Discussion Materials. Gloucester County, Virginia. February 26, Member NYSE FINRA SIPC. Member NYSE FINRA SIPC

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1 Discussion Materials Gloucester County, Virginia February 26, Member NYSE FINRA SIPC Member NYSE FINRA SIPC

2 Background County Staff tasked Davenport to conduct a Comprehensive Review as it relates to the County s: Financial Policy Guidelines; Historic Operations and Fund Balance; Key Debt Ratios; and Capital Improvement Program ( CIP ). As part of the various tasks, Davenport coordinated with County Staff in order to thoroughly assess and evaluate the County s financial position with respect to: National, Regional, and Virginia Peer Counties; Best Practices based on guidance from the National Rating Agencies and the Government Finance Officers Association ( GFOA ); and The Recommended CIP and the various Scenarios regarding the potential Gloucester County High School Project. Davenport developed and discussed several analyses with County Staff over the past several months. The materials presented on the following pages are intended to provide an Executive Summary of Davenport s Comprehensive Review in order to provide perspective on: Adherence to Financial Policy Guidelines and Maintaining Creditworthiness; and Debt Capacity and Debt Affordability as it relates to the funding of the identified CIP projects. These discussion materials will focus primarily on the County s CIP planning efforts. February 26, Gloucester County, VA 1

3 Contents / Agenda 1 Introduction Credit Ratings, Peer Comparatives, and Credit Criteria 2 Existing Tax-Supported Debt Profile 3 Debt Capacity and Policies (Current and Recommended) 4 County s CIP and Scenarios Analyzed Appendix A B C Details of Scenarios Analyzed Existing Tax-Supported Debt Gloucester County Debt Obligation Policy February 26, Gloucester County, VA 2

4 1. Introduction Credit Ratings, Peer Comparatives, and Credit Criteria February 26, Gloucester County, VA 3

5 Introduction Credit Ratings and Peer Comparatives Credit Ratings Overview The County is not currently rated by the National Rating Agencies. However, prior to the August 12, 2015 Refunding of the EDA Lease Revenue Refunding Bonds, Series 2006, the County s Lease Revenue Bonds were rated AA/AA- by Standard and Poor s and Fitch Ratings, respectively. The County was not rated by Moody s Investors Service. Moody' s Standard & Poor' s Fitch Aaa AAA AAA Aa1 AA+ AA+ Aa2 AA AA Aa3 AA- AA- A1 A+ A+ A2 A A A3 A- A- Baa1 BBB+ BBB+ Baa2 BBB BBB Baa3 BBB- BBB- Non Investment Grade EDA Lease Revenue Rating Implied General Obligation Rating Peer Comparatives Introduction The following pages contain peer comparatives based on the Moody s rating categories shown below. National Counties Aaa 111 Credits Aa1 114 Credits Aa2 278 Credits Aa3 181 Credits Virginia Counties Albemarle Fairfax Henrico Prince William Arlington Goochland James City Stafford Chesterfield Hanover Loudoun Fauquier Roanoke Spotsylvania York Montgomery Caroline Frederick Orange Pulaski Culpeper Isle of Wight Powhatan Rockingham Fluvanna King George Prince George Warren Franklin Aaa Aa1 Aa2 Aa3 (11 Credits) (5 Credits) (13 Credits) (8 Credits) Appomattox Dinwiddie Northumberland Washington Carroll Henry Pittsylvania Wise Note: The data shown in the peer comparatives is from Moody s Municipal Financial and Ratio Analysis database. The figures shown are derived from the most recent financial statement available as November 26, 2018 (mostly 2017 figures). February 26, Gloucester County, VA 4

6 Selection of Peer Comparatives Virginia and Regional In addition to the County s Rating Peers, Davenport developed a group of Virginia and Regional Peer Counties based on the following criteria: 1. Virginia Counties Budget Peers - Counties in Virginia with a Local Revenue Budget (1) +/- $25 Million in comparison to Gloucester County. Population Peers - Counties in Virginia with an estimated 2016 population +/- 10,000 in comparison to Gloucester County. 2. Regional County Budget Peers - Counties in VACo Regions 1-5 and 7 with a Local Revenue Budget (1) +/- $25 Million in comparison to Gloucester County. Population Peers - Counties in VACo Regions 1-5 and 7 with an estimated 2016 population +/- 10,000 in comparison to Gloucester County. Parameter Budget Siz e Population Range (+/-) 25,000,000 10,000 Upper Limit 82,864,064 46,983 Gloucester 57,864,064 36,983 Lower Limit 32,864,064 26,983 (2) (1) Local Revenue Budget data is sourced from the Auditor of Public Accounts Comparative Report; excludes revenues from Federal and State governments. (2) Region 2 Peers are well above or below Gloucester s Budget Size and population and are thus excluded as peers for the purposes of this analysis. February 26, Gloucester County, VA 5

7 Rating Agency Methodology Updates Moody s Moody s Rating Methodology Moody s Local Control On January 15, 2014, Moody s updated its US Local Governments General Obligation Debt methodology and assumptions. Category Rating Percentage Short Term Control Long Term Control Under the new methodology, an initial indicative rating is calculated from a weighted average of four key factors: US Local Governments General Obligation Debt M ethodology 1. Economy / Tax Base 30% Tax Base Size (Full Value) 10% Full Value Per Capita 10% Wealth (Median Family Income) 10% 2. Finances 30% Fund Balance (% of Revenues) 10% Fund Balance Trend (5-Year Change) 5% Cash Balance (% of Revenues) 10% Cash Balance Trend (5-Year Change 5% 3. M anagement 20% Institutional Framework 10% Operating History 10% 4. Debt / Pensions 20% Debt to Full Value 5% Debt to Revenue 5% Moody's Adjusted Net Pension Liability (3-Year Average) to Full Value 5% Moody's Adjusted Net Pension Liability (3-Year Average) to Revenue 5% 1. Economy / Tax Base 30% 2. Finances 30% 3. Management 20% 4. Debt / Pensions 20% Up to a one-notch adjustment can be made from the indicative rating based on other qualitative factors. February 26, Gloucester County, VA 6

8 Rating Agency Methodology Updates S&P S&P Rating Methodology S&P Local Control On September 12, 2013, Standard & Poor s updated its US Local Governments General Obligation Ratings methodology and assumptions. Category Rating Percentage Short Term Control Long Term Control Under the new methodology, an initial indicative rating is calculated from a weighted average of seven key factors: US Local Governments General Obligation Ratings M ethodology 1. Institutional Framework 10% Legal and practical environment in which the local gov't operates 2. Economy 30% Total Market Value Per Capita Projected per capita effective buying income as a % of US projected effective buying income 3. M anagement 20% Impact of management conditions on the likelihood of repayment 4. Budgetary Flex ibility 10% Available Fund Balance as a % of Expenditures 5. Budgetary Performance 10% Total Government Funds Net Result (%) General Fund Net Revenue 6. Liquidity 10% Total Gov't Available Cash as a % of Total Gov't Funds Debt Service Total Gov't Cash as a % of Total Gov't Funds Expenditures 7. Debt and C ontingent Liabilities 10% Net Direct Debt as a % of Total Governmental Funds Revenue Total Governmental Funds Debt Service as a % of Total Governmental Funds Expenditures 1. Institutional Framework 10% 2. Economy 30% 3. Management 20% 4. Budget Flexibility 10% 5. Budgetary Performance 10% 6. Liquidity 10% 7. Debt and Contingent Liabilities 10% Up to a one-notch adjustment can be made from the indicative rating based on other qualitative factors. February 26, Gloucester County, VA 7

9 Peer Comparatives Key Economic Statistics Median Home Value Full Value per Capita Gloucester Virginia Budget Peer Median Regional Budget Peer Median 225, , ,900 Higher is Better. Gloucester Virginia Budget Peer Median Regional Budget Peer Median 115, , ,224 Higher is Better. Virginia Pop. Peer Median 222,500 Virginia Pop. Peer Median 128,399 Regional Pop. Peer Median 153,800 Regional Pop. Peer Median 118,332 National 'Aaa' 240,200 National 'Aaa' 116,926 National 'Aa1' 177,750 National 'Aa1' 89,206 National 'Aa2' 153,900 National 'Aa2' 85,985 National 'Aa3' 122,900 National 'Aa3' 81,991 Virginia 'Aaa' 317,300 Virginia 'Aaa' 165,266 Virginia 'Aa1' 252,900 Virginia 'Aa1' 120,102 Virginia 'Aa2' 223,300 Virginia 'Aa2' 124,213 Virginia 'Aa3' 125,500 Virginia 'Aa3' 93,169 Unemployment 0 50, , , , , ,000 $ 0 25,000 50,000 75, , , ,000 $ Median Family Income Gloucester Virginia Budget Peer Median Regional Budget Peer Median Lower is Better. Gloucester Virginia Budget Peer Median Regional Budget Peer Median 75,261 58,920 75,451 Higher is Better. Virginia Pop. Peer Median 3.9 Virginia Pop. Peer Median 58,404 Regional Pop. Peer Median 4.3 Regional Pop. Peer Median 67,543 National 'Aaa' 3.6 National 'Aaa' 85,654 National 'Aa1' 4.0 National 'Aa1' 71,808 National 'Aa2' 4.2 National 'Aa2' 63,784 National 'Aa3' 4.8 National 'Aa3' 58,474 Virginia 'Aaa' 3.5 Virginia 'Aaa' 96,111 Virginia 'Aa1' 3.3 Virginia 'Aa1' 89,152 Virginia 'Aa2' 3.8 Virginia 'Aa2' 75,451 Virginia 'Aa3' 4.9 Virginia 'Aa3' 55, % 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90, ,000 $ Source: Moody s MFRA; Average for CY February 26, Gloucester County, VA 8

10 2. Existing Tax-Supported Debt Profile February 26, Gloucester County, VA 9

11 Millions Existing Tax-Supported Debt Profile Tax-Supported Debt Service Principal Interest Par Outstanding Estimated as of 6/30/2018 Type Par Amount General Obligation Bonds $29,710,885 Tax-Supported Debt Service F Y Principal Interest Total 1 0-yr Payout Total 36,239,163 11,818,470 48,057,634 3,053,318 1,431,846 4,485, % 2,922,931 1,319,847 4,242, % 3,017,217 1,210,257 4,227, % 2,941,853 1,094,219 4,036, % 3,013, ,546 4,003, % 3,102, ,857 3,993, % 2,464, ,755 3,260, % 2,538, ,926 3,244, % 2,612, ,702 3,231, % 2,184, ,749 2,724, % 1,873, ,933 2,345, % 1,513, ,231 1,933, % 1,561, ,873 1,926, % 1,022, ,313 1,338, % 1,057, ,310 1,340, % 1,087, ,910 1,335, % 272, , , % Lease Revenue & Capital Leases 6,528,278 Total $36,239,163 Note: 2011 & 2012 QSCB interest shown gross of federal subsidy. Does not include County s Utility debt. Does not include the Non-Governmental EDA Debt. Source: County CAFRs and County Staff Debt Service Workbook. February 26, Gloucester County, VA 10

12 Key Debt Ratio Existing Tax-Supported Payout Ratio 10 Year Payout Ratio 10 Year Payout Ratio Peer Comparative 100.0% 90.0% Gloucester 80.0% 70.0% Virginia Budget Peer Median 60.0% Regional Budget Peer Median 50.0% 40.0% Virginia Pop. Peer Median 30.0% Regional Pop. Peer Median 20.0% 10.0% National 'Aaa' 0.0% National 'Aa1' Higher is Better. 10-yr Payout National 'Aa2' National 'Aa3' Existing 10 Year Payout Ratio FY 76.9% Virginia 'Aaa' Virginia 'Aa1' Virginia 'Aa2' Virginia 'Aa3' The 10 Year Payout Ratio measures the amount of principal to be retired in the next 10 years. This ratio is an important metric that indicates whether or not a locality is back-loading its debt. The County may want to consider adopting a 10 Year Payout Ratio policy. Rating Considerations: % Moody s: Moody s rating criteria for General Obligation credits allows for a scorecard adjustment if an issuer has unusually slow or rapid amortization of debt principal. S&P: A payout ratio greater than 65% results in a one point positive qualitative adjustment to the Debt & Contingent Liabilities section of S&P s General Obligation rating methodology. Source: County CAFRs, County Staff Debt Service Workbook, Moody s Investor Services, and S&P. February 26, Gloucester County, VA 11

13 Key Debt Ratio Existing Debt to Assessed Value Debt to Assessed Value Debt to Assessed Value Peer Comparative 4.0% 3.5% 3.0% Gloucester Virginia Budget Peer Median Lower is Better. 2.5% Regional Budget Peer Median % 1.5% Virginia Pop. Peer Median Regional Pop. Peer Median % 0.5% National 'Aaa' % National 'Aa1' National 'Aa2' National 'Aa3' 0.5 Existing Policy Existing Debt to Assessed Value FY 0.8% Virginia 'Aaa' Virginia 'Aa1' Virginia 'Aa2' Virginia 'Aa3' Assumed Future Growth Rates 2018 Assessed Value $4,348,540,000 & Beyond 1.0% County Policy Net Debt as a percentage of Assessed Value will not exceed 3.0%. (Net Debt is General Obligation debt and Capital Lease Obligation exclusive of debt or leases payable from the Enterprise Fund.) Rating Considerations: % Moody s: Criteria for General Obligation Credits defines categories of Debt to Assessed Values as: Very Strong (Aaa): < 0.75% Strong (Aa): 0.75% % Moderate (A): 1.75% - 4.0% Weak Very Poor (Baa and below): > 4.0% S&P: A positive qualitative adjustment is made to the Debt and Contingent Liabilities score for a debt to market value ratio below 3.0%, while a negative adjustment is made for a ratio above 10.0%. Source: County CAFRs, County Staff Debt Service Workbook, Moody s Investor Services, and S&P. February 26, Gloucester County, VA 12

14 Key Debt Ratio Existing Debt Service vs. Expenditures Debt Service vs. Expenditures 12.0% 10.0% 8.0% Debt Service vs. Expenditures Peer Comparative Gloucester Virginia Budget Peer Median Regional Budget Peer Median Lower is Better. 6.0% 4.0% Virginia Pop. Peer Median Regional Pop. Peer Median % 0.0% National 'Aaa' National 'Aa1' National 'Aa2' Existing Policy National 'Aa3' 5.2 Existing Debt Service vs. Expenditures FY 4.7% Assumed Future Growth Rates 2018 Adjusted Expenditures: $90,388,375 & Beyond 1.0% County Policy - General Obligation Debt Service and Capital Lease payments as a percentage of General Governmental Expenditures will not exceed 10%. For purposes of this requirement, General Governmental Expenditures shall be that amount reported in the most recent Comprehensive Annual Financial Report. Note: Governmental Expenditures represent the ongoing operating expenditures of the County and Schools. In this analysis, debt service and capital outlay expenditures are excluded. Virginia 'Aaa' Virginia 'Aa1' Virginia 'Aa2' Virginia 'Aa3' % Rating Considerations: Moody s: Moody s criteria allows for a scorecard adjustment if an issuer has very high or low debt service relative to its budget Percent. S&P: The Debt and Contingent Liabilities section defines categories of Net Direct Debt as a % of Total Governmental Funds Expenditures as follows: Very Strong: <8% Strong: 8% to 15% Adequate: 15% - 25% Weak: 25% - 35% Very Weak: > 35% Source: County CAFRs, County Staff Debt Service Workbook, Moody s Investor Services, and S&P. February 26, Gloucester County, VA 13

15 Dollars ($) Key Debt Ratio Existing Debt Per Capita Debt Per Capita Debt Per Capita Peer Comparative 3,000 2,500 2,000 Gloucester Virginia Budget Peer Median Regional Budget Peer Median 975 1,345 2,331 Lower is Better. 1,500 Virginia Pop. Peer Median 1,428 1,000 Regional Pop. Peer Median 2, National 'Aaa' National 'Aa1' National 'Aa2' National 'Aa3' 411 Existing Policy Existing Debt Per Capita FY $975 Assumed Future Growth Rates 2017 Population 37, & Beyond 0.0% Virginia 'Aaa' Virginia 'Aa1' Virginia 'Aa2' Virginia 'Aa3' 2,079 1,760 2,331 1, ,000 2,000 3,000 4,000 5,000 $ County Policy - The Net Debt Per Capita will not exceed $1,700 per capita. (Net Debt is General Obligation debt and Capital Lease Obligation exclusive of debt or leases payable from the Enterprise Fund. For the purposes of this requirement, the County should use the most recent County population estimates prepared by the Center for Public Policy.) Source: County CAFRs, County Staff Debt Service Workbook, and Moody s Investor Services. February 26, Gloucester County, VA 14

16 3. Debt Capacity and Policies (Current and Recommended) February 26, Gloucester County, VA 15

17 Introduction Financial Policy Best Practices Financial Policies that are adopted, adhered to, and regularly reviewed are recognized as a cornerstone of sound financial management. Effective Financial Policies: Contribute to the County's ability to insulate itself from fiscal crisis; Enhance access to short term and long term financial credit by helping to achieve the highest credit ratings possible; Promote long-term financial stability by establishing clear and consistent guidelines; Direct attention to the total financial picture of the County rather than single issue areas; Promote the view of linking long-run financial planning with day-to-day operations; and Provide the County Staff, the County Board and the County citizens a framework for measuring the fiscal impact of government services against established fiscal parameters and guidelines. Financial Policies should be reviewed periodically by County Staff and any recommended changes should be presented to the Governing Body for formal approval / adoption. February 26, Gloucester County, VA 16

18 Introduction Financial Policy Best Practices National Rating Agencies Moody s US Local Government General Obligation Debt, January 2014 A local government s success in navigating the legal, political and practical environment in which it operates depends on a multitude of factors, including management s mastery in understanding its resources and managing its responsibilities, public and executive support for its plans, and its willingness to use the tools at its disposal. When evaluating a credit, we seek to understand the probable impact of fund balance policies, multi-year financial or capital planning, liquidity management, accuracy of budget forecasts, and willingness to make midyear adjustments. Reliance on nonrecurring, or one-shot revenues, such as proceeds from the sale of assets, windfall delinquent tax collections, or the use of fund balance as a revenue source, leaves the municipality vulnerable should these one-time revenues fail to materialize. S&P s U.S. Local Governments General Obligation Ratings: Methodology And Assumptions, September 2013 The rigor of a government s financial management practices is an important factor in Standard & Poor s Ratings Services analysis of that government s creditworthiness. Managerial decisions, policies, and practices apply directly to the government s financial position and operations, debt burden, and other key credit factors. A government s ability to implement timely and sound financial and operational decisions in response to economic and fiscal demands is a primary determinant of near-term changes in credit quality. S&P measures the strength of governmental financial management through seven (7) key factors: Revenue and expenditure assumptions Budget amendments and updates Long term financial planning Long term capital planning Investment management policies Debt management policies Reserve and liquidity policies February 26, Gloucester County, VA 17

19 Debt and Contingent Liability Policies Observations and Recommendations Observations of Current Policy The County monitors its key debt ratios at least annually in conjunction with the Multi-Year Capital Improvements Program process. The results are shared with the Board of Supervisors as part of the annual budgeting process. Key Debt Ratios (exclusive of Enterprise/Utility Fund debt) Net Debt as a percentage of Assessed Value will not exceed 3.0%; Net Debt per Capita will not exceed $1,700; and Net Debt as a percentage of Expenditures will not exceed 10%. Potential Policy Recommendations General The County may want to consider including language that provides latitude for the Board of Supervisors to make exceptions to these ratios as they see fit by motion or some other official action Should one or more of the projected key debt ratios breach policy levels, staff must request an exception from the County Board stating the justification and expected duration of the policy exception. Net Debt as a Percentage (%) of Expenditures Based on discussions with County Staff and the analyses conducted over the past several months, Davenport would recommend revising this policy to not exceed 15%. Net Debt per Capita This ratio has been de-emphasized by the credit rating agencies. Similarly, Davenport would recommend that the County consider deemphasizing or deleting this policy. 10 Year Payout Ratio The County may want to consider adding a 10 Year Payout Ratio policy. This ratio measures how quickly the County is paying principal on its debt obligations. Davenport recommends adding this policy -- Payout of aggregate outstanding tax-supported debt principal shall be no less than 50% repaid in 10 years. February 26, Gloucester County, VA 18

20 Debt Capacity vs. Key Debt Ratios The following pages illustrate the County s Debt Capacity in FY based on Key Debt Ratios with respect to Current Policies and potentially revised (Recommended) levels, as shown below. Key Debt Ratio FY Proj. FY 20 Levels (1) Levels (2) Current Policy Recommended Policy Levels Debt to Assessed Value 0.8% 0.75% 3.0% 3.0% Debt Service to Expenditures 4.7% 4.4% 10.0% 15.0% Debt Per Capita , Year Payout 76.9% 80.4% N/A 50.0% The remainder of this presentation will reflect the Recommended Policies as follows: Debt to Assessed Value Maximum of 3.0% Debt Service to Expenditures Maximum of 15.0% 10 Year Payout Ratio Minimum of 50.0% (1) Calculated as of FY. (2) Calculated as of FY ; assumes the County does not issue additional debt prior to FYE. February 26, Gloucester County, VA 19

21 Estimated Debt Capacity (1) Existing and Recommended Policy Levels Current Policy Levels The County s FY key debt ratios are shown below for comparative purposes. (2) Debt capacity is calculated based upon potential debt issuances in FY. The Projected FY Levels of the key debt ratios are shown for reference prior to any new debt issuance. The County is currently limited to approximately $30 Million in additional Debt Capacity due to the Debt Per Capita parameter. Recommended Policy Levels Based upon the Recommended Policy Levels, the County s Debt Capacity ranges between $37 Million and $62.5 Million. The Limiting Ratio in the case of either 20 or 25 Year debt would be the Recommended 10 Year Payout Ratio. The County may choose to breach this policy (or others), but would want to demonstrate that there is a prescribed plan to come back into compliance within a given timeframe. As with any of the benchmarks reflected herein, the County would potentially be negatively impacted from a credit perspective, if these benchmarks are materially breached for too long of a period. Key Debt Ratio FY Proj. FY 20 Levels (2) Levels (3) Current Policy 20 Years 4.75% 25 Years 5.00% Recommended Policy Levels 20 Years 4.75% 25 Years 5.00% Debt to Assessed Value $99,892,524 $99,892,524 $99,892,524 $99,892,524 Annual Debt Service 0.8% 0.75% 3.0% $7,846,604 $7,087, % $7,846,604 $7,087,620 Incremental Cost (4) Debt Service to Expenditures $77,911,651 $86,254,893 $155,400,016 $172,041,171 Annual Debt Service Capacity 4.7% 4.4% 10.0% $6,119,997 $6,119, % $12,206,744 $12,206,744 Incremental Cost (4) Debt Per Capita $30,001,454 $30,001,454 Annual Debt Service ,700 $2,356,628 $2,128,677 N/A Incremental Cost (4) Year Payout $62,540,882 $37,465,988 Annual Debt Service 76.9% 80.4% N/A 50.0% $4,912,616 $2,658,304 Incremental Cost (4) (1) Debt Capacity is estimated based upon issuing debt in FY with full annual level debt service payments commencing in FY. (2) Calculated as of FY. (3) Calculated as of FY ; assumes the County does not issue additional debt prior to FYE. (4) The incremental cost is based upon the Value of a Penny of $420,000 as provided by County Staff; does not include growth. February 26, Gloucester County, VA 20

22 4. County s CIP and Scenarios Analyzed February 26, Gloucester County, VA 21

23 Summary of CIP Scenarios Recommended CIP and GHS (1 Phase Approach) In order to provide the County with perspective on additional Debt Capacity and Debt Affordability, the following scenarios have been analyzed: Fiscal Y ear Scenario Scenario Scenario Projects Issued Recommended CIP 2 Page Athletic Fields 300,000 3 New Achilles Bus Loop 789,916 4 Transportation Facility - 7,019,000 5 County-Owned Library 4,800,000 Same as Scenario 1 6 Public Safety Radio Replacement 3,224,630 7 Support Facilities / Woodville 4,465,646 8 Subtotal Recommended CIP 20,599,192 20,599,192 20,599,192 9 (1) Gloucester High School (GHS) Renovation [1 Phase] - 75,297,275 52,625,000 31,575, Total CIP 95,896,467 73,224,192 52,174,192 Amortizations/terms for each Scenario (1), as described below: A 20 Years at 4.50% B 25 Years at 5.00% Please note that 30 Year options were evaluated, but it was determined that the County would be out of compliance with the Recommended 10 Year Payout Ratio for an extended period of time, additional financing (interest) costs would be excessive, and the benefit with respect to Debt Affordability (cash flows) would be minimal. The following key borrowing assumptions have been utilized for each of the above Scenarios: Issued Fall of Fiscal Year 1st Interest Payment Fiscal Year Following Issuance 1st Principal Payment Fiscal Year Following Issuance Structure Level Debt Service (1) A portion of the GHS Renovation project amounts above have been escalated by a factor of 5.25% for one year (to FY ) with base costs of $71.5 Million, $50 Million, and $30 Million, respectively. (2) For the purposes of this analysis, all projects other than the Public Safety Radio Portable & Mobile Replacement Project (the Radio Project ) will be financed over the terms set forth herein. In every Scenario, the Radio Project will be financed over 15 Years at an interest rate of 4.25%. February 26, Gloucester County, VA 22

24 Comparative Summary The Summary below illustrates the results of the various analyses that have been conducted. The details of these scenarios are presented as part of the Appendix. For purposes of this meeting, we would be happy to walk through one or more scenarios in order to demonstrate the methodology. Recommended Policy Scenario Scenario Scenario Projects Levels Year Level Debt Service at 4.5% 2 Recommended CIP $ 20,599,192 $ 20,599,192 $ 20,599,192 3 GHS Renovation [1 Phase] $ 75,297,275 $ 52,625,000 $ 31,575,000 4 Total Projects Funded $ 95,896,467 $ 73,224,192 $ 52,174,192 5 Total Proposed Debt Service $ 146,912,939 $ 112,052,721 $ 79,687,864 6 Upfront (FY ) Tax Rate Impact Natural/Targeted Tax Rate Impact (1) Debt as % of Assessed Value Max 3% 2.44% 1.94% 1.48% 9 Debt Service to Governmental Expenditures Max 15% 9.88% 8.37% 6.91% Year Payout Ratio Min 50% 49.92% 53.28% 58.12% Year Payout Ratio - # of Years out of Compliance Current Policy / Recommend Excluding 13 Debt per Capita Max 1,700 2,969 2,361 1, Debt per Capita - # of Years out of Compliance Year Level Debt Service at 5.0% 2 Recommended CIP $ 20,599,192 $ 20,599,192 $ 20,599,192 3 GHS Renovation [1 Phase] $ 75,297,275 $ 52,625,000 $ 31,575,000 4 Total Projects Funded $ 95,896,467 $ 73,224,192 $ 52,174,192 5 Total Proposed Debt Service $ 168,809,157 $ 128,592,816 $ 91,254,085 6 Upfront (FY ) Tax Rate Impact Natural/Targeted Tax Rate Impact (1) Debt as % of Assessed Value Max 3% 2.44% 1.94% 1.48% 9 Debt Service to Governmental Expenditures Max 15% 9.46% 8.05% 6.70% Year Payout Ratio Min 50% 41.11% 45.03% 50.78% Year Payout Ratio - # of Years out of Compliance Current Policy / Recommend Excluding 13 Debt per Capita Max 1,700 2,972 2,363 1, Debt per Capita - # of Years out of Compliance (1) For the purpose of this analysis, Scenarios 1-3 reflect the Targeted Tax Rate Impact. The Natural Tax Rate Impact is not materially different from the Targeted Tax Rate Impact. *Davenport recommends removing the Debt per Capita Policy. February 26, Gloucester County, VA 23

25 Appendix February 26, Gloucester County, VA 24

26 A. Details of Scenarios Analyzed Scenario 1 GHS Renovation (1 Phase) at $75.3 Million A. 20 Year Amortization B. 25 Year Amortization Scenario 2 GHS Renovation (1 Phase) at $52.6 Million A. 20 Year Amortization B. 25 Year Amortization Scenario 3 GHS Renovation (1 Phase) at $31.6 Million A. 20 Year Amortization B. 25 Year Amortization February 26, Gloucester County, VA 25

27 Millions Millions Proposed Debt Service Scenario 1A (20 Years) CIP with GHS Renovation in 1 Phase at $75.3 Million Proposed Debt Service Existing Proposed Principal Financing Assumptions Key Borrowing Assumptions 1 st Principal & Interest Year Following Issuance Amortization Level Debt Service Term 20 Years Interest Rate 4.50% Borrowing Amounts FY $8,879,916 FY 59,391,325 FY 15,134,950 FY 4,800,000 FY (1) 3,224,630 FY 4,465,646 Total Projects Debt Funded $95,896,467 Total Proposed Debt Service $146,912, Existing February 26, (1) For the purposes of this analysis, the $3,224,630 Radio Project will be financed in FY over 15 Years at an interest rate of 4.25%. Gloucester County, VA 26

28 Dollars ($) Proposed Debt Service Scenario 1A (20 Years) CIP with GHS Renovation in 1 Phase at $75.3 Million Debt per Capita 5,000 4,000 3, Year Payout 100% 90% 80% 70% 60% 50% 2,000 1,000-40% 30% 20% 10% 0% Debt to Assessed Value 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% Existing Proposed Debt Current Policy Existing and Proposed Debt Service to Expenditures 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% Proposed Policy 0.0% 0.0% Existing Proposed Debt Current & Proposed Policy Existing Proposed Debt Current Policy Proposed Policy February 26, Gloucester County, VA 27

29 Debt Affordability Analysis Scenario 1A (20 Years) Existing & Proposed Debt CIP with GHS Renovation in 1 Phase at $75.3 Million Natural / Targeted Tax Rate Impact Upfront Tax Rate Impact (FY ) A B C D E F G H I J Debt Service Revenues Available for Debt Service Debt Service Cash Flow Surplus (Deficit) Total Existing and Proposed Debt Service Capital Reserve Utilized Adjusted Surplus / (Deficit) Estimated Incremental Tax Equivalent GF Budgeted Credits for Total Revenues Revenue from Capital Reserve FY Debt Service QSCBs (1) Available Prior Tax Impact Fund Balance 4,485,164 4,249, ,036 4,485, ,242,779 4,006, ,036 4,242, ,910,127 3,991, ,036 4,227,474 4,584,482-3,901, ,901,828 9,284,556 3,800, ,036 4,036,072 4,676,630 (571,854) - - 3,329,974 10,415,804 3,767, ,036 4,003,804 4,723,396 (1,688,604) - - 1,641,370 10,405,983 3,757, ,036 3,993,983 4,770,630 (1,641,370) ,041,045 3,024, ,036 3,260,039 6,810,484-29, ,478 10,025,978 3,008, ,036 3,244,972 6,898, , ,181 10,307,989 2,995, ,036 3,231,864 6,967,696 (108,429) ,752 9,800,524 2,488, ,036 2,724,399 7,037,373 (38,752) ,764,850 2,109, ,036 2,345,423 7,419, ,353,147 1,697, ,036 1,933,720 7,496,769-77,342-77,342 9,345,790 1,700, ,070 1,926,363 7,571, , ,652 8,757,452 1,121, ,104 1,338,025 7,647, , ,679 8,759,450 1,123, ,104 1,340,023 7,723, , ,181 8,755,050 1,119, ,104 1,335,623 7,801, ,741-1,143,922 7,807, , , ,907 7,879, ,753-1,603,675 7,419, ,957, ,545-2,142,220 7,419, ,037, ,124-2,760,344 7,419, ,117, ,500-3,458,844 7,419, ,199, ,679-4,238,523 7,419, ,281, ,670-5,100,193 6,736, ,363,908-1,627,135-6,727,328 1,875, ,447,547-6,571,723-13,299, , ,532,023-7,819,715-21,118, , ,617,343-7,905,036-29,023, , ,703,516-8,360,215-37,384, , ,790,551-8,447,250-45,831, , ,878,457-8,535,155-54,366, , ,967,241-8,623,940-62,990, ,056,914-9,056,914-72,047, ,147,483-9,147,483-81,194, ,238,958-9,238,958-90,433, ,331,347-9,331,347-99,765, ,424,661-9,424, ,189,724 Total Tax Effect Total 194,970,573 44,242,765 3,814,869 48,057, ,102,663 (4,049,009) 113,238,733 A B C D E F G H I J Debt Service Revenues Available for Debt Service Debt Service Cash Flow Surplus (Deficit) Total Existing and Proposed Debt Service Capital Reserve Utilized Adjusted Surplus / (Deficit) Estimated Incremental Tax Equivalent GF Budgeted Credits for Total Revenues Revenue from Capital Reserve FY Debt Service QSCBs (1) Available Prior Tax Impact Fund Balance 4,485,164 4,249, ,036 4,485, ,242,779 4,006, ,036 4,242, ,910,127 3,991, ,036 4,227,474 6,096,581-5,413, ,413,927 9,284,556 3,800, ,036 4,036,072 6,219, ,639-6,384,566 10,415,804 3,767, ,036 4,003,804 6,281,314 (130,687) - - 6,253,879 10,405,983 3,757, ,036 3,993,983 6,344,127 (67,874) - - 6,186,006 10,041,045 3,024, ,036 3,260,039 6,407,568 (373,438) - - 5,812,568 10,025,978 3,008, ,036 3,244,972 6,471,644 (309,362) - - 5,503,206 10,307,989 2,995, ,036 3,231,864 6,536,360 (539,765) - - 4,963,441 9,800,524 2,488, ,036 2,724,399 6,601,724 (474,402) - - 4,489,039 9,764,850 2,109, ,036 2,345,423 6,667,741 (751,686) - - 3,737,353 9,353,147 1,697, ,036 1,933,720 6,734,418 (685,009) - - 3,052,345 9,345,790 1,700, ,070 1,926,363 6,801,762 (617,664) - - 2,434,680 8,757,452 1,121, ,104 1,338,025 6,869,780 (549,647) - - 1,885,033 8,759,450 1,123, ,104 1,340,023 6,938,478 (480,949) - - 1,404,084 8,755,050 1,119, ,104 1,335,623 7,007,863 (411,564) ,520 7,807, , , ,907 7,077,941 (341,486) ,035 7,419, ,148,721 (270,706) ,329 7,419, ,220,208 (199,219) ,110 7,419, ,292,410 (127,017) ,093 7,419, ,365,334 (54,093) ,419, ,438,987-19,561-19,561 6,736, ,513, , ,165 1,875, ,588,511-5,712,687-6,508, , ,664,396-6,952,089-13,460, , ,741,040-7,028,733-20,489, , ,818,451-7,475,149-27,964, , ,896,635-7,553,333-35,518, , ,975,601-7,632,300-43,150, , ,055,357-7,712,056-50,862, ,135,911-8,135,911-58,998, ,217,270-8,217,270-67,215, ,299,443-8,299,443-75,515, ,382,437-8,382,437-83,897, ,466,262-8,466,262-92,363,835 Total Tax Effect Total 194,970,573 44,242,765 3,814,869 48,057, ,276,774 (6,384,566) 98,748,401 Assumed FY 2018 Value of a Penny (2) : $420,000 Assumed Growth Rate: 1.0% (1) QSCB debt service is shown per sinking fund requirements, gross of earnings and with gross interest expense. At issue, interest expense should be fully subsidized by the Federal Government. Due to sequestration, a reduction in subsidy was implemented. Due to a difference in budgeted vs. actual subsidy, the Credits in column D above reflect an amount exceeding the budgeted amount for FY. Subsequently, the General Fund Budgeted Debt Service has been reduced by the same amount to accurately reflect the County s methodology for future debt service. (2) Provided by Staff. Please note, totals may not foot due to rounding. February 26, Gloucester County, VA 28

30 Millions Millions Proposed Debt Service Scenario 1B (25 Years) CIP with GHS Renovation in 1 Phase at $75.3 Million Proposed Debt Service Existing Proposed Principal Financing Assumptions Key Borrowing Assumptions 1 st Principal & Interest Year Following Issuance Amortization Level Debt Service Term 25 Years Interest Rate 5.00% Borrowing Amounts FY $8,879,916 FY 59,391,325 FY 15,134,950 FY 4,800,000 FY (1) 3,224,630 FY 4,465,646 Total Projects Debt Funded $95,896,467 Total Proposed Debt Service $168,809, Existing February 26, (1) For the purposes of this analysis, the $3,224,630 Radio Project will be financed in FY over 15 Years at an interest rate of 4.25%. Gloucester County, VA 29

31 Dollars ($) Proposed Debt Service Scenario 1B (25 Years) CIP with GHS Renovation in 1 Phase at $75.3 Million Debt per Capita 5,000 4,000 3, Year Payout 100% 90% 80% 70% 60% 50% 2,000 1,000-40% 30% 20% 10% 0% Debt to Assessed Value 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% Existing Proposed Debt Current Policy Debt Service to Expenditures 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% Existing and Proposed Proposed Policy 0.0% 0.0% Existing Proposed Debt Current & Proposed Policy Existing Proposed Debt Current Policy Proposed Policy February 26, Gloucester County, VA 30

32 Debt Affordability Analysis Scenario 1B (25 Years) Existing & Proposed Debt CIP with GHS Renovation in 1 Phase at $75.3 Million Natural / Targeted Tax Rate Impact Upfront Tax Rate Impact (FY ) A B C D E F G H I J Debt Service Revenues Available for Debt Service Debt Service Cash Flow Surplus (Deficit) Total Existing and Proposed Debt Service Capital Reserve Utilized Adjusted Surplus / (Deficit) Estimated Incremental Tax Equivalent GF Budgeted Credits for Total Revenues Revenue from Capital Reserve FY Debt Service QSCBs (1) Available Prior Tax Impact Fund Balance 4,485,164 4,249, ,036 4,485, ,242,779 4,006, ,036 4,242, ,857,526 3,991, ,036 4,227,474 4,231,188-3,601, ,601,136 8,880,084 3,800, ,036 4,036,072 4,316,235 (527,777) - - 3,073,359 9,921,678 3,767, ,036 4,003,804 4,359,398 (1,558,477) - - 1,514,883 9,911,857 3,757, ,036 3,993,983 4,402,992 (1,514,883) ,518,485 3,024, ,036 3,260,039 6,296,771-38, ,325 9,503,418 3,008, ,036 3,244,972 6,378, , ,299 9,785,430 2,995, ,036 3,231,864 6,442,205 (111,361) ,939 9,277,964 2,488, ,036 2,724,399 6,506,627 (46,939) ,215,837 2,109, ,036 2,345,423 6,870, ,804,134 1,697, ,036 1,933,720 6,942,135-71,721-71,721 8,796,777 1,700, ,070 1,926,363 7,011, , ,864 8,208,439 1,121, ,104 1,338,025 7,081, , ,122 8,210,437 1,123, ,104 1,340,023 7,152, , ,197 8,206,037 1,119, ,104 1,335,623 7,224, ,600-1,059,797 7,258, , , ,907 7,296, ,840-1,485,636 6,870, ,369, ,802-1,984,439 6,870, ,442, ,495-2,556,933 6,870, ,517, ,924-3,203,857 6,870, ,592, ,097-3,925,954 6,870, ,668, ,022-4,723,976 6,870, ,745, ,707-5,598,683 6,575, ,822,572-1,247,277-6,845,960 6,575, ,900,798-1,325,503-8,171,463 6,575, ,979,805-1,404,511-9,575,974 6,575, ,059,604-1,484,309-11,060,283 5,945, ,140,200-2,194,957-13,255,240 1,731, ,221,602-6,490,319-19,745, , ,303,818-7,646,397-27,391, , ,386,856-7,729,435-35,121, , ,470,724-8,153,876-43,275, , ,555,432-8,238,583-51,513, , ,640,986-8,324,137-59,837, , ,727,396-8,410,547-68,248,535 Total Tax Effect Total 216,866,790 44,242,765 3,814,869 48,057, ,057,692 (3,759,436) 72,007,971 A B C D E F G H I J Debt Service Revenues Available for Debt Service Debt Service Cash Flow Surplus (Deficit) Total Existing and Proposed Debt Service Capital Reserve Utilized Adjusted Surplus / (Deficit) Estimated Incremental Tax Equivalent GF Budgeted Credits for Total Revenues Revenue from Capital Reserve FY Debt Service QSCBs (1) Available Prior Tax Impact Fund Balance 4,485,164 4,249, ,036 4,485, ,242,779 4,006, ,036 4,242, ,857,526 3,991, ,036 4,227,474 5,640,838-5,010, ,010,786 8,880,084 3,800, ,036 4,036,072 5,754, ,207-5,920,993 9,921,678 3,767, ,036 4,003,804 5,811,761 (106,113) - - 5,814,880 9,911,857 3,757, ,036 3,993,983 5,869,879 (47,995) - - 5,766,884 9,518,485 3,024, ,036 3,260,039 5,928,578 (329,868) - - 5,437,016 9,503,418 3,008, ,036 3,244,972 5,987,863 (270,583) - - 5,166,433 9,785,430 2,995, ,036 3,231,864 6,047,742 (505,824) - - 4,660,610 9,277,964 2,488, ,036 2,724,399 6,108,219 (445,346) - - 4,215,264 9,215,837 2,109, ,036 2,345,423 6,169,302 (701,113) - - 3,514,151 8,804,134 1,697, ,036 1,933,720 6,230,995 (639,419) - - 2,874,732 8,796,777 1,700, ,070 1,926,363 6,293,305 (577,110) - - 2,297,622 8,208,439 1,121, ,104 1,338,025 6,356,238 (514,176) - - 1,783,446 8,210,437 1,123, ,104 1,340,023 6,419,800 (450,614) - - 1,332,831 8,206,037 1,119, ,104 1,335,623 6,483,998 (386,416) ,415 7,258, , , ,907 6,548,838 (321,576) ,839 6,870, ,614,326 (256,088) ,751 6,870, ,680,470 (189,944) ,807 6,870, ,747,274 (123,140) ,667 6,870, ,814,747 (55,667) ,870, ,882,894-12,480-12,480 6,870, ,951,723-81,309-93,790 6,575, ,021, , ,736 6,575, ,091, ,159-1,055,894 6,575, ,162, ,073-1,642,967 6,575, ,233, ,697-2,301,664 5,945, ,306,331-1,361,088-3,662,753 1,731, ,379,394-5,648,112-9,310, , ,453,188-6,795,768-16,106, , ,527,720-6,870,300-22,976, , ,602,998-7,286,149-30,263, , ,679,028-7,362,179-37,625, , ,755,818-7,438,969-45,064, , ,833,376-7,516,527-52,580,757 Total Tax Effect Total 216,866,790 44,242,765 3,814,869 48,057, ,389,914 (5,920,993) 58,501,750 Assumed FY 2018 Value of a Penny (2) : $420,000 Assumed Growth Rate: 1.0% (1) QSCB debt service is shown per sinking fund requirements, gross of earnings and with gross interest expense. At issue, interest expense should be fully subsidized by the Federal Government. Due to sequestration, a reduction in subsidy was implemented. Due to a difference in budgeted vs. actual subsidy, the Credits in column D above reflect an amount exceeding the budgeted amount for FY. Subsequently, the General Fund Budgeted Debt Service has been reduced by the same amount to accurately reflect the County s methodology for future debt service. (2) Provided by Staff. Please note, totals may not foot due to rounding. February 26, Gloucester County, VA 31

33 Millions Millions Proposed Debt Service Scenario 2A (20 Years) CIP with GHS Renovation in 1 Phase at $52.6 Million Proposed Debt Service Existing Proposed Principal Financing Assumptions Key Borrowing Assumptions 1 st Principal & Interest Year Following Issuance Amortization Level Debt Service Term 20 Years Interest Rate 4.50% Borrowing Amounts FY $6,714,982 FY 43,441,171 FY 10,577,763 FY 4,800,000 FY (1) 3,224,630 FY 4,465,646 Total Projects Debt Funded $73,224,192 Total Proposed Debt Service $112,052, Existing February 26, (1) For the purposes of this analysis, the $3,224,630 Radio Project will be financed in FY over 15 Years at an interest rate of 4.25%. Gloucester County, VA 32

34 Dollars ($) Proposed Debt Service Scenario 2A (20 Years) CIP with GHS Renovation in 1 Phase at $52.6 Million Debt per Capita 5,000 4,000 3, Year Payout 100% 90% 80% 70% 60% 50% 2,000 1,000-40% 30% 20% 10% 0% Debt to Assessed Value 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% Existing Proposed Debt Current Policy Debt Service to Expenditures 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% Existing and Proposed Proposed Policy 0.0% 0.0% Existing Proposed Debt Current & Proposed Policy Existing Proposed Debt Current Policy Proposed Policy February 26, Gloucester County, VA 33

35 Debt Affordability Analysis Scenario 2A (20 Years) Existing & Proposed Debt CIP with GHS Renovation in 1 Phase at $52.6 Million Natural / Targeted Tax Rate Impact Upfront Tax Rate Impact (FY ) A B C D E F G H I J Debt Service Revenues Available for Debt Service Debt Service Cash Flow Surplus (Deficit) Total Existing and Proposed Debt Service Capital Reserve Utilized Adjusted Surplus / (Deficit) Estimated Incremental Tax Equivalent GF Budgeted Credits for Total Revenues Revenue from Capital Reserve FY Debt Service QSCBs (1) Available Prior Tax Impact Fund Balance 4,485,164 4,249, ,036 4,485, ,242,779 4,006, ,036 4,242, ,743,696 3,991, ,036 4,227,474 3,351,258-2,835, ,835,036 7,891,884 3,800, ,036 4,036,072 3,418,618 (437,194) - - 2,397,842 8,672,793 3,767, ,036 4,003,804 3,452,804 (1,216,185) - - 1,181,657 8,662,972 3,757, ,036 3,993,983 3,487,332 (1,181,657) ,298,034 3,024, ,036 3,260,039 5,096,550-58, ,555 8,282,967 3,008, ,036 3,244,972 5,163, , ,977 8,564,978 2,995, ,036 3,231,864 5,215,051 (118,064) ,913 8,057,513 2,488, ,036 2,724,399 5,267,201 (65,913) ,021,839 2,109, ,036 2,345,423 5,676, ,610,136 1,697, ,036 1,933,720 5,736,781-60,365-60,365 7,602,779 1,700, ,070 1,926,363 5,794, , ,098 7,014,441 1,121, ,104 1,338,025 5,852, , ,773 7,016,439 1,123, ,104 1,340,023 5,910, , ,968 7,012,039 1,119, ,104 1,335,623 5,969, , ,270 6,064, , , ,907 6,029, ,999-1,234,269 5,676, ,089, ,293-1,647,561 5,676, ,150, ,190-2,121,751 5,676, ,212, ,696-2,657,447 5,676, ,274, ,817-3,255,265 5,676, ,336, ,559-3,915,824 5,160, ,400,345-1,240,151-5,155,975 1,525, ,464,349-4,938,864-10,094, , ,528,992-5,816,685-15,911, , ,594,282-5,881,975-21,793, , ,660,225-6,316,923-28,110, , ,726,827-6,383,525-34,493, , ,794,095-6,450,794-40,944, , ,862,036-6,518,735-47,463, ,930,657-6,930,657-54,394, ,999,963-6,999,963-61,394, ,069,963-7,069,963-68,464, ,140,663-7,140,663-75,604, ,212,069-7,212,069-82,816,791 Total Tax Effect Total 160,110,355 44,242,765 3,814,869 48,057, ,869,512 (3,019,013) 85,835,803 A B C D E F G H I J Debt Service Revenues Available for Debt Service Debt Service Cash Flow Surplus (Deficit) Total Existing and Proposed Debt Service Capital Reserve Utilized Adjusted Surplus / (Deficit) Estimated Incremental Tax Equivalent GF Budgeted Credits for Total Revenues Revenue from Capital Reserve FY Debt Service QSCBs (1) Available Prior Tax Impact Fund Balance 4,485,164 4,249, ,036 4,485, ,242,779 4,006, ,036 4,242, ,743,696 3,991, ,036 4,227,474 4,614,167-4,097, ,097,945 7,891,884 3,800, ,036 4,036,072 4,706, ,100-4,949,046 8,672,793 3,767, ,036 4,003,804 4,753,981-84,992-5,034,038 8,662,972 3,757, ,036 3,993,983 4,801, ,532-5,166,570 8,298,034 3,024, ,036 3,260,039 4,849,536 (188,459) - - 4,978,111 8,282,967 3,008, ,036 3,244,972 4,898,032 (139,963) - - 4,838,148 8,564,978 2,995, ,036 3,231,864 4,947,012 (386,102) - - 4,452,046 8,057,513 2,488, ,036 2,724,399 4,996,482 (336,632) - - 4,115,413 8,021,839 2,109, ,036 2,345,423 5,046,447 (629,969) - - 3,485,444 7,610,136 1,697, ,036 1,933,720 5,096,911 (579,505) - - 2,905,940 7,602,779 1,700, ,070 1,926,363 5,147,880 (528,535) - - 2,377,404 7,014,441 1,121, ,104 1,338,025 5,199,359 (477,057) - - 1,900,348 7,016,439 1,123, ,104 1,340,023 5,251,353 (425,063) - - 1,475,285 7,012,039 1,119, ,104 1,335,623 5,303,866 (372,550) - - 1,102,735 6,064, , , ,907 5,356,905 (319,511) ,224 5,676, ,410,474 (265,942) ,282 5,676, ,464,579 (211,837) ,445 5,676, ,519,225 (157,191) ,254 5,676, ,574,417 (101,999) ,255 5,676, ,630,161 (46,255) ,160, ,686, , ,269 1,525, ,743,327-4,217,843-4,744, , ,800,761-5,088,453-9,832, , ,858,768-5,146,461-14,979, , ,917,356-5,574,054-20,553, , ,976,529-5,633,228-26,186, , ,036,295-5,692,993-31,879, , ,096,658-5,753,356-37,632, ,157,624-6,157,624-43,790, ,219,200-6,219,200-50,009, ,281,392-6,281,392-56,290, ,344,206-6,344,206-62,635, ,407,648-6,407,648-69,042,729 Total Tax Effect Total 160,110,355 44,242,765 3,814,869 48,057, ,095,450 (5,166,570) 74,209,298 Assumed FY 2018 Value of a Penny (2) : $420,000 Assumed Growth Rate: 1.0% (1) QSCB debt service is shown per sinking fund requirements, gross of earnings and with gross interest expense. At issue, interest expense should be fully subsidized by the Federal Government. Due to sequestration, a reduction in subsidy was implemented. Due to a difference in budgeted vs. actual subsidy, the Credits in column D above reflect an amount exceeding the budgeted amount for FY. Subsequently, the General Fund Budgeted Debt Service has been reduced by the same amount to accurately reflect the County s methodology for future debt service. (2) Provided by Staff. Please note, totals may not foot due to rounding. February 26, Gloucester County, VA 34

36 Millions Millions Proposed Debt Service Scenario 2B (25 Years) CIP with GHS Renovation in 1 Phase at $52.6 Million Proposed Debt Service Existing Proposed Principal Financing Assumptions Key Borrowing Assumptions 1 st Principal & Interest Year Following Issuance Amortization Level Debt Service Term 25 Years Interest Rate 5.00% Borrowing Amounts FY $6,714,982 FY 43,441,171 FY 10,577,763 FY 4,800,000 FY (1) 3,224,630 FY 4,465,646 Total Projects Debt Funded $73,224,192 Total Proposed Debt Service $128,592, Existing February 26, (1) For the purposes of this analysis, the $3,224,630 Radio Project will be financed in FY over 15 Years at an interest rate of 4.25%. Gloucester County, VA 35