of interest that is paid. 

Philosophically, many factors go into the City’s determination to issue debt, these include: 

  • Need - age and condition of infrastructure, staff impact, sustainability, safety and technology needs.
  • Mitigating impact - reducing the length of projects whenever possible, to reduce resident/business disruption
  • Outside opportunities - Partnerships (coordinating with other jurisdictions), funding sources - grants, state aid, bonding costs, interest rates, financial resources/costs being incurred due to failing infrastructure (examples of these opportunities include the Artery, Blake Road and the pavilion). 
  • Economic development- We have seen infrastructure investments result in private development and investment (recent examples include Mainstreet, the Artery and Blake road).
  • External mandates, requirements – State or Federal requirements or mandated environmental changes (the recent pavilion project is an example of this, there are also water quality concerns and requirements). 
  • Interest Rates – In order to address all the factors above, the City began to take on more debt beginning in 2015, when interest rates have been at historical lows.  The interest costs for debt issued from 2015 until 2021 have ranged from 1.22 percent to 2.93 percent.   
  • Other Debt or TIF Districts ending. When possible, the City tries to balance investment with debt coming off or TIF Districts expiring. 

The City has been focused on projects to reconstruct City streets and making sure our infrastructure is prepared for Southwest Light Rail and the development expected from it.  

All streets in Hopkins are planned to be reconstructed by 2030. Continuing this program and annual street surface improvement projects ensures the future preservation of our streets and helps maintain the quality of life Hopkins residents have come to expect. For more information on the Street Improvement check out this video on the pavement management program.

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1. Please explain in detail why the city has $83.5 million in debt?
2. Please explain how the city will pay off outstanding debt? Will the City’s debt continue to rise?
3. How will Hopkins utilize the funding received from American Rescue Plan Act?
4. Where is the 5 percent increase in tax capacity expected to come from?
5. The city seemed to function fine after the budget was reduced in during 2020/2021. Provided we are still in a pandemic, why have the cuts been restored?
6. How do you model revenue around Tax Increment Financing projects to ensure there is sufficient revenue for increased demand on City services before the project is decertified?
7. Have you run current cost recovery models for inspection services like rental licensing or fire inspections in comparison to other metro area cities?
8. In order for Southwest Light Rail to be successful, people need to feel safe. How will the City ensure that people feel safe while riding? Will it be paid for by raising taxes? Should we ask busines
9. How do we engage the community more in the budget process?
10. What is the history behind the Fire Department responding to medical calls? They make up a large share of the work?
11. I would like more information on the amount of Tax Increment Financing (TIF) and its duration.