Utah cities stay afloat financially

The tight global credit market is forcing some Utah towns to hold off on planned financing and requiring others to pay unexpectedly high interest rates for existing debt.

Other cities are nervous about how their financing will be received in the marketplace.

But compared with cities such as Vallejo, Calif., which has declared bankruptcy, and Kansas City, Kan., which can't finance a sewer system, most Utah cities are well-managed and have been careful to balance debt and cash flow, according to the results of a multi-jurisdictional survey by the Deseret News.

Regardless, Park City is having to phase in financing for a needed water system. And Holladay, which last year instituted new taxes to pay for road repairs, could obtain financing for only part of its needs.

West Bountiful is trying to fund $5 million in water bonds to upgrade its 50-year-old infrastructure. The city has been warned that finding investors is difficult, said city finance director Craig Howe. It's a similar story for Centerville, which is planning to build a multimillion-dollar performing arts center.

Less imminent projects are being delayed for several months until record-high interest rates relax and corporations once again become interested in buying bonds.

"There was a very quick freezing up of the (bond) market," said Kelly Murdock, senior vice president of Zions Bank and Salt Lake City's financial adviser. "Since that time, thankfully, the market is thawing out — albeit slowly. There's an abundance of cash on the sidelines out of concern of the direction of the economy."

The Deseret News analyzed financial data from all Utah cities and towns with a population of 1,000 or more, as well as Utah's counties, to determine their levels of debt.

Debt figures include total debt — bonded or otherwise — held by each municipality, its enterprise (water, sewer, electricity, golf course or other) funds, municipal building authority and redevelopment agency. Using those figures and the U.S. Census Bureau's 2007 population estimates, the News was able to rank counties, cities and towns by their debt per resident.

Highs and lows

The analysis showed that Hildale, the Fundamentalist LDS Church stronghold near the Arizona border, is by far the Utah municipality deepest in debt, at nearly $12,000 per resident. The town's financial statement for the fiscal year ending June 30, 2007, lists its total debt at $23.5 million, with $19.9 million of that listed as the town's portion of power, water and gas costs shared with neighboring Colorado City, Ariz.