HomeMy WebLinkAbout16- Debt-pp-261-272Debt
Debt Table of Contents
Debt Management & Policy ................................................................................................................. 263
Outstanding Debt Summary ................................................................................................................ 264
General Debt Service
Outstanding Debt By Type ..................................................................................................... 265
Legal Debt Margin for General Obligation .............................................................................. 265 Principal & Interest Requirements -Tax-Supported................................................................ 266
Principal & Interest Requirements - Self-Supporting .............................................................. 267
Utility Debt Service
Principal & Interest Requirements .......................................................................................... 268
Utility Revenue Bond Debt Coverage ..................................................................................... 269 Proposed Debt Issues ......................................................................................................................... 270
Authorized General Obligation Debt .................................................................................................... 271
263
Debt Management & Policy
The City’s goal is to fund capital improvement projects on a ”pay as you go” basis wherever possible. For large
infrastructure projects and during heavy growth, debt financing is sometimes required. Debt financed projects must meet the City’s financing criteria as included in the Fiscal and Budgetary Policy.
“X. Debt Management
The City of Georgetown recognizes the primary purpose of capital facilities is to provide services to
the community. Using debt financing to meet the capital needs of the community must be evaluated according to efficiency and equity.
• Efficiency must be evaluated to determine the highest rate of return for a given investment of
resources.
• Equity is resolved by determining who should pay for the cost of capital improvements.
In meeting the demand for additional services, the City will strive to balance the needs between debt financing and “pay as of you” methods. The City realizes that failure to meet the demands of growth may inhibit its continued economic viability, but also realizes that too much debt may have
detrimental effects on the City’s long-term financial condition.
The City will issue debt only for the purpose of acquiring or constructing capital assets for the general benefit of its citizens and to allow it to fulfill its various purposes as a city. Debt financing will be considered for non-continuous capital improvements of which future citizens will be benefited.
Financing alternatives will be explored prior to debt issuance.
When the City of Georgetown utilizes long-term financing, it will ensure that the debt is soundly financed by:
• Conservatively projecting the revenue sources that will be utilized to pay the debt.
• Financing the improvement over a period not greater than the useful life of the improvement.
• Determining that the cost benefit of the improvement including interest costs is positive.
The City may utilize the benefits of short-term debt financing to purchasing operating equipment
provided the debt doesn’t extend past the useful life of the asset, and the potential impact to the tax rate is within policy guidelines. The I & S (interest and sinking) portion of the tax rate can not exceed $0.04 for short-term debt (3-10 years).”
The City’s debt management objective is to maintain level debt service that does not adversely impact tax or utility
rates and does not hinder the City’s ability to effectively operate the utility systems, street network, or other facilities. The City’s debt payments must stay within provisions of state law, bond covenants and council adopted policies. All of these criteria and objectives are met with the debt financing proposed in this budget.
The City of Georgetown’s bonds are rated:
General Obligation Date Obtained Utility Revenue Date Obtained
Moody’s AA2 4/23/2010 AA2 4/23/2010 Standard & Poor’s AA+ 4/29/2009 AA-
4/29/2009
Fitch AA+ 4/30/2010 AA- 4/30/2010
264
Outstanding Debt Summary - By Type as of October 1, 2011
Debt 2011/2012 2011/2012
Outstanding %Principal & Interest Handling Fees
GENERAL GOVERNMENT TAX SUPPORTED DEBT:
Certificate of Obligation and General Obligation Bonds:
Streets and Transportation 15,254,708 20%872,332 3,440
Parks and Recreation Facilities 12,634,433 17%1,124,377 300
Public Safety Facilities 10,647,103 14%972,102 2,023
Other City Facilities 36,138,616 48%4,208,273 7,868
TOTAL TAX SUPPORTED DEBT 74,674,860 100%7,177,084 13,631
ENTERPRISE DEBT:
Utility Revenue Bonds:
Electric 29,028,648 42%3,117,397 3,242
Water Services
Irrigation 1,230,545 2%118,248 143
Water 18,265,459 27%2,047,145 2,453
Wastewater 16,015,348 23%1,942,440 2,394
Total Utility Revenue Debt 64,540,000 7,225,230 8,232
Certificates of Obligation Bonds - Self-Supporting: (2)
Airport 985,263 1%162,138 148
Stormwater Drainage 3,400,799 5%396,956 1,028
Total CO Bonds - Self Supporting 4,386,062 559,094 1,176
TOTAL ENTERPRISE DEBT 68,926,062 100%7,784,324 9,408
TOTAL CITY SUPPORTED DEBT 143,600,922 14,961,408 23,039
CONTRACTUAL OBLIGATIONS (1):
Brazos River Authority (BRA) Contractual Obligation 23,353,825 1,023,396
Total Contractual Obligations 23,353,825 1,023,396
(1) Funds Georgetown's pro-rata share of the Williamson County Raw Water Line.
(2) Does not include CO's issued on behalf of the Georgetown Transportation Enhancement Corporation (GTEC) that are repaid through GTEC sales tax.
265
Legal Debt Margin for General Obligations:
All taxable property within the City is subject to the assessment, levy and collection by the City of a continuing, direct annual ad valorem tax sufficient to provide for the payment of principal and interest on the Bonds within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the City, and limits
the maximum ad valorem tax rate to $2.50 per $100 assessed valuation (for all City purposes). The Charter of the City adopts the provisions of the constitution without further limitation. Under rules promulgated by the Office
of the Attorney General of Texas, such office will not approve tax bonds of the City unless the City can demonstrate its ability to pay debt service requirements on all outstanding City tax bonds, including the issue to be approved, from a tax levy of $1.50 per $100 of valuation, based on 90% collection of tax.
Allowable levy per $100 valuation $1.50000
Proposed levy for debt service
(included in total adopted rate of $0.3875) 0.1646
Percentage of allowable levy used 10.97%
266
Summary of Debt Service Charges to Maturity
General Obligation Bonds and Certificates of Obligation – TAX SUPPORTED
Debt funded by dedicated portion of local ad valorem tax
Year Ending Outstanding Total
September 30 Beginning of Year Interest Principal Requirements
2012 74,674,860 3,078,822 4,098,261 7,177,084
2013 70,576,599 2,556,039 4,722,271 7,278,310
2014 65,854,328 2,390,917 4,721,997 7,112,913
2015 61,132,331 2,318,647 4,744,501 7,063,148
2016 56,387,830 2,095,764 4,904,766 7,000,531
2017 51,483,064 2,018,822 4,991,768 7,010,590
2018 46,491,296 1,840,536 4,637,029 6,477,565
2019 41,854,267 1,671,091 4,280,556 5,951,646
2020 37,573,711 1,509,795 4,001,677 5,511,472
2021 33,572,034 1,357,727 4,081,106 5,438,832
2022 29,490,928 1,197,380 3,848,161 5,045,541
2023 25,642,768 1,045,529 4,015,421 5,060,950
2024 21,627,347 883,128 4,120,947 5,004,076
2025 17,506,399 713,544 4,294,490 5,008,034
2026 13,211,910 532,161 3,378,761 3,910,922
2027 9,833,149 392,403 3,297,303 3,689,706
2028 6,535,846 255,377 2,265,845 2,521,222
2029 4,270,000 165,823 2,180,000 2,345,823
2030 2,090,000 79,300 1,460,000 1,539,300
2031 630,000 25,200 630,000 655,200
26,128,005 74,674,860 100,802,865
267
Summary of Debt Service Charges to Maturity
General Obligation Bonds and Certificates of Obligation – SELF SUPPORTING
Debt issued for specific purpose and repaid through dedicated revenues
Year Ending Outstanding Total
September 30 Beginning of Year Interest Principal Requirements
2012 4,386,062 166,366 392,728 559,094
2013 3,993,335 152,673 405,940 558,613
2014 3,587,394 139,081 426,836 565,917
2015 3,160,558 123,118 445,166 568,284
2016 2,715,392 105,950 459,034 564,983
2017 2,256,358 89,472 475,021 564,493
2018 1,781,337 71,878 421,771 493,649
2019 1,359,567 55,742 236,233 291,975
2020 1,123,333 46,115 153,100 199,214
2021 970,233 40,029 146,661 186,690
2022 823,572 34,199 107,595 141,793
2023 715,978 29,868 113,324 143,192
2024 602,654 25,278 114,053 139,330
2025 488,601 20,536 120,510 141,046
2026 368,091 15,503 91,239 106,742
2027 276,852 11,689 97,697 109,386
2028 179,155 7,573 104,155 111,728
2029 75,000 3,113 75,000 78,113
1,138,182 4,386,062 5,524,244
268
Summary of Utility Debt Service Charges to Maturity
Revenue bonds issued to finance construction of electric, water and wastewater improvements, and secured by the net operating revenue of all combined utilities. The allocation of debt principal is based on the use of each bond issue. Each utility pays debt service from operating revenues. The Brazos River Authority Contractual Obligations are the liability of the Water Services Fund.
Year Ending Outstanding Total BRA
September 30 Beginning of Year Interest Principal Requirements Contract
2012 64,540,000 2,650,230 4,575,000 7,225,230 (1)(2)1,023,396
2013 59,965,000 2,483,628 4,425,000 6,908,628 1,021,945
2014 55,540,000 2,320,245 4,600,000 6,920,245 1,011,637
2015 50,940,000 2,147,493 4,815,000 6,962,493 1,006,612
2016 46,125,000 1,843,933 8,965,000 10,808,933 1,011,637
2017 37,160,000 1,575,145 3,880,000 5,455,145 1,011,368
2018 33,280,000 1,424,110 4,080,000 5,504,110 1,011,096
2019 29,200,000 1,262,010 3,790,000 5,052,010 995,745
2020 25,410,000 1,107,371 3,545,000 4,652,371 1,359,667
2021 21,865,000 955,691 3,335,000 4,290,691 1,300,070
2022 18,530,000 811,821 3,375,000 4,186,821 1,295,007
2023 15,155,000 661,106 3,005,000 3,666,106 1,297,077
2024 12,150,000 528,380 2,610,000 3,138,380 1,296,546
2025 9,540,000 413,386 2,730,000 3,143,386 1,300,529
2026 6,810,000 293,693 2,550,000 2,843,693 1,288,528
2027 4,260,000 181,636 1,995,000 2,176,636 1,296,419
2028 2,265,000 94,881 1,455,000 1,549,881 1,293,666
2029 810,000 32,400 810,000 842,400 1,299,085
2030 1,297,491
2031 734,477
2032 201,829
20,787,159 64,540,000 85,327,159 23,353,825
269
Utility Revenue Bond Debt Coverage
The City has agreed through its bond ordinances to maintain a minimum "times coverage" ratio of 1.25. The ordinance allows the City to eliminate its reserve fund requirement with coverage of 1.35 or better. The times
ratio is calculated using the net revenue available for debt service from the combined Water, Electric and Wastewater utilities' operations divided by the combined debt service requirement of the utilities. The times coverage ratio is also reviewed by bond rating agency analysts when the City receives a rating for a potential bond issue.
The following combined times coverage ratios have occurred, based on actual revenues and expenditures, for the fiscal years indicated:
The 2011/12 Proposed Operating Plan provides the revenue to debt ratios shown below. The City’s Fiscal and
Budgetary Policy requires that each utility maintain separate coverage of at least 1.5, including both the Airport and Stormwater Drainage. The excess coverage provided by each fund is used to pay for related utility system
capital improvements and other uses approved by the City Council.
UTILITY REVENUE BOND COVERAGE
Water
Services Electric
Fund Fund Total
REVENUE:
All Other Revenue 1,929,930 1,798,584 3,728,514
Interest 104,100 50,000 154,100
System Billings 22,873,227 61,527,544 84,400,771
Total Revenues 24,907,257 63,376,128 88,283,385
EXPENSES:
Departments 18,137,275 55,587,723 73,724,998
Total Expenditures 18,137,275 55,587,723 73,724,998
Net Available for Debt Service 6,769,982 7,788,405 14,558,387
Annual Debt Requirement 4,207,633 3,117,398 7,325,031
Times Coverage Ratio 1.61 2.50 1.99
270
Proposed Debt Issues:
Outstanding
9/30/11
Debt Principal
11/12
Principal
Reduction
Estimated 2012
New Debt
Estimated
9/30/12
Outstanding
Debt
TAX SUPPORTED DEBT:
General Debt Service:
General Obligation/Certificates of Obligation 74,674,860 (4,098,261) 3,970,000 74,546,599
SELF SUPPORTED DEBT:
General Debt Service:
Stormwater 3,400,799 (272,508) - 3,128,291
Airport 985,263 (120,220) - 865,043
total GDS:79,060,922 (4,490,989) 3,970,000 78,539,933
Utility Revenue Debt:
Electric 29,028,648 (1,902,313) - 27,126,335
Irrigation 1,230,546 (67,379) - 1,163,167
Wastewater 16,015,347 (1,276,223) - 14,739,124
Water 18,265,459 (1,329,085) 2,200,000 19,136,374
total Utility Revenue Debt:64,540,000 (4,575,000) 2,200,000 62,165,000
TOTAL OUTSTANDING DEBT:143,600,922 (9,065,989) 6,170,000 140,704,933
General Debt:
Long-term obligations will be issued for $3.97 million to fund general capital projects and $2.2 million to fund
utility capital projects as detailed below:
General Debt:
CO - equipment & public safety vehicles 1,380,000
GO - Public Safety Facility 2,590,000
Total Projected General Debt 3,970,000
Utility Debt:
Revenue - Water Projects 2,200,000
Total Projected Utility Debt 2,200,000
TOTAL CITY-WIDE DEBT ISSUE 6,170,000
271
Authorized General Obligation Debt:
General Obligation Bonds (GO’s):
General obligation bonds must be authorized by a vote of the citizens of Georgetown. They are used only to fund capital assets of the general government and are not to be used to fund operating needs of the City.
The full faith and credit of the City as well as the City’s ad valorem taxing authority back general obligation bonds. Conditions for issuance of general obligation debt include:
When the project will have a significant impact on the tax rate;
When the project may be controversial even through it is routine in nature; or
When the project falls outside the normal bounds of projects the City has typically done.
General Obligation Debt
Authorized by the Voters Roads Parks
Public Safety
Facility Total
Year Authorized by the Voters
2008 46,000,000 35,500,000 81,500,000
2011 29,500,000 29,500,000
Total Authorized 46,000,000 35,500,000 29,500,000 111,000,000
Year Issued
2009 1,175,000 2,500,000 3,675,000
2010 10,800,000 10,800,000
Total Issued 11,975,000 2,500,000 0 14,475,000
Authorization Remaining 34,025,000 33,000,000 29,500,000 96,525,000
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