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Debt Table of Contents
Debt Management & Policy ................................................................................................................. 203
Outstanding Debt Summary ................................................................................................................ 204
General Debt Service
Outstanding Debt By Type ..................................................................................................... 205
Legal Debt Margin for General Obligation .............................................................................. 205
Principal & Interest Requirements -Tax-Supported................................................................ 206
Principal & Interest Requirements - Self-Supporting .............................................................. 207
Utility Debt Service
Principal & Interest Requirements .......................................................................................... 208
Utility Revenue Bond Debt Coverage ..................................................................................... 209
Proposed Debt Issues ......................................................................................................................... 210
203
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 AA3 Aa3
Standard & Poor’s
AA+
AA- Fitch AA A+
204
Outstanding Debt Summary - By Type as of October 1, 2009
Debt 2009/2010 2009/2010
Outstanding %Principal & Interest Handling Fees
GENERAL GOVERNMENT TAX SUPPORTED DEBT:
Certificate of Obligation and General Obligation Bonds:
Streets and Transportation 1,900,008 3%172,505 1,139
Parks and Recreation Facilities 11,618,200 20%1,010,649 300
Public Safety Facilities 3,393,130 6%802,177 1,745
Other City Facilities 40,186,435 70%4,135,883 6,301
TOTAL TAX SUPPORTED DEBT 57,097,773 100%6,121,214 9,485
ENTERPRISE DEBT:
Utility Revenue Bonds:
Electric 29,230,821 46%2,786,727 1,500
Water Services
Irrigation 1,358,064 2%118,186 1,000
Water 18,572,035 29%1,565,984 1,000
Wastewater 10,429,080 16%2,073,308 1,000
Total Utility Revenue Debt 59,590,000 6,544,205 4,500
Certificates of Obligation Bonds - Self-Supporting: (2)
Airport 1,216,733 2%164,962 420
Stormwater Drainage 2,976,027 5%328,457 595
Total CO Bonds - Self Supporting 4,192,760 493,419 1,015
TOTAL ENTERPRISE DEBT 63,782,760 100%7,037,624 5,515
TOTAL CITY SUPPORTED DEBT 120,880,533 13,158,838 15,000
CONTRACTUAL OBLIGATIONS (1):
Brazos River Authority (BRA) Contractual Obligation 25,682,720 963,297
Total Contractual Obligations 25,682,720 963,297
(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.
anding Debt by Type
205
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) 0.14482
Percentage of allowable levy used 10.4%
Assuming the maximum tax rate for debt service of $1.50 on the January 1, 2009, certified assessed valuation
of $4,173,874,126 at 90% collection, tax revenue of $56,347,301 would be produced. This revenue could
service the debt on $673,371,798 issued as 20-year serial bonds at 5.50% (with level debt service payments).
206
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
207
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
208
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.
209
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 2009/10 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 1,240,246 1,621,800 2,862,046
Interest 577,000 50,000 627,000
System Billings 22,621,216 58,461,733 81,082,949
Total Revenues 24,438,462 60,133,533 84,571,995
EXPENSES:
Departments 15,543,018 52,973,462 68,516,480
Total Expenditures 15,543,018 52,973,462 68,516,480
Net Available for Debt Service 8,895,444 7,160,071 16,055,515
Annual Debt Requirement 3,757,478 2,786,727 6,544,205
Times Coverage Ratio 2.37 2.57 2.45
210
Proposed Debt Issues:
Utility Revenue Debt:
Debt proceeds will be used for system expansion and repaid through continued growth of the City’s customer
base.
General Debt:
Long-term obligations will be issued for $5.3 million to fund general capital projects as detailed below:
Authorized in November 2008 Bond election.
(1) General Capital Projects & Equipment Summary:
Future Fire Stations 2,500,000
DB Wood Widening 1,320,000
Williams Drive Widening with WILCO 1,500,000
General Capital Projects 5,320,000
Outstanding
9/30/09
Debt
Principal
09/10
Principal
Reduction
Estimated 2010
New Debt
Estimated
9/30/10
Outstanding
Debt
TAX SUPPORTED DEBT:
General Debt Service:
General Obligation/Certificates of Obligation 57,097,773 (3,742,072) 5,320,000 58,675,701
SELF SUPPORTED DEBT:
General Debt Service:
Stormwater 2,976,027 (219,102) 1,200,000 3,956,925
Airport 1,216,733 (114,048) - 1,102,685
total GDS:61,290,533 (4,075,222) 6,520,000 63,735,311
Utility Revenue Debt:
Electric 29,230,821 (1,433,664) 4,350,000 32,147,157
Irrigation 1,358,064 (62,465) - 1,295,599
Wastewater 18,572,035 (1,311,723) 2,600,000 19,860,312
Water 10,429,080 (1,127,148) 8,770,000 18,071,932
total Utility Revenue Debt:59,590,000 (3,935,000) 15,720,000 71,375,000
TOTAL OUTSTANDING DEBT:120,880,533 (8,010,222) 22,240,000 135,110,311
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