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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
A2
Standard & Poor’s
AA
AA-
Outstanding Debt Summary - By Type as of October 1, 2008
Deb 2008/200 2008/200
Principal & Interest Outstanding Handling Fees%
GENERAL GOVERNMENT TAX SUPPORTED DEBT:
Certificate of Obligation and General Obligation Bonds:
Streets and Transportation 336,245 1%121,853 1,13
1,092,261 Parks and Recreation Facilities 12,648,550 23 30
Public Safety 4,768,222 9%929,677 1,74
3,709,092 Other City Facilities 36,540,510 67 6,30
TOTAL TAX SUPPORTED DEBT 9,485
54,293,527
5,852,88
100
ENTERPRISE DEBT:
Utility Revenue Bonds:
2,440,541 Electri 24,624,933 40 1,50
Water Services
Irrigation 1,409,564 2%118,369 1,00
Water 1,595,022 11,503,761 19 1,00
Wastewater 2,100,322 19,741,742 32 1,00
Total Utility Revenue Debt 6,254,254 57,280,000 4,500
Certificates of Obligation Bonds - Self-Supporting: (2)
Airpor 1,364,709 2%209,091 42
Stormwater Drainage 3,115,241 5%319,995 59
Total CO Bonds - Self Supporting 4,479,950 529,08 1,015
0 5,515TOTAL ENTERPRISE DEBT
61,759,950
6,783,34
100
TOTAL CITY SUPPORTED DEBT
212
116,053,477
1 2,636,223
15,000
CONTRACTUAL OBLIGATIONS (1):
Brazos River Authority (BRA) Contractual Obligation 26,536,043 853,324
Total Contractual Obligations 26,536,04
(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.
853,324
Outstanding Debt by Type
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 $.35622) 0.15569
Percentage of allowable levy used 10.4%
Assuming the maximum tax rate for debt service of $1.50 on the January 1, 2008, certified assessed valuation of
$4,176,836,943 at 90% collection, tax revenue of $56,387,298 would be produced. This revenue could service
the debt on $673,849,778 issued as 20-year serial bonds at 5.50% (with level debt service payments).
213
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
214
Year Ending Outstanding Total
September 30 Beginning of Year Interest Principal Requirements
2009 54,293,527 2,350,893 3,501,990 5,852,883
2010 50,791,537 2,152,663 3,593,935 5,746,598
2011 47,197,602 2,017,041 3,529,236 5,546,277
2012 43,668,366 1,874,388 3,437,976 5,312,364
2013 40,230,390 1,731,947 3,549,002 5,280,949
2014 36,681,388 1,589,529 3,484,694 5,074,223
2015 33,196,694 1,443,244 3,403,868 4,847,112
2016 29,792,826 1,296,807 3,452,558 4,749,365
2017 26,340,269 1,157,357 3,563,070 4,720,427
2018 22,777,199 1,010,957 3,154,233 4,165,189
2019 19,622,966 876,511 2,748,215 3,624,726
2020 16,874,751 758,071 2,408,694 3,166,765
2021 14,466,057 653,792 2,432,480 3,086,273
2022 12,033,577 547,470 2,188,251 2,735,721
2023 9,845,326 450,595 2,279,869 2,730,464
2024 7,565,457 346,006 2,319,753 2,665,759
2025 5,245,704 240,760 2,417,011 2,657,771
2026 2,828,693 129,601 1,420,640 1,550,241
2027 1,408,053 64,579 1,262,898 1,327,476
2028 145,155 6,713 145,155 151,869
20,698,923 54,293,527 74 ,992,450
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
215
Year Ending Outstanding Total
September 30 Beginning of Year Interest Principal Requirements
2009 4,479,950 206,188 322,899 529,086
2010 4,157,051 181,581 321,010 502,591
2011 3,836,041 168,805 340,708 509,513
2012 3,495,333 153,573 314,957 468,530
2013 3,180,375 139,635 328,931 468,566
2014 2,851,444 125,737 375,251 500,987
2015 2,476,194 108,993 390,799 499,791
2016 2,085,395 91,111 406,242 497,353
2017 1,679,153 73,896 423,719 497,615
2018 1,255,434 55,729 364,567 420,296
2019 890,866 38,993 203,574 242,567
2020 687,292 30,222 121,083 151,305
2021 566,210 25,142 110,286 135,429
2022 455,923 20,418 72,505 92,922
2023 383,419 17,276 73,876 91,152
2024 309,543 14,007 75,247 89,253
2025 234,296 10,677 77,989 88,666
2026 156,307 7,168 49,360 56,528
2027 106,947 4,946 52,102 57,049
2028 54,845 2,537 54,845 57,381
1,476,631
4,479,950 5, 956,581
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 BR September 30 Beginning of Year Interest Principal Requirements Contract
2009 57,280,000 2,614,254 3,640,000 6,254,254 853,324
2010 53,640,000 2,245,605 3,935,000 6,180,605 963,297 2011 49,705,000 2,098,087 3,685,000 5,783,087 1,365,598 2012 46,020,000 1,954,893 3,780,000 5,734,893 1,023,396 2013 42,240,000 1,808,465 3,595,000 5,403,465 1,021,945 2014 38,645,000 1,666,882 3,735,000 5,401,882 1,011,637
2015 34,910,000 1,517,718 3,910,000 5,427,718 1,006,612
2016 31,000,000 1,362,533 2,970,000 4,332,533 1,011,637
2017 28,030,000 1,241,658 3,060,000 4,301,658 1,011,368
2018 24,970,000 1,114,298 3,225,000 4,339,298 1,011,096
2019 21,745,000
216
977,463 2,895,000 3,872,463 995,745
2020 18,850,000 850,816 3,025,000 3,875,816 1,359,667
2021 15,825,000 716,816 2,790,000 3,506,816 1,300,070
2022 13,035,000 592,021 2,800,000 3,392,021 1,295,007
2023 10,235,000 464,306 2,400,000 2,864,306 1,297,077
2024 7,835,000 355,780 1,975,000 2,330,780 1,296,546
2025 5,860,000 266,186 2,065,000 2,331,186 1,300,529
2026 3,795,000 173,093 1,850,000 2,023,093 1,288,528
2027 1,945,000 89,036 1,260,000 1,349,036 1,296,419
2028 685,000 31,681 685,000 716,681 1,293,666
2029 1,299,085
2030 1,297,491
2031 734,477
2032 201,829
22,141,590
57,280,000 79,421,590 26 ,536,043
Interest
Principal
BRA
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32
Utility Debt Service
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 2008/09 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.
217
UTILITY REVENUE BOND COVERAGE
Services Electri
Fund Fund Total
REVENUE:
All Other 1,951,109 1,825,689 3,776,798
Interest 545,500 125,000 670,500
System 20,332,873 57,776,114 78,108,987
Total Revenues 22,829,482
59,726,803
8 2,556,285
EXPENSES:
Departments 16,355,484 50,908,340 67,263,824
Total Expenditures 16,355,484 50,908,340 67,263,824
Net Available for Debt Service 6,473,998
8,818,463
1 5,292,461
Annual Debt Requirement 3,194,699 2,277,415 5,472,114
Times Coverage Ratio 2.03 3.87 2.79
Proposed Debt Issues:
Outstanding
9/30/08
Debt Principal
08/09
Principal
Reduction
Estimated
2009 New Debt
Estimated 9/30/09
Outstanding Debt
TAX SUPPORTED DEBT:
General Debt Service:
General Obligation/Certificates of Obligation 54,293,527 (3,501,990) 12,079,000 62,870,537
SELF SUPPORTED DEBT:
General Debt Service:
Stormwater 3,115,241 (172,766) 1,950,000 4,892,475
Airport 1,364,709 (150,133) 1,214,576
Sanitation - transferred to general debt - - -
total GDS:58,773,477 (3,824,889) 14,029,000 68,977,588
Utility Revenue Debt:
Electric 24,624,933 (1,342,996) 6,100,000 29,381,937
Irrigation 1,409,564 (51,500) - 1,358,064
Wastewater 19,741,742 (1,169,862) 4,625,000 23,196,880
Water 11,503,761 (1,075,642) 4,006,000 14,434,119
total Utility Revenue Debt:57,280,000 (3,640,000) 14,731,000 68,371,000
TOTAL OUTSTANDING DEBT:116,053,477 (7,464,889) 28,760,000 137,348,588
(1) General Capital Projects & Equipment Summary:
Police/Municipal Court Facility Purchase & Renovation 10,000,000
Self Contained Breathing Apparatus 400,000
Remodel Fire Station 2 529,000
Land Acquisition 400,000
Future Fire Stations 200,000
11,529,000
Bond Issue Costs 550,000
General Capital Projects & Equipment Bond Costs 12,079,000
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 Long-term obligations will be issued for $12.1 million to fund general capital projects as
detailed below:
4 An $81.5 million bond package is being presented to voters in November 2008. If approved,
bonds would be issued over a 10-15 year period for approved projects.