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Kechi council gets overview of debt situation 
By David Dinell
Last Updated: March 05, 2015

Reviewing general obligation debt may not appear to be much of an exciting activity, but in the world of small-town governance, it's a necessary function, much like fixing potholes and keeping street lights on. 

In that regard, examining Kechi's debt was a major topic at the city council's Feb. 26 meeting. 

The review was given because it's good business to keep the council abreast of the city's monetary situation, said Kechi's finance director and treasurer, Nicole Bailey, and because the city's financial adviser, Mark Detter is leaving the job and becoming Andover's city administrator.

Kechi's debt is in good shape, said Detter, who was vice president at Central States Capital Markets LLC and who handed over the Kechi job to Dave Malone, who is a similar capacity at the same company. 

"Everyone is concerned about debt and not going in over their heads," he said. 

On the other hand, it's difficult for cities to "pay as they go," so a certain amount of debt is necessary, especially to pay for capital improvements.

"It's just like a home, you have to keep it up," he said. "It's the same thing with streets and water supply; it's something you can't ignore." 

Currently, Kechi has $5.84 million in general obligation debt. Such debt is backed by the full faith of a city, which can take whatever legal means necessary to repay it.

That is much lower debt than other nearby cities, however, since the population is less, too. A more accurate figure is the debt-to-assessed valuation, which places Kechi at 31.5 percent. 

Park City is 39.8 percent, Maize is 54 percent and Bel Aire is 67.8 percent. However, Clearwater, much closer in size to Kechi, has a lower direct debt ratio of 25.3 percent.

Kechi's per capita (per person) debt of $2,981 is lowest among nearby cities. Park City's is $3,650, Bel Aire is $5,171 and Maize is $5,548. Kechi also has slightly lower debt per capita than Clearwater's $3,077.  

Kechi doesn't currently have a debt rating, which is used by bond purchasers to see how solid their investment is, but if it did, it would likely be an A or an A+, Detter said. 

"We should be proud of that," Detter said. 

The higher the grade, the more stable it is. 

"You're not just selling (debt) to the bank, but to investors all over the country," he said. 

Financial rating services also look at an area's economy, and with a median income of $76,000 per household and moderate unemployment, those figures make buying bonds from cities in the Wichita area attractive, he said. 

Given its circumstances, Kechi could actually take out up to $4.7 million in debt and still be within its credit limits, however, there's no need to do so at this time, Bailey said. 

In the same way a homeowner would keep something in reserve in case of emergencies, the city would be wise to keep its debt level to a moderate level and not use it all, she said. 

Then, should something like a natural disaster strike, Kechi would be prepared to take on the necessary obligation to rebuild its infrastructure. 

"The city of Kechi has improved its debt capacity," Bailey said. "We're prepared to handle an emergency." 

If city officials do need to borrow, the good news is that rates are at historic lows and it appears that they will be that way for awhile, Detter said. 

Detter said he was recently involved in providing 20-year financing for another town that obtained a 3.1 percent interest rate. "Why pay more for debt than you have to?" he asked. 

In other action, the council: 

•Listened to a report from Police Chief John Blevins about the search for a new police officer. A candidate has been offered employment on a conditional basis, depending on whether the individual passes physical and psychological tests. Once the tests are complete, Blevins will seek council approval for the hire. That request should come at the March meeting. 

Also taking part in the hiring process was City Administrator Bob Conger and Council President Kevin Opat. The candidate is already certified by the state, which saves the city the expense of having to send the person to the police training academy.  





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