The City of Junction City, Kansas (pop. 25,000) engaged Columbia Capital to help it design and implement a financial turn-around plan in 2011-2012.
In anticipation of the return of the Army’s First Infantry Division (“the Big Red One”) to Ft. Riley from Germany, policymakers at the Federal, state and local levels pressured the City to increase the capacity of local residential development to support an anticipated influx of troops to the area. In the mid-2000s, the City decided to support this new development through the financing of a number of special assessment projects with more than $60 million of development bonds supported by the City’s general obligation pledge. However, between slower-than-anticipated redeployments and a worsening economy, Fort Riley experienced a smaller-than-expected influx of troops, and as a result, the City found itself with a significant number of undeveloped lots (2000+) supported by roads and underground infrastructure it financed only a few years prior. In the wake of the economic crisis and facing crushing indebtedness, City cash balances declined to less than $100,000 and it was at serious risk of default.
The tactical components of our proposed turnaround plan included providing nearly $10 million in budget relief through debt restructurings in 2011 and 2012, aligned in such a way to keep the City from exceeding its statutory debt limits, which, following the expiration of special legislation, are now declining. The strategic components of the plan include a comprehensive review of capital and operating budgets, a long-term debt management plan, an evaluation of the City’s revenue structure, a plan to deal with hundreds of undeveloped residential lots and an approach to communicate the plan to governing body members, the community, the legislature, the Army and the rating agencies.
The City Commission accepted most of Columbia Capital's recommendations, including imposing a sizable property tax increase, and the City has been very disciplined in the subsequent years. As of 2020, the City’s statutory debt capacity has increased from effectively $0 in 2011 to more than $20 million. It ended FY20 with cash balances of nearly $30 million. It has also benefitted from multiple bond rating increases in the intervening period, as well.
Columbia Capital Management, LLC is a registered with the US Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB) as a municipal advisor. The firm is also registered with the SEC as a registered investment adviser. Columbia Capital has a statutory duty to serve its governmental clients as a fiduciary.