Texas Cities Debt Summary

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1 Texas Cities Debt Summary Quick Facts FY 2009 Number of Issuers 224 Number of Bond Issues 393 Total New Money Issued 5,012,273,054 Total Refunding Money Issued $3,211,729,106 Total Par Amount Issued $8,224,002,160 FY Biennial Total $4,751,510,,981 $9,763,784,035 $3,405,019,,997 $6,616,749,103 $8,156,530,,978 $16,380,533,138 BOND ISSUES FOR FISCAL YEARS 2009 & 2010 Bond issuance by Texas cities in FY 2010 decreased from FY 2009 ($8.16 billion vs. $8.22 billion, respectively). Of the total debt issued in FY 2010, 41.7% was for refunding outstanding prior bonds or converting short-term commercial paper notes to long-term bonds, an increase compared to 39.1% of the total in fiscal Refunding transactions during fiscal years 2009 and 2010 resulted in total cash savings of $291.6 million and a $225.7 million net present value savings. In fiscal years 2009 and 2010, 356 Texas cities completed 874 financing transactions and borrowed $16.38 billion dollars. Of the 874 financing transactions, 721 totaling $9.29 billion were backed by taxes, 150 totaling $7.05 billion were backed by revenue, and 3 totaling $38.9 million were backed by sales tax revenue. During fiscal years 2009 and 2010, twelve cities issued Build America Bonds totaling $1.82 billion. Build America Bonds (BAB) weree created from the American Recovery and Reinvestment Act (ARRA) in February 2009 which could be issued as Tax Credit BABs or Direct-Payment BABs. Tax Credit BABs provided a federal subsidy

2 to investors equal to 35% of the interest payable by the issuer, and Direct-Payment BABs provided a direct federal subsidy payment to state and local governmental issuers equal to 35% of the interest payable. Authority to issue either type of BABs expired on December 31, The largest long-term bond transactions were: FY Houston s $ 476,050,000 Combination Utility System First Lien Revenue Refunding Bonds, Series 2009A were used to improve the Utility System and refund Combination Utility System First Lien Revenue Refunding Bonds, Series 2008D-2 and Commercial Paper Notes Series A. FY Houston s Public Improvement Refunding Bonds, Series 2009A for $430.9 million and Build America Bonds Direct Subsidy Taxable Series 2009B for $76.8 million were issued at the same time for a total par amount of $507.7 million. Series 2009A refunded partial amounts of GO Commercial Paper Note Series E, G, H-1, H-2 and tax supported Series 1999A, 2000A, 2001A and Series 2009B refunded partial amounts of GO Commercial Paper Note Series E, G, and H-2. COMMERCIAL PAPER Commercial paper is a short-term financing tool with a maximum maturity of 270 days and is used by some governmental entities. It is normally issued at the first stage of financing projects and is then either rolled over or fixed out by issuing longterm bonds to retire the outstanding commercial paper. During fiscal year 2009, Dallas established a new waterworks and sewer system revenue note program in February 2009 not to exceed $300 million to fund improvements to the city s waterworks and sewer system. In FY 2010, Houston created a new GO note program not to exceed $125 million. Also, Houston created a new combined utility system note program not to exceed $700 million. Ten Texas cities utilize either general obligation and/or revenue commercial paper programs to interim fund infrastructure improvements, additions and extensions. As of August 31, 2010, eight of these cities had $1.69 billion in commercial paper outstanding. Houston had the largest amount outstanding at $692.3 million. Commercial Paper Outstanding Texas Cities Principal as of 8/31/10 Government County Tax-Supported (GO) CP Notes Rev-Supported CP Notes Total Houston Harris 393,000, ,300, ,300,000 San Antonio Bexar 0 585,420, ,420,000 Austin Travis/Williamson * 281,053, ,053,000 Dallas Dallas * 58,000,000 58,000,000 Garland Dallas 30,000,000 * 30,000,000 Arlington Tarrant 17,200, ,200,000 Brownsville Cameron * 15,000,000 15,000,000 El Paso El Paso 0 9,000,000 9,000,000 Corpus Christi Nueces * 0 - Fort Worth Tarrant 0 * - Total $440,200,000 $1,247,773,000 $1,687,973,000 *City does not have a CP program in this category.

3 TOTAL DEBT OUTSTANDING AS OF AUGUST 31, 2010 As of August 31, 2010, Texas cities had $61.13 billion in general obligation and revenue debt outstanding (including $1.69 billion commercial paper and $15.1 million in lease purchases). This is an increase of $2.68 billion or 4.6% over FY Repayment of debt in a timely manner is one municipal performance indicator used by rating agencies to assess financial performance. A payment schedule that retires 25% of principal in five years and 50% in ten years is considered average or adequate. Texas cities will repay $8 billion (30.3%) in principal outstanding of tax-supporteyears. debt within five years and $15.37 billion (58.2%) within ten Revenue debt principal repayment is 17.9% ($6.22 billion) within five years and 37.5% ($13.02 billion) within ten years. This below average repayment indicator has remained relatively the same over the past five years. Note: Repayment calculations do not include commercial paper outstanding or conduit financings.

4 DEBT FOR THE BIG SIX The majority of the debt is held by the six largest Texas cities (The Big Six): Houston, Dallas, San Antonio, Austin, El Paso, and Fort Worth. The Big Six hold $38.02 billion or 62.2% of the total GO (tax-supported) and revenue debt outstanding. City Debt - Principal Outstanding Government Tax Revenue Houston San Antonio Dallas Austin Fort Worth El Paso SUBTOTAL $3,422,431,768 1,305,255,000 1,969,009,913 1,114,764, ,505, ,460,000 $9,329,426,675 $9,292,515,532 7,795,662,412 4,476,608,000 4,070,091,405 2,225,012, ,460,000 $28,692,349,349 Other Cities 17,064,831,456 6,027,243,189 TOTAL $26,394,258,131 $34,719,592,538 Source: Texas Bond Review Board Total Combined $12,714,947,299 $9,100,917,412 $6,445,617,913 $5,184,856,400 $2,910,517,000 $1,664,920,000 $38,021,776,023 23,092,074,645 $61,113,850,668 Of the total debt outstanding for The Big Six, Houston s $12.71 billion accounts for 33.4%. The three largest - Houston, San Antonio and Dallas - hold 74.3% of The Big Six debt. All but one of the cities in The Big Six had an increase in tax-supported (GO) debt since FY 2009: Fort Worth 22.6% %, San Antonio -13.5%, Houston 6.3% El Paso 5.9%,, and Austin - 5%. Dallas was the only city in The Big Six to decrease 1.9% since FY 2009.

5 Note: Population numbers used in the debt per capita calculations are from the July 1, 2009 estimates released December 2009 by the U.S. Census Bureau, Population Division. In FY 2010, San Antonio had the highest debt per capita (tax and revenue combined) of the six largest Texas cities. FY 2010 was the first year in recent history when Austin did not have the highest debt per capita. This was largely due to $2.39 billion increase in San Antonio s outstanding tax and revenue debt (excluding conduit) since FY In the past five years, El Paso and San Antonioo had the two highest debt percentage increases 67.9% and 24.0%, respectively. Austin decreasedd by 2.4% and Fort Worth experienced a less than 1% declinee since FY Dallas continues to have the highest average tax-supported debt per capita ($1,515) of the Big Six as of August 31, Austin ranks second with $1,418; El Paso moved up to third with $1,342. Houston moved down to fourth with $1,339, followed by San Antonio with $950 and Fort Worth with $942 tax-supported debt per capita.