Debt Table of Contents

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Madlyn Morris
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2 Debt Table of Contents Debt Management & Policy Outstanding Debt Summary General Debt Service Outstanding Debt By Type Legal Debt Margin for General Obligation Principal & Interest Requirements -Tax-Supported Principal & Interest Requirements - Self-Supporting Utility Debt Service Principal & Interest Requirements Utility Revenue Bond Debt Coverage Proposed Debt Issues

3 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/

Outstanding Debt Summary - By Type as of October 1, 2010 GENERAL GOVERNMENT TAX SUPPORTED DEBT: Debt 2010/2011 2010/2011 Outstanding % Principal & Interest Handling Fees Certificate of Obligation and

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

4 Outstanding Debt Summary - By Type as of October 1, 2010 GENERAL GOVERNMENT TAX SUPPORTED DEBT: Debt 2010/ /2011 Outstanding % Principal & Interest Handling Fees 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, 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, % 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, Stormwater Drainage 3,690,008 5% 433,606 1,028 Total CO Bonds - Self Supporting 4,792, ,068 1,176 TOTAL ENTERPRISE DEBT 73,602, % 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. 206

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

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).

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

5 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 $ Proposed levy for debt service (included in total adopted rate of $.35622) 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). 207

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

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

6 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 ,057,618 2,308,815 3,752,758 6,061, ,304,860 2,135,794 3,693,261 5,829, ,611,599 1,988,958 3,807,271 5,796, ,804,328 1,842,135 3,776,997 5,619, ,027,331 1,788,766 3,769,501 5,558, ,257,830 1,585,383 3,894,766 5,480, ,363,064 1,482,216 4,011,768 5,493, ,351,296 1,324,917 3,627,029 4,951, ,724,267 1,178,197 3,270,556 4,448, ,453,711 1,042,151 2,951,677 3,993, ,502, ,420 2,996,106 3,913, ,505, ,624 2,773,161 3,562, ,732, ,023 2,895,421 3,565, ,837, ,222 2,955,947 3,497, ,881, ,469 3,084,490 3,491, ,796, ,324 2,118,761 2,385, ,678, ,403 1,992,303 2,161, ,685,846 78, , , ,000 35, , ,923 20,552,792 57,057,618 77,610,

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

7 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 ,792, , , , ,386, , , , ,993, , , , ,587, , , , ,160, , , , ,715, , , , ,256,358 89, , , ,781,337 71, , , ,359,567 55, , , ,123,333 46, , , ,233 40, , , ,572 34, , , ,978 29, , , ,654 25, , , ,601 20, , , ,091 15,503 91, , ,852 11,689 97, , ,155 7, , , ,000 3,113 75,000 78,113 1,329,618 4,792,693 6,122,

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

8 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 ,810,000 2,954,337 4,270,000 7,224,337 (1)(2) 1,365, ,540,000 2,650,230 4,575,000 7,225,230 1,023, ,965,000 2,483,628 4,425,000 6,908,628 1,021, ,540,000 2,320,245 4,600,000 6,920,245 1,011, ,940,000 2,147,493 4,815,000 6,962,493 1,006, ,125,000 1,843,933 8,965,000 10,808,933 1,011, ,160,000 1,575,145 3,880,000 5,455,145 1,011, ,280,000 1,424,110 4,080,000 5,504,110 1,011, ,200,000 1,262,010 3,790,000 5,052, , ,410,000 1,107,371 3,545,000 4,652,371 1,359, ,865, ,691 3,335,000 4,290,691 1,300, ,530, ,821 3,375,000 4,186,821 1,295, ,155, ,106 3,005,000 3,666,106 1,297, ,150, ,380 2,610,000 3,138,380 1,296, ,540, ,386 2,730,000 3,143,386 1,300, ,810, ,693 2,550,000 2,843,693 1,288, ,260, ,636 1,995,000 2,176,636 1,296, ,265,000 94,881 1,455,000 1,549,881 1,293, ,000 32, , ,400 1,299, ,297, , ,829 23,741,496 68,810,000 92,551,496 24,719,

Utility Revenue Bond Debt Coverage The City has agreed through its bond ordinances to maintain a minimum "times coverage" ratio of 1.25.

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

The following combined times coverage ratios have occurred, based on actual revenues and expenditures, for the fiscal years indicated: UTILITY REVENUE BOND COVERAGE The 2010/11 Proposed Operating

9 Utility Revenue Bond Debt Coverage The City has agreed through its bond ordinances to maintain a minimum "times coverage" ratio of 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: UTILITY REVENUE BOND COVERAGE 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, ,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

10 Proposed Debt Issues: 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, ,686,423 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 Road Bond projects 9,800,000 GO Parks Bond projects 2,600,000 Total Projected Debt 17,455,

CITY OF GEORGETOWN 2015 DEBT OVERVIEW

CITY OF GEORGETOWN 2015 DEBT OVERVIEW City Council Workshop February 24, 2015 BUDGET WORKSHOP Debt Overview DEBT OVERVIEW COMPENSATION, BENEFITS, & SELF INSURANCE FOCUS AREA: TRANSPORTATION & CIP FOCUS