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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
$0.04 for short-term debt (3-10 years).
The City’s debt management objective is to maintain level debt service that does not adversely impact tax or utility
rates and does not hinder the City’s ability to effectively operate the utility systems, street network, or other facilities.
The City’s debt payments must stay within provisions of state law, bond covenants and council adopted policies. All of
these criteria and objectives are met with the debt financing proposed in this budget.
The City of Georgetown’s bonds are rated:
General Obligation
Utility Revenue
Moody’s
A2
A1
Standard & Poor’s
AA-
A+
214
0.00%
0.50%
1.00%
1.50%
1 9 9 92 0 0 02 0 0 12 0 0 22 0 0 32 0 0 42 0 0 52 0 0 62 0 0 72 0 0 82 0 0 92 0 0 9
Ratio - Tax-Supported Debt
to Taxable Value
Outstanding Debt Summary - By Type as of October 1, 2006
Debt 2006/2007 2006/2007
Outstanding %Principal & Interest Handling Fees
GENERAL GOVERNMENT TAX SUPPORTED DEBT:
Certificate of Obligation and General Obligation Bonds:
Streets and Transportation 746,200 2%251,285 1,829
Parks and Recreation Facilities 1,334,200 4%131,235 300
Public Safety Facilities 4,200,539 11%966,372 1,594
Other City Facilities 31,302,916 83%2,766,191 2,773
TOTAL TAX SUPPORTED DEBT 37,583,855$ 100%4,115,083$ 6,496$
ENTERPRISE DEBT:
Utility Revenue Bonds:
Electric 17,808,789 36%1,882,002 1,500
Water Services
Irrigation 800,805 2%66,615 1,000
Water 13,657,051 27%1,755,583 1,000
Wastewater 13,618,355 27%1,625,936 1,000
Total Utility Revenue Debt 45,885,000 5,330,136 4,500
Certificates of Obligation Bonds - Self-Supporting: (2)
Airport 1,625,859 3%187,416 392
Stormwater Drainage 2,639,574 5%258,807 512
Total CO Bonds - Self Supporting 4,265,433 446,223 904
TOTAL ENTERPRISE DEBT 50,150,433$ 100%5,776,359$ 5,404$
TOTAL CITY SUPPORTED DEBT 87,734,288$ 9,891,442$ 11,900$
CONTRACTUAL OBLIGATIONS (1):
Brazos River Authority (BRA) Contractual Obligation 28,124,065 779,464
Total Contractual Obligations 28,124,065$ 779,464$
(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.
215
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 $.36728) .14749
Percentage of allowable levy used 11.0%
Assuming the maximum tax rate for debt service of $1.50 on the January 1, 2006, certified assessed valuation of
$3,060,088,213 at 90% collection, tax revenue of $41,311,191 would be produced. This revenue could service
the debt on $493,684,533 issued as 20-year serial bonds at 5.50% (with level debt service payments).
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
216
Summary of Debt Service Charges to Maturity
Debt funded by dedicated portion of local ad valorem tax
Certificates of Obligation – TAX SUPPORTED
Year Ending Outstanding Total
September 30 Beginning of Year Interest Principal Requirements
2007 37,583,855 1,675,580 2,439,503 4,115,083
2008 35,144,352 1,524,292 2,342,585 3,866,876
2009 32,801,768 1,436,215 2,280,240 3,716,455
2010 30,521,527 1,341,032 2,263,154 3,604,186
2011 28,258,374 1,256,778 2,144,826 3,401,605
2012 26,113,547 1,167,571 2,146,633 3,314,204
2013 23,966,914 1,074,298 2,242,325 3,316,622
2014 21,724,589 981,515 2,340,027 3,321,542
2015 19,384,561 876,790 2,388,958 3,265,747
2016 16,995,604 766,208 2,407,140 3,173,348
2017 14,588,464 663,487 2,478,515 3,142,002
2018 12,109,949 556,514 2,085,305 2,641,819
2019 10,024,645 460,532 1,896,566 2,357,098
2020 8,128,079 374,038 1,520,812 1,894,850
2021 6,607,267 303,887 1,517,767 1,821,654
2022 5,089,500 233,515 1,170,756 1,404,271
2023 3,918,744 179,884 1,223,744 1,403,628
2024 2,695,000 123,400 1,215,000 1,338,400
2025 1,480,000 68,475 1,265,000 1,333,475
2026 215,000 9,944 215,000 224,944
15,073,952 37,583,855 52,657,807
Principal
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Th
o
u
s
a
n
d
$
$
$
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 24 25 26
Interest
General Government Debt Service
Tax Supported
217
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
2007 4,265,433 191,814 254,409 446,223
2008 4,011,025 180,933 294,316 475,248
2009 3,716,709 168,806 304,649 473,455
2010 3,412,061 155,031 291,791 446,821
2011 3,120,270 143,287 310,118 453,405
2012 2,810,152 129,135 321,300 450,435
2013 2,488,852 114,368 335,609 449,976
2014 2,153,244 99,574 349,917 449,491
2015 1,803,327 83,133 365,709 448,842
2016 1,437,618 65,491 381,661 447,151
2017 1,055,957 48,473 398,274 446,747
2018 657,683 30,678 348,496 379,173
2019 309,188 13,778 125,223 139,001
2020 183,965 8,192 38,965 47,157
2021 145,000 6,485 25,000 31,485
2022 120,000 5,385 30,000 35,385
2023 90,000 4,050 30,000 34,050
2024 60,000 2,700 30,000 32,700
2025 30,000 1,350 30,000 31,350
1,452,662 4,265,433 5,718,095
Interest
Principal
0
100,000
200,000
300,000
400,000
500,000
600,000
Th
o
u
s
a
n
d
$
$
$
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 24 25
Self Supporting CO Debt Service
Enterprise Funds
218
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.
Interest
Principal
BRA Contract0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
' 0 7' 0 8' 0 9' 1 0' 1 1' 1 2' 1 3' 1 4' 1 5' 1 6' 1 7' 1 8' 1 9' 2 0' 2 1' 2 2' 2 3' 2 4' 2 5' 2 6' 2 7' 2 8' 2 9' 3 0' 3 1' 3 2
Utility Debt Service
Enterprise Funds
Year Ending Outstanding Total BRA
September 30 Beginning of Year Interest Principal Requirements Contract
2007 45,885,000 2,205,136 3,125,000 5,330,136 779,464
2008 42,760,000 1,940,677 3,045,000 4,985,677 808,557
2009 39,715,000 1,807,760 3,125,000 4,932,760 853,324
2010 36,590,000 1,669,085 3,220,000 4,889,085 963,297
2011 33,370,000 1,526,737 2,970,000 4,496,737 1,365,598
2012 30,400,000 1,393,773 3,050,000 4,443,773 1,023,396
2013 27,350,000 1,257,130 2,855,000 4,112,130 1,021,945
2014 24,495,000 1,127,392 2,985,000 4,112,392 1,011,637
2015 21,510,000 988,378 3,145,000 4,133,378 1,006,612
2016 18,365,000 842,968 2,200,000 3,042,968 1,011,637
2017 16,165,000 744,193 2,265,000 3,009,193 1,011,368
2018 13,900,000 643,333 2,405,000 3,048,333 1,011,096
2019 11,495,000 533,178 2,005,000 2,538,178 995,745
2020 9,490,000 441,438 2,105,000 2,546,438 1,359,667
2021 7,385,000 344,188 1,835,000 2,179,188 1,300,070
2022 5,550,000 258,041 1,780,000 2,038,041 1,295,007
2023 3,770,000 174,289 1,345,000 1,519,289 1,297,077
2024 2,425,000 112,138 870,000 982,138 1,296,546
2025 1,555,000 71,550 910,000 981,550 1,300,529
2026 645,000 29,831 645,000 674,831 1,288,528
2027 1,296,419
2028 1,293,666
2029 1,299,085
2030 1,297,491
2031 734,477
2032 201,829
18,111,211 45,885,000 63,996,211 28,124,065
219
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 2006/07 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
by the City Council.
5.77 6.56 6.67
4.16 4.03
3.42 3.32 3.84 4.44
2.95
0.00
2.00
4.00
6.00
8.00
97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06* 06/07*
UTILITY REVENUE BOND COVERAGE
*Projected
Water
Services Electric
Fund Fund Total
REVENUE:
All Other Revenue 4,006,600 1,533,850 5,540,450
Interest 127,900 85,500 213,400
System Billings 17,831,000 42,670,900 60,501,900
Total Revenues 21,965,500 44,290,250 66,255,750
EXPENSES:
Departments 13,512,413 37,038,536 50,550,949
Total Expenditures 13,512,413 37,038,536 50,550,949
Net Available for Debt Service 8,453,087 7,251,714 15,704,801
Annual Debt Requirement 3,448,134 1,882,002 5,330,136
Times Coverage Ratio 2.45 3.85 2.95
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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 $603,000 to fund public safety vehicles and equipment.
4 Long-term obligations will be issued for $3.4 million to fund the following projects:
Proposed 2006/07 Debt
General Debt
Public Safety Vehicles, Fire Truck, laptop program 2,006,700
Capital Projects General Projects & Equipment 3,778,257 **
Total General Debt Service (Tax Supported) 5,784,957
Utility Revenue Bonds:
Water System Improvements 2,960,000
Electric System Improvements 5,790,000
Total Utility Revenue Bonds 8,750,000
Total Proposed 2006/07 14,534,957
Note:Issuance costs on the above debt issue total $619,407.
The City expects its portion of outstanding debt to be $96,450,333 at September 30, 2007, which includes principal
reductions of $5,818,912 and the 2006/07 proposed debt issue. This amount does not include the debt issued on behalf
of the Georgetown Transporation Enhancement Corporation (GTEC) of $16,845,711, which includes a principal
reduction of $316,089 and will be fully serviced through GTEC revenue.
**General Capital Projects & Equipment Summary:
Remodel Old WCAD Building 2,000,000
Downtown Improvements 300,000
Street Equipment 113,000
Parks Improvements 990,000
Facility Improvements 222,900
3,625,900
Bond Issue Costs 152,357
General Capital Projects & Equipment Bond Costs 3,778,257
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A Blended Component Unit of the City of Georgetown
Georgetown Transportation Enhancement Corporation
Summary of Debt Service Charges to Maturity
Certificates of Obligation issued by the City on behalf of GTEC, repaid by sales tax collections.
Interest
Principal
0
250,000
500,000
750,000
1,000,000
1,250,000
1,500,000
1,750,000
Th
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a
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d
$
$
$
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 24 25 26
Georgetown Transportation Enhancement
Corporation (GTEC) Debt Service
Year Ending Outstanding Total
September 30 Beginning of Year Interest Principal Requirements
2007 16,845,711 395,263 316,089 711,352
2008 16,529,622 1,214,027 348,100 1,562,127
2009 16,181,522 714,377 585,111 1,299,488
2010 15,596,411 691,580 630,056 1,321,635
2011 14,966,355 665,761 725,056 1,390,816
2012 14,241,300 635,959 787,067 1,423,025
2013 13,454,233 603,924 862,067 1,465,990
2014 12,592,167 568,392 890,056 1,458,448
2015 11,702,111 531,084 970,333 1,501,417
2016 10,731,778 487,740 996,200 1,483,940
2017 9,735,578 441,024 1,038,211 1,479,235
2018 8,697,367 391,770 1,086,200 1,477,970
2019 7,611,167 339,750 1,143,211 1,482,961
2020 6,467,956 285,850 1,200,222 1,486,073
2021 5,267,733 230,020 1,247,233 1,477,254
2022 4,020,500 171,332 1,299,244 1,470,577
2023 2,721,256 109,449 1,121,256 1,230,705
2024 1,600,000 56,281 1,125,000 1,181,281
2025 475,000 21,594 385,000 406,594
2026 90,000 4,163 90,000 94,163
8,559,340 16,845,711 25,405,051