Potentially troubling signs regarding Powell's fiscal health from a report by the Ohio Auditor of State's office have a benign explanation, city officials said last week.
The auditor's office in January released reports grading the financial outlooks of all of Ohio's cities and counties based on 17 criteria. Powell received a "critical outlook" rating, which the auditor's office defined as a "potential high risk of fiscal stress" in five of 17 categories.
City officials said Powell's red marks on the report relate to a decision to take on debt related to two city neighborhoods in 2012.
Delaware County in the early 2000s approved the creation of the Liberty Community Infrastructure Financing Authority and the Powell Community Infrastructure Financing Authority at the request of Triangle Real Estate, the developer of the Golf Village and Murphy Park subdivisions. Community authorities are special tax districts allowed to levy property tax-like charges on neighborhood residents to pay for infrastructure projects -- in this case, about $26 million in roadway, sewer and water improvements.
After the creation of the authorities and the annexation of Golf Village into the city, Powell eventually took on the debt to allow the authorities to refinance their debts using the city's bond rating and secure a lower interest rate. The property owners still pay the interest and principal through the charges.
Powell Finance Director Debra Miller said she views the arrangement as a win-win.
"These are our residents," Miller said. "We want them to have this debt paid off as quickly as possible."
She compared the agreement to a parent taking out a college loan for a child.
"The loan is in the parent's name, but the child is making the payment," she said.
While Miller said the arrangement has worked smoothly for the Powell so far, it has somewhat complicated the city's numbers regarding assets and debts. She said all five "critical outlooks" on the auditor's report relate to the city's decision to take on the community authorities' debts.
While the debt shows up on the city's books, City Manager Steve Lutz said city residents outside of the special taxing districts do not pay for it.
"The city is not short any money," he said. "We're not using our general-fund revenue to pay for it."
Lutz said city officials are not concerned about the authorities' continued ability to pay back their debts. He said he would describe the city's overall financial condition as "excellent."
"We're highly rated, we run balanced budgets, we have a healthy reserve (and) we live within our means," he said.
Ben Marrison, spokesman for the auditor's office, said the financial health indicators were designed to identify problems that affected municipalities in the past and to gauge if any communities run the risk of falling into the same traps. He said communities with multiple critical outlooks "are ones we want to work with."
"We looked at the communities who were declared to be in fiscal distress, then we went backward three years to look for trends and commonalities they shared," he said. "What were the indicators of high fiscal stress? Then they built these indicators to replicate what we've seen historically."
Lutz said Powell officials have not yet communicated with the auditor's office about the city's results. He said he thinks the auditor's system of fiscal health indicators is a good tool that may require additional research by residents depending on where they live.
"Whenever you put together ratings, every (community) isn't going to fit perfectly into it," Lutz said. "It's just one tool of many."
ThisWeek reporter Andrew King contributed to this story.