"I think it's critical that the public understand what good shape the town is in financially, said commission member Linda Miller at its meeting on Monday. "I think we've, as a town, accomplished a lot to be able to get all these other things and still go ahead with what the people want," she said.
Terry Tice, a member of the Valley Floor Advisory Board, laid out the financial context of the proposed bonding.
The town's debt capacity the maximum debt it can legally issue, defined as twenty percent of the town's assessed property value is about $39.2 million, and it has about $2.7 million of debt outstanding for projects like the Telluride Historical Museum and the Town Park Pavilion. Most of this debt is slated to be repaid in the next ten years.
The remaining debt capacity of $16.7 million is expected to increase sharply in 2007, when the town's value is reassessed by the State of Colorado. In 2005, the town's assessed value rose by about 46 percent to $196 million. It rose by about 10 percent each year in 2003, 2001, and 1997, and about 3 percent in 1999.
"No other bonding is on the horizon," the commission's council liaison, Town Councilmember Roberta Peterson, said. Repair work on the Hwy. 145 Spur, she added, will probably be paid for with unexpected capital fund surpluses of about $1 million in each of the last two years.
Water and sewer utilities debt is not included in the debt capacity.
"You guys are aware of the implications of this additional bonding as far as other potential acquisitions," Lance McDonald, Program Director for the Town of Telluride, told the commission, "though with the Valley Floor and Kentucky Placer and Bear Creek, we've really knocked off a lot of our high priorities."
Tice added that the Valley Floor is the town's major priority for open space acquisitions. The previously authorized debt was approved as 20-year bonds. The commission will recommend the additional debt be issued in 30-year bonds to spread the cost out over a longer period.
The debt service on the bonds will probably cost between just less than $1.5 million to just less than $2 million annually for the first 20 years after the bonds are issued, and between $675,000 and about $900,000 for the next ten years after that, depending on interest rates. It will be paid out of the Open Space Fund; a percentage of the town's revenue is already designated for open space expenses.
McDonald said the debt service would not cut into the 6 percent of the fund set aside each year for administration of the town's open space holdings. As revenues go up which in the next 30 years they almost certainly will the debt service will take up a decreasing portion of the fund.