Nearly every city borrows money and nearly every city pays it back.

The trick is to borrow only when the city needs it and to make sure the city has the annual revenue to comfortably repay the debt.

Sometimes, when interest rates are low, a city will borrow money and repay it over time rather than dip into its reserves.

City officials decide to borrow money for several reasons but often because they believe the city needs to complete an expensive project now and the yearly income is there to repay the money over time.

In Athens, the city has about $13.5 million in outstanding warrants (debt), excluding bonds and warrants for the school system, according to City Clerk Annette Barnes Threet.

The debt due to school bonds and warrants is approximately $71.5 million, which includes the $54 million in warrants issued in 2016 for construction of the new Athens High School, she said.

In finance, a general obligation warrant is a municipal bond backed by the credit and taxing power of the issuing jurisdiction, in this case the city, rather than the revenue from a given project.

The city general fund currently has three outstanding warrant issues, Threet said. They are general obligation warrants series 2009, 2010 and 2014.

2009

The proceeds from the 2009 warrant issue were used to refund the then outstanding 1999 warrant at a lower interest rate and to provide an additional $5 million in new funds. Those funds were used for the following capital projects:

• Fire Station No. 3 on MLK Drive —$780,000

• Purchase of the Sportsplex property — $595,000

• Fire Station No. 1 on Washington Street — $900,000

• Sportsplex Phase I —$470,000

• City Hall —$2.2 million

2010

The proceeds from the 2010 issue were used to refund the then outstanding 2002 warrants and to provide funds for capital improvements, the city clerk said.

“Those new funds were used to fund a variety of equipment to include telecommunications equipment, garbage truck, garbage carts and dumpsters, servers, fire department vehicle and police department vehicles,” she said.

2014

The proceeds from the 2014 issue were used strictly to refund the outstanding 2005 and 2006 warrants at a lower interest rate, which resulted in a cost savings of approximately $300,000.

The current general fund debt is scheduled to be paid off in 2034.

The current school-system debt is scheduled to be repaid in 2046.

A city’s long-term plan for repaying its debt is as important as the projects for which it needs to borrow.

“Debt-service payments are carefully structured over a period of time commensurate with the life of the underlying assets for which the funds are borrowed,” she said.

In Athens, property tax revenues, sales tax revenues and alcohol tax revenues are the main sources of funding debt-service payments, Threet said.

“The city has also been diligent in taking advantage of any opportunities for refunding outstanding debt when interest rates are favorable for doing so,” she said.

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There are several methods for a city to borrow, but these are most common:

General obligation debt is available for all city purposes.

Revenue bonds are available for certain undertakings capable of producing revenue, but the source of payments must be satisfactory to the lender.

Lease-purchase financing are available within limits without a referendum but are subject to a variety of restrictions. Cities sometimes use a lease-purchase plan to buy machinery or equipment they must have to operate.