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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.
XII. 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
4/21/2014
276
Outstanding Debt Summary - By Type as of October 1, 2014
Debt 2014/2015 2014/2015
Outstanding %Principal & Interest Handling Fees
GENERAL GOVERNMENT TAX SUPPORTED DEBT:
Certificate of Obligation and General Obligation Bonds:
Streets and Transportation 19,481,450 19%1,137,232 2,335
Parks and Recreation Facilities 11,857,022 12%1,258,334 1,450
Public Safety 37,979,240 37%2,753,655 2,153
Other City Facilities 33,738,590 33%4,414,479 4,497
TOTAL TAX SUPPORTED DEBT 103,056,303 100%9,563,699 10,435
ENTERPRISE DEBT:
Utility Revenue Bonds:
Electric 30,160,530 43%3,573,771 2,992
Water Services
Irrigation 1,084,880 2%129,233 108
Water 23,077,210 33%2,505,463 2,289
Wastewater 12,215,731 17%1,805,120 1,212
Total Utility Revenue Debt 66,538,351 8,013,587 6,600
Certificates of Obligation Bonds - Self-Supporting: (2)
Airport 603,846 1%165,223 88
Stormwater Drainage 3,012,205 4%429,344 670
Total CO Bonds - Self Supporting 3,616,051 594,566 758
TOTAL ENTERPRISE DEBT 70,154,402 100%8,608,153 7,358
TOTAL CITY SUPPORTED DEBT 173,210,705 18,171,853 17,792
CONTRACTUAL OBLIGATIONS (1):
Brazos River Authority (BRA) Contractual Obligation 23,708,328 1,061,110
Total Contractual Obligations 23,708,328 1,061,110
(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.
277
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 $0.434) 0.22662
Percentage of allowable levy used 15.11%
278
Summary of Debt Service Charges to Maturity
General Obligation Bonds and Certificates of Obligation – TAX SUPPORTED
Year Ending Outstanding Total
September 30 Beginning of Year Interest Principal Requirements
2015 103,056,309 3,415,929 6,194,650 9,610,579
2016 96,861,659 3,076,688 6,537,815 9,614,503
2017 90,323,844 2,978,685 6,843,910 9,822,595
2018 83,479,934 2,768,385 6,267,766 9,036,151
2019 77,212,168 2,584,002 5,962,751 8,546,753
2020 71,249,417 2,406,402 5,693,609 8,100,012
2021 65,555,807 2,244,583 5,813,706 8,058,289
2022 59,742,101 2,070,903 5,637,108 7,708,011
2023 54,104,993 1,890,373 5,783,971 7,674,344
2024 48,321,022 1,693,840 5,894,136 7,587,976
2025 42,426,886 1,482,060 5,859,564 7,341,624
2026 36,567,322 1,267,156 5,056,578 6,323,734
2027 31,510,744 1,084,856 5,016,594 6,101,451
2028 26,494,150 903,993 4,288,222 5,192,215
2029 22,205,928 753,165 4,274,089 5,027,254
2030 17,931,839 601,206 3,581,063 4,182,269
2031 14,350,776 480,064 2,821,063 3,301,127
2032 11,529,713 384,497 2,271,567 2,656,064
2033 9,258,146 310,889 2,287,072 2,597,961
2034 6,971,074 235,251 2,026,074 2,261,325
2035 4,945,000 167,706 1,595,000 1,762,706
2036 3,350,000 113,913 1,645,000 1,758,913
2037 1,705,000 45,031 1,705,000 1,750,031
32,959,579 103,056,309 136,015,888
279
Ad Valorem Tax-Supported Debt Payments
Adjusted Net Voter Approved
Year Ending Certificates of Less Certificates of General Obligation Total
September 30 Obligation GTEC Portion*Obligation Debt Requirements
2015 6,492,912 (1,732,572) 4,760,340 4,850,238 9,610,579
2016 6,225,208 (1,686,759) 4,538,450 5,076,053 9,614,503
2017 6,050,002 (1,397,506) 4,652,495 5,170,099 9,822,595
2018 5,610,722 (1,491,564) 4,119,157 4,916,993 9,036,151
2019 5,132,877 (1,467,449) 3,665,428 4,881,325 8,546,753
2020 4,851,773 (1,441,217) 3,410,556 4,689,456 8,100,012
2021 4,692,582 (1,428,569) 3,264,013 4,794,276 8,058,289
2022 4,353,047 (1,366,796) 2,986,251 4,721,760 7,708,011
2023 4,189,638 (1,262,313) 2,927,325 4,747,019 7,674,344
2024 4,175,717 (1,242,275) 2,933,441 4,654,535 7,587,976
2025 3,494,196 (715,658) 2,778,538 4,563,087 7,341,624
2026 2,805,903 (434,434) 2,371,469 3,952,266 6,323,734
2027 2,544,814 (354,355) 2,190,459 3,910,992 6,101,451
2028 1,850,361 (174,090) 1,676,271 3,515,944 5,192,215
2029 1,681,481 (174,228) 1,507,254 3,520,000 5,027,254
2030 919,179 (66,009)853,169 3,329,100 4,182,269
2031 917,362 (64,059)853,302 2,447,825 3,301,127
2032 267,349 (64,609)202,739 2,453,325 2,656,064
2033 141,792 - 141,792 2,456,169 2,597,961
2034 141,007 - 141,007 2,120,319 2,261,325
2035 - - - 1,762,706 1,762,706
2036 - - - 1,758,913 1,758,913
2037 - - - 1,750,031 1,750,031
66,537,920 (16,564,462) 49,973,457 86,042,431 136,015,888
* GTEC Debt is self supporting certificates of Obligation (CO Bonds) repaid through dedicated sales tax
revenue.
280
Summary of Debt Service Charges to Maturity
Certificates of Obligation – SELF SUPPORTING – Enterprise Funds
(Airport & Stormwater Drainage) Debt issued for specific purpose and repaid through dedicated revenues
Year Ending Outstanding Total
September 30 Beginning of Year Interest Principal Requirements
2015 3,616,051 136,349 458,216 594,566
2016 3,157,835 119,854 410,899 530,753
2017 2,746,935 106,306 426,608 532,914
2018 2,320,327 91,704 388,050 479,754
2019 1,932,278 78,011 220,409 298,419
2020 1,711,869 70,182 186,466 256,648
2021 1,525,403 59,842 172,443 232,284
2022 1,352,961 52,252 164,836 217,088
2023 1,188,124 46,239 173,908 220,147
2024 1,014,216 39,493 178,577 218,070
2025 835,640 32,445 184,757 217,202
2026 650,882 25,122 127,991 153,113
2027 522,891 20,078 134,194 154,271
2028 388,698 14,752 130,098 144,850
2029 258,600 9,480 102,939 112,419
2030 155,661 5,459 28,937 34,396
2031 126,724 4,483 28,937 33,420
2032 97,787 3,506 30,933 34,439
2033 66,854 2,423 32,928 35,352
2034 33,926 1,230 33,926 35,156
919,209 3,616,051 4,535,261
281
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
2015 665,338,351 2,340,323 5,673,264 8,013,587 1,061,110
2016 659,665,087 2,148,830 4,747,169 6,895,999 1,237,584
2017 654,917,918 1,989,981 4,905,826 6,895,807 1,237,500
2018 650,012,092 1,842,089 5,115,826 6,957,915 1,237,499
2019 644,896,266 1,681,688 4,827,045 6,508,733 1,219,092
2020 640,069,221 1,516,069 4,607,592 6,123,662 1,583,349
2021 635,461,629 1,354,998 4,425,030 5,780,029 1,524,296
2022 631,036,598 1,200,942 4,488,687 5,689,629 1,518,758
2023 626,547,911 1,038,912 3,986,869 5,025,782 1,520,636
2024 622,561,041 886,881 3,657,665 4,544,546 1,519,178
2025 618,903,376 748,281 3,813,884 4,562,165 1,524,631
2026 615,089,492 600,294 3,673,212 4,273,507 1,511,318
2027 611,416,280 459,829 3,157,541 3,617,370 1,520,159
2028 608,258,739 344,348 2,708,760 3,053,108 1,517,615
2029 605,549,979 242,006 2,114,979 2,356,985 1,522,931
2030 603,435,000 167,794 1,090,000 1,257,794 1,521,024
2031 602,345,000 130,869 1,135,000 1,265,869 730,823
2032 601,210,000 92,100 1,180,000 1,272,100 200,825
2033 600,030,000 47,175 1,230,000 1,277,175 -
18,833,409 66,538,351 85,371,760 23,708,328
282
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 both the Electric and Water Service Funds. The times coverage ratio is also reviewed by bond rating agency analysts when the City receives a rating for a potential utility bond issue.
The following combined times coverage ratios have occurred, based on actual revenues and expenditures, for
the fiscal years indicated:
The 2014/15 Annual Budget 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.
Water
Services Electric
Fund Fund Total
REVENUE:
All Other Revenue 4,385,108 4,395,917 8,781,025
Interest 67,600 26,000 93,600
System Billings 25,098,634 62,318,107 87,416,741
Total Revenues 29,551,342 66,740,024 96,291,366
EXPENSES:
Departments 19,477,049 52,361,263 71,838,312
Total Expenditures 19,477,049 52,361,263 71,838,312
Net Available for Debt Service 10,074,293 14,378,761 24,453,054
Annual Debt Requirement 4,562,116 3,659,699 8,221,815
Times Coverage Ratio 2.21 3.93 2.97
UTILITY REVENUE BOND COVERAGE
283
Proposed Debt Issues:
Outstanding
9/30/14
Debt
Principal
14/15
Principal
Reduction
Estimated 2015
New Debt
Estimated
9/30/15
Outstanding
Debt
TAX SUPPORTED DEBT:
General Debt Service:
General Obligation/Certificates of Obligation 103,056,302 (6,194,650) 7,985,000 104,846,652
SELF SUPPORTED DEBT:
General Debt Service:
Fire-based Paramedic Program - - 400,000 400,000
Conservation - - 750,000 750,000
Stormwater 3,012,205 (318,493) 2,215,000 4,908,712
Airport 603,846 (139,724) - 464,122
total GDS:106,672,353 (6,652,867) 11,350,000 111,369,486
Utility Revenue Debt:
Electric 30,160,531 (2,526,270) 5,723,000 33,357,261
Irrigation 1,084,880 (87,160) - 997,720
Wastewater 12,215,731 (1,334,213) 7,990,000 18,871,518
Water 23,077,210 (1,725,621) - 21,351,589
total Utility Revenue Debt:66,538,352 (5,673,264) 13,713,000 74,578,088
Issuance Costs:376,000
TOTAL OUTSTANDING DEBT:173,210,705 (12,326,131) 25,439,000 185,947,574
General Debt:
Long-term obligations are proposed to fund capital projects as detailed below:
General Debt:
GO - 1460 Widening, final payment 4,371,000
CO - Downtown projects 694,000
CO - Parks projects 1,150,000
CO - Airport 870,000
CO - Equipment & public safety vehicles 900,000
Total Projected General Debt 7,985,000
Self Supporting Debt:
CO - TRV's - Fire-based Paramedic Program 400,000
CO - Stormwater 2,215,000
CO - Westside Service Center - Conservation 750,000
Total Projected Self Supporting Debt 3,365,000
Utility Debt:
Revenue - Electric 5,723,000
Revenue - Water/Wastewater 7,990,000
Total Projected Utility Debt 13,713,000
Issuance Costs 376,000
TOTAL CITY-WIDE DEBT ISSUE 25,439,000
284
Authorized General Obligation Debt:
General Obligation Bonds (GO’s):
General obligation bonds must be authorized by a vote of the citizens of Georgetown. They are used only to fund capital assets of the general government and are not to be used to fund operating needs of the City.
The full faith and credit of the City as well as the City’s ad valorem taxing authority back general obligation bonds. Conditions for issuance of general obligation debt include:
When the project will have a significant impact on the tax rate;
When the project may be controversial even through it is routine in nature; or
When the project falls outside the normal bounds of projects the City has typically done.
General Obligation Debt
Authorized by the Voters Roads Parks
Public Safety
Facility Total
Year Authorized by the Voters
2008 46,000,000$ 35,500,000$ -$ 81,500,000$
2011 - - 29,500,000 29,500,000
Total Authorized 46,000,000 35,500,000 29,500,000 111,000,000
Year & Issue
2010 1,370,000 - - 1,370,000
2010A 9,430,000 2,500,000 - 11,930,000
2012 - - 12,500,000 12,500,000
2012A - - 12,500,000 12,500,000
2013 - 5,000,000 4,500,000 9,500,000
2014 4,800,000 - - 4,800,000
Total Issued 15,600,000 7,500,000 29,500,000 52,600,000
Authorization Remaining 30,400,000$ 28,000,000$ -$ 58,400,000$