4C

Assessing General Obligation Debt Burden. This case focuses on the analysis of a citys general obligation debt burden. After examining the accompanying table that shows a citys general obligation (tax-supported) debt for the last ten fiscal years, answer the following questions. Required a. What is your initial assessment of the trend of the citys general obligation debt burden? b. Complete the table by calculating the ratio of Net General Bonded Debt to Assessed Value of taxable property and the ratio of Net General Bonded Debt per Capita. In addition, you learn that the average ratio of Net General Bonded Debt to Assessed Value for comparable-size cities in 2011 was 2.13 percent, and the average net general bonded debt per capita was $1,256. Based on time series analysis of the ratios you have calculated and the benchmark information provided in this paragraph, is your assessment of the citys general obli-gation still the same as it was in part a, or has it changed? Explain. Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per Capita (Last Ten Fiscal Years$000s omitted) Fiscal Year Estimated Population Assessed Valuation Gross Bonded Debt Less: Amount in Debt Service Fund Net Bonded Debt Net General Bonded Debt to Assessed Value Net General Bonded Debt per Capita 2002 85,359 $1,488,391 $165,454 $101,789 $ 63,665 2003 86,935 1,552,844 164,496 100,482 64,014 2004 88,128 1,668,126 186,273 100,197 86,076 2005 90,599 1,792,747 192,151 99,545 92,606 2006 92,061 1,939,316 206,856 100,690 106,166 2007 93,524 2,057,130 212,323 106,655 105,668 2008 94,986 2,197,710 221,287 102,518 118,769 2009 96,647 2,386,169 261,519 117,212 144,307 2010 97,610 2,585,416 291,736 120,326 171,410 2011 99,208 2,843,133 280,654 106,551 174,103 Source: Adapted from City of Fargo, North Dakota, Comprehensive Annual Financial Report, 2006