CITY MAKES GOOD USE OF DEBT

In these uncertain economic times, the accumulation of debt is something that weighs heavily on the public mind. Not only are people concerned about their personal debt, they also are dismayed over a runaway national debt measuring in the trillions of dollars.

Local government can't evade such concerns. Few taxpayers object to city infrastructure improvements as long as someone else seems to be picking up the tab. But ask them to pay for the new street with property tax assessments and user fees and you can expect noisy protest.

Cape Girardeau has enjoyed tremendous growth in the past decade in terms of an ever-expanding street and sewerage network. Since purchasing the water system from Union Electric, officials also have expanded and improved that utility.

But such improvements and forward thinking come with a price: about $100 million in debt by next year. Only 10 years ago, the city's debt was less than $1 million. The increase worries some residents and past city officials. But they should know the alternative might very well be a stagnant community, unable to attract commercial and residential growth and unable to adjust to growth if it occurs.

With an annual budget of just under $50 million, the city's soon-to-be $100 million of financed debt isn't unreasonable. Cape Girardeau finally is beginning to get in front of the curve in planning and development. The city's boundaries continue to expand westward and northward as pockets of undeveloped property blossom into residential subdivisions.

One of the biggest reasons for this growth and orderly development has been the sale of bonds to finance major capital improvement projects. Bond sales financed a fire station, a trash transfer station, sewers and streets. Bond money helped fund construction of the Show Me Center and the Cape LaCroix-Walker Creek flood control project, and purchase the water system.

Also, most of the debt derived from projects approved by city voters. For example, when the bonds are issued next year raising the city's debt total to $100 million, $40 million will derive from the interest and principal costs for the sewer issue voters approved in April.

City officials have taken great pains to ensure such project include a steady revenue stream to make the bond payments. More than 70 percent of the debt is being retired with user fees and tax assessments. A good example of this is the Lexington Avenue arterial. Abutting property owners are footing a large portion of the construction costs for the street. As the street is extended eastward, developers are able to market new tracts of land, including in the sale price of the lots the tax bills for the new street. Sewer and water improvements that fostered the development are financed by the property owners who connect to the system. Bonds also enabled the city to annex Twin Lakes and provide sewer and water to the subdivision within three years.

Commercial development west of Interstate 55 in Cape Girardeau is a direct result of bond-funded projects that ushered in the growth. Another bonus: Interest rates have remained low in recent years, making financing costs less expensive. If rates climb, it might be time to consider whether the city wants to incur additional debt. But until that happens, officials would be ill-advised to throttle growth by rigidly opposing the use of bond indebtedness to finance capital projects.