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209
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 Utility Revenue
Fitch A A
Moody’s A1 A1
Standard & Poor’s A+A+
210
Outstanding Debt Summary - By Type as of October 1, 2004
Debt 2004/2005 2004/2005
Outstanding %Principal & Interest Handling Fees
GENERAL GOVERNMENT TAX SUPPORTED DEBT:
Certificate of Obligation Bonds:
Streets and Transportation 5,449,360 26%537,244 2,545
Parks and Recreation Facilities 1,776,032 9%210,935 829
Public Safety Facilities 5,482,417 26%756,155 2,560
Other City Facilities 8,084,577 39%835,311 3,775
TOTAL TAX SUPPORTED DEBT 20,792,386 100%2,339,645 9,709
ENTERPRISE DEBT:
Utility Revenue Bonds:
Electric 10,058,586 23%1,244,380 1,000
Water Services
Irrigation 864,321 2%66,665 500
Water 15,857,600 37%670,374 1,000
Wastewater 12,123,256 28%1,504,961 1,000
Total Utility Revenue Debt 38,903,763 3,486,380 3,500
Certificates of Obligation Bonds - Self-Supporting:
Airport 1,804,078 4%190,366 500
Stormwater Drainage 2,457,640 6%258,962 1,500
Total CO Bonds - Self Supporting 4,261,718 449,328 2,000
TOTAL ENTERPRISE DEBT 43,165,481 100%3,935,708 5,500
TOTAL CITY SUPPORTED DEBT 63,957,867 6,275,353 15,209
CONTRACTUAL OBLIGATIONS (1):
Brazos River Authority (BRA) Contractual Obligation 32,925,880 460,240
Total Contractual Obligations 32,925,880 460,240
(1)Funds Georgetown's pro-rata share of the Williamson County Raw Water Line
Ratio - Tax Supported Debt to Taxable Value
0.00%
0.50%
1.00%
1.50%
2.00%
93/94 95/96 97/98 99/00 01/02 03/04 05/06* 07/08*
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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 $1.25 per $100 of valuation, based on 90% collection of tax.
Allowable levy per $100 valuation $1.25000
Proposed levy for debt service
(included in total adopted rate of $.34626) .11332
Percentage of allowable levy used 9.0%
Outstanding Debt by Type
General Government
Tax Supported Debt
Streets
Parks
Public Safety
Other City
Facilities
Enterprise Debt
Electric
Irrigation
Water
Airport
Wastewater
Stormwater
Drainage
212
Summary of Debt Service Charges to Maturity
Debt funded by dedicated portion of local ad valorem tax
Certificates of Obligation – TAX SUPPORTED
Interest
Principal
0
500,000
1,000,000
1,500,000
2,000,000
Th
o
u
s
a
n
d
$
$
$
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23
General Government Debt Service
Tax Supported
Year Ending Outstanding Total
September 30 Beginning of Year Interest Principal Requirements
2005 20,792,386 1,010,188 1,329,457 2,339,646
2006 19,462,929 943,727 1,257,064 2,200,791
2007 18,205,864 886,821 1,297,480 2,184,301
2008 16,908,385 833,595 1,140,293 1,973,888
2009 15,768,091 781,295 1,193,107 1,974,402
2010 14,574,984 725,654 1,259,719 1,985,373
2011 13,315,265 666,705 1,317,779 1,984,484
2012 11,997,485 605,149 1,310,718 1,915,867
2013 10,686,767 541,326 1,378,363 1,919,689
2014 9,308,403 472,979 1,448,019 1,920,999
2015 7,860,384 400,426 1,468,082 1,868,508
2016 6,392,302 325,953 1,569,860 1,895,813
2017 4,822,442 245,287 1,651,829 1,897,116
2018 3,170,613 160,312 1,130,940 1,291,252
2019 2,039,673 102,646 902,629 1,005,275
2020 1,137,044 56,317 549,778 606,095
2021 587,267 28,377 452,767 481,144
2022 134,500 6,053 65,756 71,808
2023 68,744 3,094 68,744 71,838
8,795,903 20,792,386 29,588,289
213
Summary of Debt Service Charges to Maturity
Debt issued for specific purpose and repaid through dedicated revenues
Certificates of Obligation – SELF SUPPORTING Enterprise Funds
Year Ending Outstanding Total
September 30 Beginning of Year Interest Principal Requirements
2005 4,261,718 212,090 237,239 449,328
2006 4,024,479 201,074 246,054 447,128
2007 3,778,425 189,679 256,432 446,110
2008 3,521,994 177,589 271,607 449,196
2009 3,250,387 164,512 281,782 446,294
2010 2,968,605 150,677 270,225 420,902
2011 2,698,379 137,462 287,165 424,627
2012 2,411,214 123,150 297,215 420,365
2013 2,113,999 108,161 314,570 422,731
2014 1,799,429 92,086 326,925 419,011
2015 1,472,504 75,081 346,585 421,666
2016 1,125,919 57,000 298,940 355,940
2017 826,980 42,053 314,960 357,013
2018 512,020 26,305 367,860 394,165
2019 144,160 7,568 144,160 151,728
1,764,487 4,261,718 6,026,205
Interest
Principal
0
100,000
200,000
300,000
400,000
500,000
600,000
Th
o
u
s
a
n
d
$
$
$
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Self Supporting CO Debt Service
Enterprise Funds
214
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
2005 38,903,763 1,814,400 2,866,882 4,681,282 460,240
2006 36,036,882 1,685,433 2,861,882 4,547,315 584,214
2007 33,175,000 1,556,967 2,800,000 4,356,967 730,480
2008 30,375,000 1,431,520 2,580,000 4,011,520 767,132
2009 27,795,000 1,316,115 2,645,000 3,961,115 829,801
2010 25,150,000 1,195,890 2,720,000 3,915,890 883,764
2011 22,430,000 1,070,307 2,450,000 3,520,307 1,291,483
2012 19,980,000 956,005 2,515,000 3,471,005 1,368,091
2013 17,465,000 838,950 2,300,000 3,138,950 1,302,766
2014 15,165,000 729,662 2,410,000 3,139,662 1,297,741
2015 12,755,000 613,391 2,545,000 3,158,391 1,292,716
2016 10,210,000 489,901 1,580,000 2,069,901 1,292,716
2017 8,630,000 415,344 1,620,000 2,035,344 1,292,716
2018 7,010,000 337,854 1,740,000 2,077,854 1,292,716
2019 5,270,000 253,394 1,315,000 1,568,394 1,277,641
2020 3,955,000 189,541 1,380,000 1,569,541 1,274,173
2021 2,575,000 121,566 1,075,000 1,196,566 1,273,993
2022 1,500,000 70,233 985,000 1,055,233 1,275,074
2023 515,000 23,433 515,000 538,433 1,277,538
2024 1,277,629
2025 1,277,119
2026 1,275,903
2027 1,278,900
2028 1,277,158
2029 1,277,873
2030 1,276,925
2031 729,978
2032 728,927
2033 731,171
2034 729,298
15,109,905 38,903,763 54,013,669 32,925,880
Interest
Principal
BRA Contract
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34
Utility Debt Service
Enterprise Funds
215
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 2004/05 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. The excess coverage
provided by each fund is used to pay for related utility system capital improvements and other uses approved
5.20
4.05
5.77
6.56 6.67
4.16 4.03
3.42 3.47
2.89
0.00
2.00
4.00
6.00
8.00
95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04* 04/05*
UTILITY REVENUE BOND COVERAGE
*Projected
Water
Services Electric Combined
Fund Fund Total
REVENUE:
All Other Revenue 2,027,595 1,160,000 3,187,595
Interest 126,900 45,479 172,379
System Billings 16,116,260 32,500,000 48,616,260
Total Revenues 18,270,755 33,705,479 51,976,234
EXPENSES:
Departments 10,447,282 28,012,983 38,460,265
Total Expenditures 10,447,282 28,012,983 38,460,265
Net Available for Debt Service 7,823,473 5,692,496 13,515,969
Annual Debt Requirement 3,436,902 1,244,380 4,681,282
Times Coverage Ratio 2.28 4.57 2.89
216
by the City Council.
Financial Impact:
Utility Revenue Debt:
4 Debt proceeds will be used for system expansion and repaid through continued growth of the City’s
customer base.
General Debt:
4 Short-term obligations will be issued for $560,000 to fund public safety vehicles and equipment.
4 Long-term obligations will be issued for $1.3 million to fund the following projects:
General Capital Projects & Equipment Summary:
Williamson County Appraisal District Building 400,000
Fire Station 1 - Design 150,000
Grace Heritage Center - Roof 50,000
Parks Administration - Community Room 75,000
Westside Park 125,000
Parks - Weight equipment 45,000
Information Technology - System Upgrades 50,000
Street Equipment - Caterpillar 110,000
Downtown Masterplan - Bridge & Sidewalks 268,000
Portable Computers - Building Inspections 11,775
1,284,775
Bond Issue Costs 55,225
General Capital Projects & Equipment Bond Costs 1,340,000
Proposed 2004/05 Debt
General Debt - Short Term Obligations
Public Safety Vehicles & laptop program 560,000
Capital Projects General Projects & Equipment 1,340,000 **
Total General Debt Service (Tax Supported) 1,900,000
Utility Revenue Bonds:
Electric System Improvements 525,000
Stormwater System Improvements 425,000
Water Services Wastewater System Improvements 3,500,000
Total Utility Revenue Bonds 4,450,000
Total Proposed 2004/05 6,350,000
Note:Issuance costs on the above debt issue total $268,235.
The City expects its portion of outstanding debt to be $65,874,289 at September 30, 2005, which includes principal
reductions of $4,433,578 and the 2004/05 proposed debt issue. This amount does not include the debt issued on behalf
of the Georgetown Transporation Enhancement Corporation (GTEC) of $11,990,711, which includes a principal
reduction of $411,422 and will be fully serviced through GTEC revenue.