The City of University Place’s total debt at the end of last year was $55.1 million.
That may seem steep for a community of about 31,000 people that operates annually on less than half of what it owes.
In two years, University Place is scheduled to make a big payment on the original $12 million it borrowed to purchase the land for its Town Center project, which accounts for 80 percent of the city’s total debt.
Still, the city’s finance experts say UP is in line to make the 2013 payment, and pay off its debt by 2034, and that’s assuming officials fail to sell one piece of Town Center’s land over the next two years.
Eric Faison, assistant city manager for administrative services, told the University Place City Council on Monday that one of the biggest threats to the city’s financial stability is declining property values – a trend that isn’t exclusive to University Place.
“This is very much what a lot of cities are growing through right now,” he said.
Those declining values are having a direct effect on UP’s financial future.
For instance, the city had planned to make a $4 million payment on the original $12 million it borrowed for the Town Center land and refinance the rest in 2013.
But, similar to a family’s credit score, University Place likely won’t be able refinance that much if its property values continue to decline. Those values limit how much UP can borrow.
So, officials are instead projecting paying $5.7 million in cash in 2013 and refinancing the rest of the original bond.
Faison also said the city will be able to maintain its current level of police, public works and other services while continuing to pay off its debt by 2034.
But the numbers show how financially indebted University Place is in Town Center.
Of UP’s $55.1 million in debt, 43 percent, almost $24 million, is tied to the Civic Building – home to the University Place Library and future City Hall and police station.
Another 19 million, or 35 percent, was spent on infrastructure – parking, streets and other improvements – for Town Center.
That’s $43 million tied to the project, for which officials have yet to officially sell a piece of land.
Factors such as the slumping economy have only made it worse. Officials had hoped to sell part of a lot for a future , but that won’t open until next year.
University Place’s debt by the numbers
What the city will owe by the end of:
2010: $55.1 million
2015: $38. 6 million
2021: $29.4 million
2031: $8.1 million
What the debt has paid for:
Civic/Library Building: 43 percent
Town Center infrastructure: 35 percent
Stormwater/street improvements: 11 percent
Windmill Village purchase and development: 7 percent
Cirque Park purchase and development: 4 percent