[Mpls] Bond rating questions

[Victoria Heller]

Thank you David for your research.  Did you obtain the actual amounts used
in the following formula?  

"The final figure is of total overall net debt. Then they divide this debt
by
the value of the property tax base, which Fitch says is often the best
indicator of what is supportable."

If they used $27 billion as the market value divisor, it is overstated by
nearly $8 billion of non-taxable real estate.  Also, they should be using
"tax capacity" rather than "market value" to yield an accurate ratio.

Last night, at our property rights meeting, the Minnesota Finance
Commissioner, Peggy Ingison, said that the State of Minnesota limits "total
debt service" to 3% of the State's general fund, including payments of both
interest and principal.

If Minneapolis followed the State's guidelines, using $250 million in the
general fund, the Minneapolis debt service payments would be limited to
around $7.5 million annually.  Even if Minneapolis used the entire budgeted
revenue of $1.22 billion as a base, its debt service limit would be
approximately $37 million annually.

In 1999, Mpls debt service was $108 million.
In 2000, Mpls debt service was $98 million.
In 2001, Mpls debt service was $137 million.
In 2002, Mpls debt service was $210 million.

The lowest debt service payment in the past 10 years was 1997 at $67
million.

All of the numbers we have access to are 18 months old.  It will be
interesting to see the City's 2003 financial reports.

Vicky Heller
North Oaks and Cedar-Riverside