QC has highest debt per capita in Arizona

East Valley Tribune
Monday, February 25, 2008
Sarah J. Boggan

Queen Creek has the highest per capita municipal debt in Arizona, and neighboring Gilbert ranks seventh for total municipal debt.

The information is reflected in an analysis by the Department of Revenue's Debt Oversight Commission and was released Monday by the Arizona Tax Research Association. Officials from both towns and an analyst with the Arizona Tax Research Association said the rankings aren't surprising with both towns growing and needing the money to put significant infrastructure in place for residents.

"You need to build these things," Queen Creek Assistant Town Manager Patrick Flynn said. "They cost a considerable amount of money, and you need to float debt in order to make it happen."

Queen Creek's public debt is $7,671 for every resident. Though Queen Creek doesn't appear in the top 10 cities for total municipal debt, the town has taken on more debt per person to provide services needed for the growing population of nearly 23,000. Queen Creek's total debt is more than $143 million.

Flynn said Queen Creek's debt comes from paying for a portion of the nearly complete Ellsworth Loop Road, other major transportation projects, town administration buildings, projects under construction such as the Horseshoe Park and Equestrian Centre and the Queen Creek Library, and other large community amenities and infrastructure.

"To bring infrastructure to the community is expensive stuff - that's just the way it is," Flynn said. "It's impossible to do those larger projects without going into debt."

And as Queen Creek expects less revenue due to a slow housing market, the town will take on $40 million more debt this year with the purchase of Queen Creek Water Co.

"We're down to (new-home construction) permit levels that are just about a break-even to cover the debt," Flynn said. "We build up reserves and other backstops to help with that. But we're in an anomaly. People will still be coming to Arizona, and before you know it we'll be back on the growth train."

In Gilbert, officials said the town's total debt of almost $435 million is in line with the population.

About two-thirds of Gilbert's debt goes toward major street, water and wastewater infrastructure projects, town spokesman Greg Svelund said.

"Which of those things do you want to get rid of?" he said.

He pointed out that smaller communities tend to have higher per capita debt levels because those municipalities are still paying for major infrastructure needed to provide basic services. Gilbert ranks seventh in debt, behind cities such as Phoenix, Mesa, Scottsdale, Glendale and Tempe.

Justin Olson, research analyst with the Tax Research Association, said the report is important to help taxpayers realize that the bonds they approve as voters have a direct impact on increasing property taxes.

Reporter Chris Markham contributed to this report.