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Home My WebLink About15 - DebtTY Y / i 1 ebt Debt Service ,- " Debt Service Table of Contents " Debt 4anagement & Policy ........ :..... 323 - General Debt Service _ _ .-Principal & Interest Requirements ............ . ... , -. ,_:.. .........324 - O/S General Debt Issues . - ....:...... - .. .. �-.. ' 3Z5 r .:........ .. ....-...-::.... Legal Debt Margin_ior General Obligation- ' - 327 , Utility Debt Service- ervicePrincipal Principal- & Interest Requirements ......... _ ... :................. - , 328 - - - , Allocation of Debt Principal by Utility Segment ...= ............... : i :. 32� _ -0/S Rovenue Debt Issues .... ...... ..... ; . R.................`.: 3229 ._ Utility Revenue Bond -Debt Coverage,. < ...- :.... , ............. _ , .. ,,:.. 330 \ - Proposed Debt - - - - Proposed Debt Issues .............:. :...... 331 :.x......_` 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 usually required. Debt financed projects must meet the City's long-term financing criteria as included in the Budget & Financial Policies. 115.1 Debt Policy City staff recommend the use of debt financing when appropriate. It will be judged appropriate when the following conditions exist: (1) non -continuous capital improvements are desired, and (2) future citizens will receive a benefit from the improvement. When the City of Georgetown utilizes long-term financing, it will ensure that the debt is soundly financed by: (1) conservatively projecting the revenue sources that will be utilized to pay the debt, (2) financing the improvement over a period not greater than the useful life of the improvement, and (3) determining that the cost benefit of the improvement including interest costs is positive." 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, etc. The City must also maintain a utility coverage ratio of at least 1.5. All of these criteria and objectives will be met with the debt financing proposed in this budget. DEBT ANNUAL OPERATING PLAN ELEMENT 1996/97 323 General Debt Service Summary The City has a relatively low level of debt. The City's general obligation debt is primarily funded from a dedicated portion of local ad valorem tax. Certain issues are for specific purposes and will be repaid through dedicated revenues. Summary of Debt Service Charges to Maturity General Obligation Bonds and Certificates of Obligation Year Ending Outstanding September 30 Beginning of Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 5,681,785 5,083,941 4,456, 839 3,802,421 3,114,971 2,387,194 1,792, 869 1,172,464 647,141 532,189 408,721 280,996 144,756 TAX SUPPORTED Interest 309,313 275,928 241,862 205,567 167,953 127,342 96,896 64,427 37,607 31,170 24,132 16,723 8,685 1,607,603 Total Principal Requirements 597,845 627,102 654,418 687,450 727,778 594,325 620,405 525,323 114,953 123,468 127,725 136,240 144,756 5,681,785 907,157 903,030 896,279 893,017 895,731 721,667 717,301 589,749 152,559 154,637 151,857 152,963 153,441 7,289,388 DEBT 324 ANNUAL OPERATING PLAN ELEMENT 1996/97 Summary of Debt Service Charges to Maturity General Obligation Bonds and Certificates of Obligation SELF-SUPPORTING Year Ending Outstanding Total September 30 Beginning of Year Interest Principal Requirements 1997 1,123,215 62,447 42,156 104,603 1998 1,081,060 60,875 42,898 103,773 1999 1,038,162 57,967 50,583 108,549 2000 987,579 55,423 52,550 107,973 2001 935,029 52,873 57,223 110,095 2002 877,807 50,018 75,675 125,693 2003 802,132 46,107 79,595 125,702 2004 722,537 41,907 109,678 151,584 2005 612,859 36,296 55,047 91,342 2006 557,813 33,320 56,533 89,852 2007 501,280 30,184 57,275 87,459 2008 444,005 26,917 63,760 90,677 2009 380,245 23,193 65,245 88,438 2010 315,000 19,318 45,000 64,318 2011 270,000 16,618 50,000 66,618 2012 220,000 13,593 50,000 63,593 2013 170,000 10,544 55,000 65,544 2014 115,000 7,161 55,000 62,161 2015 60,000 3,752 60,000 63,752 648,511 1,123,215 1,771,726 DEBT ANNUAL OPERATING PLAN ELEMENT 1996/97 325 General Debt Service Summary (cont.) Tax Supported: Refunding, $1,665,000, 1991 General Obligation Refunding Bonds due in annual installments through August 1, 2001; interest at 4.6% to 5.85% 1,180,000 Building and Land, $1,600,000, 1992 Combination Tax and Revenue Certificates of Obligation due in annual installments through August 1, 2004; interest at 5% to 8% (portion included below) 1,235,127 Recreation Program, $1,750,000, 1994 Combination Tax and Revenue Certificates of Obligation due in annual installments through August 15, 2009; interest at 6% to_Z.6%o_(portion included below) 1,366,658 River Corridors and 800 MHZ, $685,000 1994 Anticipation Notes due in annual installments through August 15, 2001; interest at 5.75% to 6.5%. 610,000 Refunding, $1,375,000, 1995 General Obligation Refunding Bonds due in annual installments through August 1, 2003; interest at 3.9% to 5.0% 1.290.000 Subtotal tax supported general obligation debt 5.681.785 Self Supporting: Airport Improvements, $1,600,000, 1992 Combination Tax and Revenue Certificates of Obligation due in annual installments through August 1, 2004, interest at 5% to 8%; portion designated for airport hangars to be paid through rentals of the hangers, $200,000 179,873 Airport Improvements, $1,750,000, 1994 Combination Tax and Revenue Certificates of Obligation due in annual installments through August 15, 2009, interest at 6% to 7.6%; portion designated for airport hangers to be paid through rentals of the hangers, $260,000 238,342 Stormwater Drainage Improvements, $725,000, 1995 Combination Tax and Revenue Certificates of Obligation due in annual installments through September 30, 2015; interest at 3.9% to 6.25%. Paid through monthly fees charged to utility customers within the city limits. 705.000 Subtotal self supporting general obligation debt 1.123.215 Total General Obligation Debt $6.805.000 DEBT 326 ANNUAL OPERATING PLAN ELEMENT 1996/97 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 $1.25 per $100 of valuation, based on 90% collection of tax. Allowable levy per $100 valuation $1.25000 Proposed levy for debt service (included in total adopted rate of $.37850) .16950 Percentage of allowable levy 13.56% J -' DEBT .J ANNUAL OPERATING PLAN ELEMENT 1996/97 327 Utility Debt Service The City has issued debt in the form of revenue bonds to finance construction of electric, water and wastewater improvements. The debt is secured by the net operating revenue of all combined revenues of those utilities. The allocation of debt principal and costs is based on the use of each bond issue. Each utility fund pays debt service from operating revenues. Summary of Debt Service Charges to Maturity: Year Ending Outstanding Total September 30 Beginning of Year Interest Principal Requirements 1997 21,620,000/ 1,278,118 990,000 2,268,118 1998 20,630,000 1,216,758 1,050,000 2,266,758 1999 19,580,000 1,152,985 1,110,000 2,262,985 2000 18,470,000 1,086,358 1,180,000 2,266,358 2001 17,290,000 1,014,433 1,250,000 2,264,433 2002 16,040,000 937,045 1,320,000 2,257,045 2003 14,720, 000 854,127 1,335,000 2,189,127 2004 13,385,000 769,205 1,270,000 2,039,205 2005 12,115, 000 687,833 1,295, 000 1,982,833 2006 10,820,000 605,353 830,000 1,435,353 2007 9,990,000 558,583 880,000 1,438,583 2008 9,110,000 513,273 930,000 1,443,273 2009 8,180, 000 464,173 985,000 1,449,173 2010 7,195,000 411,063 1,040,000 1,451,063 2011 6,155, 000 354,010 1,080,000 1,434, 010 2012 5,075,000 293,775 1,145,000 1,438,775 2013 3,930,000 228,160 1,215,000 1,443,160 2014 2,715,000 157,830 1,275, 000 1,432,830 2015 1,440, 000 83,880 1,440, 000 1,523,880 12,666,957 21,620,000 34,286,957 DEBT 328 ANNUAL OPERATING PLAN ELEMENT 1996/97 Allocation of Debt Principal by Utility Segment: Percent 11.5% 44.5% 44.0% 100.0% Electric 2,482,000 Water 9,623,400 Wastewater 9,514,600 21,620,000 Utility Debt Issues Outstanding Wastewater Improvements, $2,300,000, 1991 Utility System revenue bonds due in annual installments through August 15, 2006; interest at 6.5% to 9.5% Refunding, $9,150,000 1991 Utility System revenue bonds due in annual installments through August 15, 2005; interest at 5.1 % to 6.75% Wastewater Improvements, $5,200,000, 1995 Utility System revenue bonds due in annual installments through August 15, 2016, interest at 3.5% to 5.0% Water, Wastewater & Electric Improvements, $6,825,000, 1995A Utility System revenue bonds due in annual installments through September 15, 2015; interest at 5.5% to 6.25% Total revenue debt $1,950,000 7,755,000 5,115, 000 6.800.000 $21.620.000 DEBT ANNUAL OPERATING PLAN ELEMENT 1996/97 329 Utility Revenue Bond Debt Coverage The City has agreed through its bond ordinances to maintain a "times coverage" ratio of one and one half. The times ratio is calculated using the net revenue available for debt service from the combine 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 service analysts when the City receives a rating for a potential bond issue. The following combined times coverage ratios have occurred, based on budgeted revenues and expenditures, for the fiscal years indicated: 1988 2.64 times 1989 3..21 -times 1990 2.40 times 1991 2.40 times 1992-2.39 times 1993 2.23 times 1994 3.43 times 1995376 -times 1996 4.16 times The 1996/97 Operating Plan results in the revenue to debt ratios shown below. As can be noted, the required coverage is maintained and improved in 1996/97. The excess coverage provided by each fund is used to pay for related utility system capital improvements and transfers out as approved by the City Council. DEBT 330 ANNUAL OPERATING PLAN ELEMENT 1996/97 Water Electric Wastewater Fund Fund Fund Total REVENUE All Other Revenue 1,305,678 783,057 738,453 2,827,188 Interest 70,000 117,279 9,453 196,732 System Billings 5,787,700 14,610,000 3,232,218 23,629,918 Total Revenues 7,163,378 15,510,336 3,980,124 26,653,838 EXPENDITURES Departments 3,043,359 12,236,955 1,930,478 17,210,792 Total Expenditures 3,043,359 12,236,955 1,930,478 17,210,792 Net Available for Debt Service 4,120,019 3,273,381 2,049,646 9,443,046 Annual Debt Requirement 1,309,713 157,877 800,528 2,268,118 Times Coverage Ratio 3.15 20.73 2.56 4.16 DEBT 330 ANNUAL OPERATING PLAN ELEMENT 1996/97 Proposed Debt Issues For 1996/97, the City proposes issuing the following debt for necessary capital improvement projects. Increases in debt service will be funded through continued growth in the City's revenue base. No utility rate increases to cover this additional debt are needed in the current year and are not anticipated in future years. PROPOSED DEBT ISSUES Certificates of Obligation Fire Station Construction &* Street Capital Improvements* Subtotal - Certificates of Obligation *Tax supported Issue Project Issuance Amount Costs Cost & Resv 1,600,000 4,635,000 2,897,125 137,875 4,635,000 2,897,125 137,875 Revenue Bonds Electric Capital Improvements** 2,057,500 2,000,000 223,525 Water Capital Improvements** 1,646,000 1,600,000 178,820 Wastewater Capital Improvements** 411,500 400,000 44,705 Subtotal - Revenue Bonds 4,115,000 4,000,000 447,050 TOTAL PROPOSED DEBT ISSUES 8,750,000 6,897,125 584,925 **Customer Choice & Control System. DEBT ANNUAL OPERATING PLAN ELEMENT 1996/97 331 This page intentionally left blank. 332 . ANNUAL OPERATING PLAN ELEMENT 1996/97