More concerns are arising over Hillsboro’s decision to possibly back funding of a new ballpark with general funds, but given the size of the Oregon city, we’re not so sure the concern is warranted.
Usually cities back bonds with dedicated revenue streams, like property taxes, sales-tax revenues or rental-car-tax proceeds. The advantage: bonds backed by dedicated revenues are considered to be more reliable, leading to lower interest rates and favorable terms.
Now, there are other cities that have run into financial issues because of general funds devoted to sports-facility debt, but these tend to concern arenas — like financial issues faced by Wenatchee, Wash., and Stockton, Cal. because of their new arenas — and not ballparks. These were situations where general funds were dedicated to debt service.
In Hillsboro, we’re looking at the city borrowing $15.2 million to pay for the ballpark; that works out to $1.1 million annually in debt service, through rent from the relocating Yakima Beara (short season A; Northwest League) and other ballpark revenues will drive that number down. Is that a number that will cripple Hillsboro’s finances? Probably not: the two-year budget for the city is $366 million, which means a max of $2.2 million in debt service may require cuts of less than 1 percent in the total city budget. Risky? Hardly.
Image courtesy city of Hillsboro.
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