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Debt Table of Contents
Debt Management & Policy ................................................................................................................. 205
Outstanding Debt Summary ................................................................................................................ 206
General Debt Service
Outstanding Debt By Type ..................................................................................................... 207
Legal Debt Margin for General Obligation .............................................................................. 207
Principal & Interest Requirements -Tax-Supported ................................................................ 208
Principal & Interest Requirements - Self-Supporting .............................................................. 209
Utility Debt Service
Principal & Interest Requirements .......................................................................................... 210
Utility Revenue Bond Debt Coverage ..................................................................................... 211
Proposed Debt Issues ......................................................................................................................... 212
205
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
206
Outstanding Debt Summary - By Type as of October 1, 2010
Debt 2010/2011 2010/2011
Outstanding %Principal & Interest Handling Fees
GENERAL GOVERNMENT TAX SUPPORTED DEBT:
Certificate of Obligation and General Obligation Bonds:
Streets and Transportation 4,465,008 8% 268,975 2,488
Parks and Recreation Facilities 10,684,033 19% 1,011,849 90
Public Safety Facilities 3,432,540 6% 543,867 2,251
Other City Facilities 38,476,037 67% 4,236,881 7,700
TOTAL TAX SUPPORTED DEBT 57,057,618 100%6,061,572 12,529
ENTERPRISE DEBT:
Utility Revenue Bonds:
Electric 30,832,157 42% 3,108,796 1,500
Water Services
Irrigation 1,295,599 2% 118,399 1,000
Water 19,421,932 26% 2,038,793 1,000
Wastewater 17,260,312 23% 1,958,349 1,000
Total Utility Revenue Debt 68,810,000 7,224,337 4,500
Certificates of Obligation Bonds - Self-Supporting: (2)
Airport 1,102,685 1% 164,462 148
Stormwater Drainage 3,690,008 5% 433,606 1,028
Total CO Bonds - Self Supporting 4,792,693 598,068 1,176
TOTAL ENTERPRISE DEBT 73,602,693 100%7,822,405 5,676
TOTAL CITY SUPPORTED DEBT 130,660,311 13,883,977 18,205
CONTRACTUAL OBLIGATIONS (1):
Brazos River Authority (BRA) Contractual Obligation 24,719,423 1,365,598
Total Contractual Obligations 24,719,423 1,365,598
(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.
207
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) 0.13635
Percentage of allowable levy used 9.10%
Assuming the maximum tax rate for debt service of $1.50 on the January 1, 2010, certified assessed valuation of
$4,180,224,985 at 90% collection, tax revenue of $62,703,375 would be produced. This revenue could service
the debt on $749,329,000 issued as 20-year serial bonds at 5.50% (with level debt service payments).
208
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
2011 57,057,618 2,308,815 3,752,758 6,061,574
2012 53,304,860 2,135,794 3,693,261 5,829,055
2013 49,611,599 1,988,958 3,807,271 5,796,229
2014 45,804,328 1,842,135 3,776,997 5,619,132
2015 42,027,331 1,788,766 3,769,501 5,558,267
2016 38,257,830 1,585,383 3,894,766 5,480,149
2017 34,363,064 1,482,216 4,011,768 5,493,984
2018 30,351,296 1,324,917 3,627,029 4,951,946
2019 26,724,267 1,178,197 3,270,556 4,448,752
2020 23,453,711 1,042,151 2,951,677 3,993,828
2021 20,502,034 917,420 2,996,106 3,913,526
2022 17,505,928 789,624 2,773,161 3,562,785
2023 14,732,768 670,023 2,895,421 3,565,444
2024 11,837,347 541,222 2,955,947 3,497,170
2025 8,881,399 407,469 3,084,490 3,491,959
2026 5,796,910 266,324 2,118,761 2,385,084
2027 3,678,149 169,403 1,992,303 2,161,706
2028 1,685,846 78,052 910,845 988,897
2029 775,000 35,923 775,000 810,923
20,552,792 57,057,618 77,610,409
209
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
2011 4,792,693 191,436 406,631 598,066
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
1,329,618 4,792,693 6,122,310
210
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
2011 68,810,000 2,954,337 4,270,000 7,224,337 (1)(2) 1,365,598
2012 64,540,000 2,650,230 4,575,000 7,225,230 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
23,741,496 68,810,000 92,551,496 24,719,423
211
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 2010/11 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.
Water
Services Electric
Fund Fund Total
REVENUE:
All Other Revenue 1,847,722 1,513,584 3,361,306
Interest 104,100 50,000 154,100
System Billings 22,348,251 62,990,014 85,338,265
Total Revenues 24,300,073 64,553,598 88,853,671
EXPENSES:
Departments 16,969,133 54,159,779 71,128,912
Total Expenditures 16,969,133 54,159,779 71,128,912
Net Available for Debt Service 7,330,940 10,393,819 17,724,759
Annual Debt Requirement 4,115,541 3,108,796 7,224,337
Times Coverage Ratio 1.78 3.34 2.45
UTILITY REVENUE BOND COVERAGE
212
Proposed Debt Issues:
General Debt:
4 Long-term obligations will be issued for $17.5 million to fund general capital projects as detailed below:
Project/Description
CO - equipment & public safety vehicles 1,105,500
CO - facilities & transportation improvements 3,950,000
GO - 2008 Road Bond projects 9,800,000
GO - 2008 Parks Bond projects 2,600,000
Total Projected Debt 17,455,500
Outstanding
9/30/10
Debt
Principal
10/11
Principal
Reduction
Estimated 2011
New Debt
Estimated
9/30/11
Outstanding
Debt
TAX SUPPORTED DEBT:
General Debt Service:
General Obligation/Certificates of Obligation 57,057,618 (3,752,758) 17,455,500 70,760,360
SELF SUPPORTED DEBT:
General Debt Service:
Stormwater 3,690,008 (289,208) - 3,400,800
Airport 1,102,685 (117,423) - 985,262
total GDS: 61,850,311 (4,159,389) 17,455,500 75,146,422
Utility Revenue Debt:
Electric 30,832,157 (1,803,509) - 29,028,648
Irrigation 1,295,599 (65,053) - 1,230,546
Wastewater 17,260,312 (1,244,964) - 16,015,348
Water 19,421,932 (1,156,473) - 18,265,459
total Utility Revenue Debt: 68,810,000 (4,269,999) - 64,540,001
TOTAL OUTSTANDING DEBT:130,660,311 (8,429,388) 17,455,500 139,686,423