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HomeMy WebLinkAbout12 Debt-compressed FY2016 Annual Budget DEBT City employees in from of the Tin Barn Alley project 249 FY2016 Annual Budget DEBT Debt Management Policy ........................ 251 Outstanding Debt Summary ................. 252 Debt Service Charges (Tax-Supported) . 254 Ad Valorem Tax-Supported Debt ......... 255 Debt Service Charges (Self-Supported) 256 Utility Debt .............................................. 258 Proposed Debt Issues .............................. 260 Authorized General Obligation Debt ....... 261 250 FY2016 Annual Budget 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 cannot 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: Rating Agency General Obligation Date Obtained Utility Revenue Date Obtained2 Moody's Aa2 4/23/2010 Aa2 4/23/2010 Standard & Poor's AA+10/19/2015 AA 4/21/2014 251 FY2016 Annual Budget OUTSTANDING DEBT SUMMARY – BY TYPE AS OF OCTOBER 1, 2015 Debt Outstanding % FY2016 Principal & Interest FY2016 Handling Fees GENERAL GOVERNMENT DEBT General Government Tax Supported Debt Certificate of Obligation and General Obligation Bonds: Streets and Transportation 23,585,600 21%1,626,447 4,072 Parks and Recreation Facilities 11,972,846 11%1,316,149 1,640 Public Safety 37,942,596 34%2,925,762 2,668 Other City Facilities 30,979,218 28%4,365,373 4,182 Total Gen. Gov. Tax Supported Debt 104,480,260 10,233,731 12,562 Certificates of Obligation Bonds - Self-Supporting: . Rivery TIRZ 6,470,000 8%265,828 750 Total CO Bonds - Self Supporting 6,470,000 265,828 750 TOTAL GENERAL GOVERNMENT DEBT 110,950,260 94%10,499,559 13,312 ENTERPRISE DEBT Utility Revenue Bonds: Electric 30,279,446 36%3,470,507 3,568 Water Services Irrigation 997,720 1%129,152 118 Water 31,319,097 37%2,845,078 3,690 Wastewater 15,483,824 18%1,650,536 1,824 Total Utility Revenue Debt 78,080,087 8,095,273 9,200 Certificates of Obligation Bonds - Self-Supporting (2) Airport 1,333,595 2%139,056 140 Stormwater Drainage 4,910,577 6%595,294 1,117 Total CO Bonds - Self Supporting 6,244,173 734,350 1,257 TOTAL ENTERPRISE DEBT 84,324,260 100%8,829,623 10,457 TOTAL CITY SUPPORTED DEBT 195,274,520 19,329,182 23,769 CONTRACTUAL OBLIGATIONS (1) Brazos River Authority (BRA) Contractual Obligation 33,873,792 1,836,398 Total Contractual Obligations 33,873,792 1,836,398 (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. 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 2009 2010 2011 2012 2013 2014 2015 *2016 *2017 *2018 Ratio -Tax-Supported Debt to Taxable Value * Projected 252 FY2016 Annual Budget Streets Parks & Rec Public Safety Other City Facilities General Government Tax Supported Debt Electric Irrigation Water Airport Wastewater Stormwater Drainage Enterprise Debt 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 of 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 for 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)0.22684 Percentage of allowable levy used 15.12% 253 FY2016 Annual Budget SUMMARY OF DEBT SERVICE CHARGES TO MATURITY General Obligation Bonds and Certificates of Obligation – TAX SUPPORTED Year Ending September 30 Outstanding Beginning of Year Interest Principal Total Requirements 2016 104,480,260 3,362,083 6,871,645 10,233,728 2017 97,608,615 3,172,521 7,228,319 10,400,840 2018 90,380,296 2,963,667 6,715,088 9,678,755 2019 83,665,208 2,774,958 6,386,891 9,161,849 2020 77,278,317 2,596,029 6,167,838 8,763,866 2021 71,110,479 2,420,051 6,290,388 8,710,439 2022 64,820,091 2,233,589 6,129,781 8,363,371 2023 58,690,310 2,037,006 6,181,908 8,218,914 2024 52,508,402 1,827,315 6,305,979 8,133,294 2025 46,202,423 1,601,743 6,285,576 7,887,319 2026 39,916,847 1,374,951 5,306,332 6,681,283 2027 34,610,515 1,187,465 5,274,162 6,461,627 2028 29,336,353 1,001,512 4,545,425 5,546,937 2029 24,790,928 845,209 4,609,089 5,454,297 2030 20,181,839 682,481 3,926,063 4,608,544 2031 16,255,776 549,814 3,181,063 3,730,877 2032 13,074,713 442,097 2,636,567 3,078,664 2033 10,438,146 355,714 2,662,072 3,017,786 2034 7,776,074 266,608 2,421,074 2,687,682 2035 5,355,000 183,675 2,005,000 2,188,675 2036 3,350,000 113,913 1,645,000 1,758,913 2037 1,705,000 45,031 1,705,000 1,750,031 32,037,432 104,480,260 136,517,692 0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 General Government Debt Service Tax Supported Principal Interest 254 FY2016 Annual Budget AD VALOREM TAX-SUPPORTED DEBT PAYMENTS Year Ending September 30 Certificates of Obligation Less GTEC Portion* Adjusted Net Certificates of Obligation Voter Approved General Obligation Debt Total Requirements 2016 6,772,909 (1,732,562) 5,040,348 5,193,380 10,233,728 2017 6,555,414 (1,445,822) 5,109,592 5,291,248 10,400,840 2018 6,032,823 (1,466,308) 4,566,515 5,112,240 9,678,755 2019 5,561,596 (1,475,042) 4,086,554 5,075,295 9,161,849 2020 5,210,194 (1,390,396) 3,819,798 4,944,068 8,763,866 2021 5,139,429 (1,373,136) 3,766,293 4,944,146 8,710,439 2022 4,797,972 (1,309,552) 3,488,421 4,874,950 8,363,371 2023 4,525,074 (1,204,554) 3,320,520 4,898,394 8,218,914 2024 4,514,474 (1,185,390) 3,329,084 4,804,210 8,133,294 2025 3,830,391 (659,159) 3,171,232 4,716,087 7,887,319 2026 2,899,029 (478,312) 2,420,717 4,260,566 6,681,283 2027 2,638,551 (399,615) 2,238,935 4,222,692 6,461,627 2028 1,940,555 (219,362) 1,721,193 3,825,744 5,546,937 2029 1,801,069 (174,228) 1,626,841 3,827,456 5,454,297 2030 1,035,797 (66,009) 969,788 3,638,756 4,608,544 2031 1,035,893 (64,059) 971,833 2,759,044 3,730,877 2032 382,505 (64,609) 317,896 2,760,769 3,078,664 2033 253,448 - 253,448 2,764,338 3,017,786 2034 259,163 - 259,163 2,428,519 2,687,682 2035 119,169 - 119,169 2,069,506 2,188,675 2036 - - - 1,758,913 1,758,913 2037 - - - 1,750,031 1,750,031 65,305,457 (14,708,116)50,597,341 85,920,351 136,517,692 0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 20 3 6 20 3 7 Ad Valorem Tax-Supported Debt Payments General Obligation Certificates of Obligation *GTEC Debt is self-supporting Certificates of Obligation (CO Bonds) repaid through dedicated sales tax revenue. 255 FY2016 Annual Budget 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 September 30 Outstanding Beginning of Year Interest Principal Total Requirements 2016 6,244,171 226,955 507,396 734,351 2017 5,736,775 194,215 546,235 740,450 2018 5,190,540 178,985 509,667 688,651 2019 4,680,873 164,274 335,525 499,799 2020 4,345,348 156,032 307,831 463,864 2021 4,037,516 147,726 309,104 456,830 2022 3,728,413 136,534 305,684 442,217 2023 3,422,729 124,613 324,672 449,285 2024 3,098,057 111,142 328,669 439,812 2025 2,769,388 97,407 339,569 436,976 2026 2,429,819 83,219 278,210 361,429 2027 2,151,609 74,063 284,017 358,080 2028 1,867,592 64,692 283,992 348,685 2029 1,583,600 55,049 277,939 332,988 2030 1,305,661 45,559 203,937 249,496 2031 1,101,724 38,895 208,937 247,832 2032 892,787 31,844 220,933 252,776 2033 671,854 24,111 227,928 252,039 2034 443,926 16,092 233,926 250,018 2035 210,000 7,613 210,000 217,613 1,979,021 6,244,171 8,223,192 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 General Debt Service -Self Supported Principal Interest 256 FY2016 Annual Budget SUMMARY OF DEBT SERVICE CHARGES TO MATURITY Certificates of Obligation – SELF-SUPPORTING – Tax Increment Reinvestment Zones (TIRZ) Year Ending September 30 Outstanding Beginning of Year Interest Principal Total Requirements FY2016 6,470,000 265,828 - 265,828 FY2017 6,470,000 224,643 - 224,643 FY2018 6,470,000 224,643 250,000 474,643 FY2019 6,220,000 219,643 260,000 479,643 FY2020 5,960,000 214,443 280,000 494,443 FY2021 5,680,000 208,843 290,000 498,843 FY2022 5,390,000 202,695 295,000 497,695 FY2023 5,095,000 190,895 310,000 500,895 FY2024 4,785,000 181,595 320,000 501,595 FY2025 4,465,000 171,995 325,000 496,995 FY2026 4,140,000 162,245 335,000 497,245 FY2027 3,805,000 151,525 350,000 501,525 FY2028 3,455,000 139,625 360,000 499,625 FY2029 3,095,000 126,665 375,000 501,665 FY2030 2,720,000 111,665 395,000 506,665 FY2031 2,325,000 95,865 415,000 510,865 FY2032 1,910,000 79,265 440,000 519,265 FY2033 1,470,000 61,005 465,000 526,005 FY2034 1,005,000 41,708 490,000 531,708 FY2035 515,000 21,373 515,000 536,373 Total 3,096,163 6,470,000 9,566,163 0 100,000 200,000 300,000 400,000 500,000 600,000 FY 2 0 1 6 FY 2 0 1 7 FY 2 0 1 8 FY 2 0 1 9 FY 2 0 2 0 FY 2 0 2 1 FY 2 0 2 2 FY 2 0 2 3 FY 2 0 2 4 FY 2 0 2 5 FY 2 0 2 6 FY 2 0 2 7 FY 2 0 2 8 FY 2 0 2 9 FY 2 0 3 0 FY 2 0 3 1 FY 2 0 3 2 FY 2 0 3 3 FY 2 0 3 4 FY 2 0 3 5 General Government Debt Service -Self Supported Principal Interest 257 FY2016 Annual Budget UTILITY DEBT 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 September 30 Outstanding Beginning of Interest Principal Total Requirements BRA Contract 2016 78,080,087 2,778,104 5,317,169 8,095,273 1,836,398 2017 72,762,918 2,531,717 5,565,826 8,097,543 1,835,374 2018 67,197,092 2,369,125 5,790,826 8,159,951 1,834,234 2019 61,406,266 2,192,074 5,532,045 7,724,119 1,818,222 2020 55,874,221 2,004,056 5,337,592 7,341,648 2,371,890 2021 50,536,629 1,816,935 5,180,030 6,996,965 2,277,352 2022 45,356,598 1,632,778 5,273,687 6,906,466 2,273,009 2023 40,082,911 1,449,049 4,801,869 6,250,918 2,276,986 2024 35,281,041 1,268,343 4,507,665 5,776,008 2,271,146 2025 30,773,376 1,096,642 4,688,884 5,785,526 2,278,252 2026 26,084,492 923,331 4,583,212 5,506,543 2,269,972 2027 21,501,280 755,566 4,092,541 4,848,107 2,274,261 2028 17,408,739 612,034 3,673,760 4,285,794 2,274,571 2029 13,734,979 481,892 3,104,979 3,586,871 2,279,158 2030 10,630,000 376,505 2,120,000 2,496,505 2,275,635 2031 8,510,000 308,029 2,200,000 2,508,029 1,119,659 2032 6,310,000 233,256 1,855,000 2,088,256 307,674 2033 4,455,000 169,306 1,930,000 2,099,306 - 2034 2,525,000 96,962 1,730,000 1,826,962 - 2035 795,000 29,750 795,000 824,750 - 23,125,453 78,080,087 101,205,541 33,873,792 Interest Principal BRA Contract 0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 20 1 6 20 1 7 20 1 8 20 1 9 20 2 0 20 2 1 20 2 2 20 2 3 20 2 4 20 2 5 20 2 6 20 2 7 20 2 8 20 2 9 20 3 0 20 3 1 20 3 2 20 3 3 20 3 4 20 3 5 Utility Debt Service 258 FY2016 Annual Budget 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: 3.32 3.28 3.90 2.18 2.79 3.32 2.87 2.76 3.46 4.17 2.45 3.01 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 20 0 4 20 0 5 20 0 6 20 0 7 20 0 8 20 0 9 20 1 0 20 1 1 20 1 2 20 1 3 20 1 4 * 20 1 5 * Utility Revenue Bond Coverage The FY2016 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 Fund ElectricFund Total REVENUE All Other Revenue 9,455,733 1,782,350 11,238,083 Interest 119,232 17,425 136,657 System Billings 32,243,822 63,400,000 95,643,822 Total Revenues 41,818,787 65,199,775 107,018,562 EXPENSES Departments 27,428,713 49,786,179 77,214,892 Total Expenditures 27,428,713 49,786,179 77,214,892 Net Available for Debt Service 14,390,074 15,413,596 29,803,670 Annual Debt Requirement 4,635,034 3,487,307 8,122,341 Times Coverage Ratio 3.10 4.42 3.67 259 FY2016 Annual Budget PROPOSED DEBT ISSUES Outstanding Debt Summary Outstanding 9/30/15 Debt Principal FY2016 Principal Reduction Estimated FY2016 New Debt Estimated 9/30/16 Outstanding Debt TAX SUPPORTED DEBT General Debt Service General Obligation/Certificates of Obligation 104,480,260 (6,871,645) 27,548,049 125,156,664 SELF SUPPORTED DEBT General Debt Service Rivery TIRZ 6,470,000 - - 6,470,000 Electric - - 950,000 950,000 Water - - 950,000 950,000 Stormwater 4,910,577 (416,752) 250,000 4,743,825 Airport 1,333,596 (90,644) - 1,242,952 Total General Debt Service 117,194,433 (7,379,041) 29,698,049 139,513,441 Utility Revenue Debt Electric 30,279,446 (2,407,500) 1,795,000 29,666,946 Irrigation 997,720 (89,840) - 907,880 Wastewater 15,483,824 (1,033,745) 5,548,000 19,998,079 Water 31,319,097 (1,786,084) 2,462,000 31,995,013 Total Utility Revenue Debt 78,080,087 (5,317,169) 9,805,000 82,567,918 Issuance Costs 481,000 GENERAL DEBT: Long-term obligations are proposed to fund capital projects as detailed below: General Debt GO - Roads - Southwest Bypass 20,000,000 GO - Parks projects 4,700,000 CO - Austin Ave Bridges 675,000 CO - Facility/parks projects 1,224,049 CO - Public safety vehicles 949,000 Total Projected General Debt 27,548,049 Self-Supporting Debt CO - Electric 950,000 CO - Water 950,000 CO - Stormwater 250,000 Total Self-Supporting Debt 2,150,000 Utility Debt Revenue - Electric 1,795,000 Revenue - Water/Wastewater 8,010,000 Total Utility Debt 9,805,000 Issuance Costs 481,000 Total City-wide Debt Issue 39,984,049 260 FY2016 Annual Budget 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 the 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 2008 Roads 2008 Parks 2015 Roads Total Amount Authorized by the Voters 46,000,000 35,500,000 105,000,000 186,500,000 Year & Issue 2010 1,370,000 - - 1,370,000 2010A 9,430,000 2,500,000 - 11,930,000 2012 - - - - 2012A - - - - 2013 - 5,000,000 - 5,000,000 2014 4,800,000 - - 4,800,000 2015 4,450,000 - - 4,450,000 Total Issued 20,050,000 7,500,000 - 27,550,000 Authorization Remaining 25,950,000 28,000,000 105,000,000 158,950,000 261 FY2016 Annual Budget THIS PAGE INTENTIONALLY LEFT BLANK. 262