Capital Budget Overview! Presentation to County Commission!

Transcription

1 County of Durham Capital Budget Overview Presentation to County Commission March 7, 2013

2 Discussion Materials Overview Discussion Elements Review Capital Program Size, Timing and Sources of Funding Evolving Nature of the County Capital Program, Investment in County Capital Assets and Meeting Rating Medians Define Important Elements Of Capital Planning And The Credit Rating Process Provide Selected Comparative Analysis to Other Governments Selected Comparative Analysis Compare the County s Investment in Fixed Assets Compare the County To The Moody s Rating Benchmarks for General Obligation Ratings Compare the County to Other N.C. Highly Rated Urban Counties On A Number Of Criteria Summary Of The Five And Ten Year CIP And Comparison To Other Highly Rated Urban N. C. Counties County Credit Positives, Challenges And Importance Of Financial Policies Define The Major Elements Of Credit Rating Analysis Summary Capital Budget Discussion March 7,

3 Capital Plan Change, Investment in County Fixed Assets And Moody s Rating Components Capital Budget Discussion March 7,

4 Evolution Of The County Capital Program County Capital Programs Have Been Adjusted Downward Due to Changing Needs and Conditions and With Objective to Meet Triple A Rating Standards. County Financial Policies Also Impact Levels of Capital Investment Represented by Debt Issuance. The Following Graph Illustrates the Trend in 10 Year Capital Programs: $800,000,000 $700,000,000 $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $2,265* $699,000,000 $1,484* $492,075,395 $1,326* 417,489,527 Total CIP Program * = Per Capita $100,000,000 $ pop. Figure (309,000) 2021 pop. Figure (331,523) 2023 pop. Figure (314,701) Capital Budget Discussion March 7,

5 Investment In County Fixed Assets A Comparison Based Upon Audited FY 2012 Results the Following Table Illustrates the Fixed Asset Investment Per Capita in General Govt. and Per ADM for Schools $20,000 $18,000 $17,308 $16,000 $14,000 $12,000 $10,870 $11,678 $11,619 $12,272 $10,000 $8,000 Governmental Schools $6,000 $4,000 $2,000 $1,420 $1,742 $1,793 $1,877 $2,841 $0 Durham Gulford Forsyth Mecklenburg Wake Capital Budget Discussion March 7,

6 Moody s Aaa Rating Medians Compared To Durham Co. North Carolina Aaa Medians Na1onal Aaa Medians Durham County Available General Fund Balance as % of Revenues Direct Net Debt as % of Full Ad Valorem Value Debt Service as % of OperaIng Expenses Full Value Per Capita $108,530 $110,047 $109,956 Per Capita Income as % of U.S. (2000 Census) Source: Moody s Investors Service; NC data from 11/06/12; National data from 1/4/2013; Population figures used in per capita calculations from earlier than Capital Budget Discussion March 7,

7 Selected N. C. County Comparative Analysis Capital Budget Discussion March 7,

8 Current Property Tax Rates Wake Forsyth Durham Guilford Mecklenburg Source: 2013 County Adopted Budgets $ $ $ $ $ $ $ $ $ Wake Forsyth Durham Guilford Mecklenburg Capital Budget Discussion March 7,

9 Current Appraised Values Durham Durham Forsyth Guilford Mecklenburg Wake Mecklenburg Wake $30,061,232,029 $34,016,438,965 $45,357,757,815 $116,691,859,209 $121,893,000,000 Last Revaluation Jan 1, 2008 Last Revaluation 2009 Last Revaluation 2012 Last Revaluation 2012 Last Revaluation 2009 Source: 2013 County Adopted Budgets $140,000,000,000 $120,000,000,000 $100,000,000,000 $80,000,000,000 $60,000,000,000 $40,000,000,000 $20,000,000,000 $0 Durham Forsyth Guilford Mecklenburg Wake Capital Budget Discussion March 7,

10 Current Per Capita Appraised Values Guilford Forsyth Durham Mecklenburg Wake $91,580 $95,833 $109,956 $123,565 $131, ,279 (pop.)* 354,952 (pop.)* 273,392 (pop.)* 944,373 (pop.)* 929,780 (pop.)* 767.8ppl per sq mile 869.9ppl per sq mile 959.2ppl per sq mile 1,805.6ppl per sq mile 1,113.5ppl per sq mile * = 2011 US Census Bureau Estimate 140, , ,000 80,000 60,000 40,000 20,000 0 Guilford Forsyth Durham Mecklenburg Wake Capital Budget Discussion March 7,

11 Current Outstanding Long Term Bonded Debt Durham Forsyth Guilford Mecklenburg Wake $543,934,616* $586,265,543 $901,028,508 $1,848,272,471 $2,058,808,059 Source: 2012 County CAFRs General Government Only * = Includes issuance of 2013 Courthouse LOBs on March 14, ,500,000,000 2,000,000,000 1,500,000,000 1,000,000, ,000,000 0 Durham Forsyth Guilford Mecklenburg Wake Capital Budget Discussion March 7,

12 Current Outstanding Long Term Bonded Debt to Appraised Value Mecklenburg Wake Forsyth Durham Guilford 1.58% 1.68% 1.72% 1.8% 1.98% 2.00% 1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% Mecklenburg Wake Forsyth Durham Guilford Capital Budget Discussion March 7,

13 Current Outstanding Long Term Bonded Debt Per Capita Forsyth Guilford Mecklenburg Durham Wake $1,651 $1,819 $1,957 $1,989 $2, ,952(pop.)* 495,279(pop.)* 944,373(pop.)* 273,392(pop.)* 929,780(pop.)* * = 2011 US Census Bureau Estimate $2,500 $2,000 $1,500 $1,000 $500 $0 Forsyth Guilford Mecklenburg Durham Wake Capital Budget Discussion March 7,

14 Current Median Household Income Forsyth Guilford Durham Mecklenburg Wake $46,417 $46,288 $50,078 $55,994 $65,289 Source: 2011 Estimate from US Census Bureau $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Forsyth Guilford Durham Mecklenburg Wake Capital Budget Discussion March 7,

15 Durham CIP Capital Budget Discussion March 7,

16 Five Year Capital Improvement Program Summarized by Major Category Fiscal Years Governmental $98,248,737 Education $165,871,140 Total: $264,155,877 * GO Referendum currently planned for November Capital Budget Discussion March 7,

17 Ten Year Capital Improvement Program Summarized by Major Category Fiscal Years Governmental $215,390,698 Education $202,098,829 Total: $417,489,527 * GO Referendum currently planned for November Capital Budget Discussion March 7,

18 CIP Comparatives Capital Budget Discussion March 7,

19 Comparative Ten Year General Capital Improvement Program Durham, Forsyth, Guilford, Mecklenburg and Wake Counties Durham 1 Forsyth 2 Guilford 3 Mecklenburg 4 Wake 5 Governmental $215,390,698 $205,752,000 $21,622,034 $- $472,324,285 Education $202,098,829 $249,400,000 $1,131,356,836 $- $286,714, Totals: $417,489,527 $455,152,000 $1,152,978,870 $1,300,000,000 $759,038, Totals: $492,075,395 $519,602,000 $1,109,000,000 $0 $850,400, Totals: $699,000,000 $488,500,000 $700,000,000 $2,254,000,000 $1,900,000,000 1 = CIP = CIP = CIP = CIP = CIP (pro rated to 2022) (formal CIP program suspended) $1,400,000,000 $1,200,000,000 $1,000,000,000 $800,000,000 $600,000,000 $400,000,000 $200,000,000 $0 Durham Forsyth Wake Guilford Mecklenburg Capital Budget Discussion March 7,

20 Per Capita Amounts by Category for Ten Year Capital Budget Durham, Forsyth, Guilford, Mecklenburg and Wake Counties Durham 1 Forsyth 2 Guilford 3 Mecklenburg 4 Wake 5 Governmental $684 $530 $38 $- $409 Education $642 $642 $2,011 $- $ Totals: $1,326 $1,172 $2,049 $1,133 $ Totals: $1,484 $1,223 $1,962 $0 $ Totals: $2,265 $1,220 $1,329 $1,926 $1, Population Estimates 314, , ,579 1,146,460 1,153,355 1 = CIP = CIP = CIP = CIP = CIP (pro rated to 2022) Population Source: NC Office of State Budget and Management (formal CIP program suspended) $2,500 $2,000 $1,500 $1,000 $500 $0 Wake Mecklenburg Forsyth Durham Guilford Capital Budget Discussion March 7,

21 Long Term Bonded Debt and New CIP Debt Millions $600 $540 $480 $420 $360 $300 CIP Principal Outstanding Current Principal Outstanding Per Capita Outstanding Principal $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $240 $800 $180 $600 $120 $400 $60 $200 $0 $ Capital Budget Discussion March 7,

22 County Credit Positives and Challenges, Importance of Financial Policies and Major Elements of Credit Rating Capital Budget Discussion March 7,

23 County Credit Positives Diverse, Growing and Stable Economy Strong Potential as Economy Recovers. Management of County Has Demonstrated Ability to Perform in Both High Growth and Recent Lower Growth Environments. County Financial Management Has Created Strong Finances Consistent With Highest Credit Ratings and Adoption of Financial Policies Has Placed County in Distinguished Group of Planners. Capital Plans Have Been Comprehensive and Changed in View of Various Realities and County Debt Policies. Debt Management Has Been Prudent With Future Capacity Created Based Upon Reasonable Debt Management Policies and Structures of Debt (Over 50% of Debt Retired in First Ten Years, as Example). Creative Use of Construction Period Financing Techniques, Implemented by the County in 2008, Has Contributed Significantly to Financial Management and Most Importantly Lowering Cost of Debt. Use of a Comprehensive Debt Issuance Model Has Defined Future Cost of Debt and Impact on Revenues. Retention, Update and Compliance With Financial Policies a Credit Essential Capital Budget Discussion March 7, 2013

24 County Credit Challenges Population Growth and Demand for Services Creates Expanding Capital Needs and Cost for Operations Necessitating Need for Balance. Managing Capital and Operating Cost Within Constraints of Revenue Growth and Other Ability to Pay Measures. Improving Revenue Source Diversity, Potential for Changes at State Level. Holding Capital Budgets and Issuance of Debt at Reasonable Levels Consistent With High Credit Measures. Prioritizing Capital Projects Within Defined Capital Resource Constraints. Increasing County Contribution Resources to the Capital Plan. Managing Strong Overall Finances and Meeting County Financial and Debt Policies. Growth in Operating and Capital Needs Will Place Pressure on Managing to Current Policy. Retention of Significant Fund Balances, Financial Management Flexibility and Managing to High Standards in Debt Issuance is Key Capital Budget Discussion March 7,

25 Major Elements of Credit Rating Define the Major Elements of the Credit Rating Analysis Benefits of Highest Credit Rating (Triple-A) There are a number of benefits that accrue to governmental issuers who hold the highest credit rating and include a numbers of benefits that have been especially important since 2008 national financial crisis and they include. Greater Future Flexibility to Meet Changing Environments Highest Credits Are Perceived as Having Greatest Ability to Meet Management/Financial/Economic Challenges Economic Activity The economy of the County and how it has grown and changed over the years is of great importane in the rating process. Lower Cost of Borrowing Due to Lowest Interest Rates Available to Highest Credits Maximum Access to Credit Markets Both Public and Private Placement Markets Significant Issue in 2008 Lowest Cost of Credit Instruments, If Needed Overall Condition Of The Area Economy Area Wealth And Means For Government To Access Resources Area Economic Indicators And Demographics Historic Growth In The Overall Economy And Potential For Continued Expansion A Blend Of Economic Factors Provides The Overall Economic Profile For The County Capital Budget Discussion March 7,

26 Major Elements of Credit Rating Define the Major Elements of the Credit Rating Analysis County Management Management is the measure of how the County performs its business plan, the underlying cost of the plan and success of the various programs operated and managed by the management team. It is also a guide to how the major policy decisions of the County Commission are implemented in an efficient manner. Efficiency in Management Of The County Management Strategies and Practice Working With Other Governmental Entities, Both Overlapping Governments And Regulators Quality of Management, Longevity of Staff and Efficiency of Budgetary Management Are Important Considerations Debt Structures and Policies Several elements or factors are used to evaluate the debt issued and the overall debt position of the County. General Government Debt Types/Methods Ability To Pay Indicators Common Debt Factors/Indicators Use Of Debt And Pay-as-you-go Sources To Fund The Capital Program Adopted Debt Policies Evaluating Cost Of Operation For Capital Program Projects Prudent Debt Policy, Use of Appropriate Structures and Ability to Pay Debt Are Key Capital Budget Discussion March 7,

27 Major Elements of Credit Rating Define the Major Elements of the Credit Rating Analysis Financial Management of the County Overall financial management brings together the financial stability of the County as a result of overall management, the economy and debt factors. Financial Planning Development And Use Of Both Long And Short Term Financial Plans Financial Projections And The Use Of Future Oriented Planning Separation Of Resources Between Operating, Capital And Fund Equity Policies That Provide For Sound Financial Footing And Provide A Basis To Reach To Multiple Financial Needs Selected Financial Benchmarks Financial Policies Level Of Retained Fund Balance Actual Financial Performance Measured To The Annual Budget Composition Of Balance Sheet Assets And Liabilities Cash Position And Policies For Invested Cash Are Reviewed Other Financial Indicators, Such As Composition And Diversity Of Revenues, Growth Patterns For The Major Revenues, Primary Expenditure Areas And Their Growth And Change, Use Of One Time Revenues To Balance The Budget And Others Adoption Of Comprehensive Financial Policies Prudent Financial Management Is Key to Retaining Highest Credit Ratings Capital Budget Discussion March 7,

28 Summary Capital Budget Discussion March 7,

29 Summary The County Economy Is Strong And Long-Term Economic Growth Trends Are Excellent Financial Management Is Sound And Compares Well To Highly Rated Credits Current Capital Program Is Comprehensive, Significant In Size, Although Decreasing In Recent Years Current Debt Position, Including Debt Anticipated in CIP, Is Largest Amount That Should be Undertaken Without Increased Revenues Dedicated/Collected for Debt Repayment Future Debt Issuance To Implement The Capital Program Must Be Monitored And Altered By Size And Timing, As Needed, If Highest Credit Ratings Is The Goal, Significant New Debt Capacity Potentially Available After 2022 Ongoing Financial And Debt Policy Development And Evaluation Is Crucial Given County Needs And Changing Economic And Financial Environments Establishment of a Dedicated Capital/Debt Service Fund With Separate Dedicated Revenues Should be Considered as Means to Manage Future Capital and Debt Service Needs and Affordability Capital Budget Discussion March 7,