HomeMy WebLinkAbout3.C. Update on Debt Service Levies 2
To: Mayor and City Council
Mark McNeill, City Administrator
From: Julie A. Linnihan, Finance Director
Topic: Debt Service Levy Update
Date: August 23, 2011
Introduction:
During the past budget cycles, the City has cancelled the debt service levies for specific outstanding
bond issues, as a part of the budget resolution approval process. This has been undertaken by utilizing
the incoming special assessment payments, the fund cash position as well as use of fund balance
through transfers from other funds.
Background:
As City staff reviews the upcoming debt service payments for existing debt service issues, it is important
to note that the annual debt service payments may require a commitment of funds from the City to
meet the needs of 2013 and beyond. This may require a property tax levy increase, dependent upon the
status of collected special assessments and the level and amount of unpaid property taxes, as well as
the fund position of each specific debt service fund.
For future debt service funded projects, it is important to recognize that the City, in agreeing to the
project, is committed to the payment of the debt service obligations, such as the 2011 Reconstruction
project (debt to be issued in 2012) as well as other major improvement projects that may require debt
service funds. Recently the City has changed the special assessment policy that previously provided for
a revenue source of 30 % of the project cost, collected through special assessments. It provided a
revenue source that is no longer available in meeting the future debt service obligations of the City. This
will result in requiring a larger debt service levy for a project that may have been previously funded with
a portion of special assessment proceeds.
The City will be applying the cancellation of debt service levies to the 2012 preliminary budget process
for certain debt issuances, based on this cash positions of the funds. Staff considers the timely update
on the future debt service obligations of the City to be a critical discussion point, as future years' debt
service payments may require additional funding, as the cash position of the debt service funds may not
allow for on -going cancellation. This has been greatly impacted by the recent changes in the economy as
well as the ability of many property owners to prepay special assessments. This will require staff to bring
forward levy recommendations that may ultimately impact the total levy of the City, as well as future tax
rates and comparability. The attached work paper is for review and discussion during the Tuesday work
session. The status of the tax levies needed for future debt service payments requires the analysis of the
special assessment payments received, as well as review of the special assessment pre - payments. This
process will occur each year as a part of the budget and levy planning process.
H:budgetl2"
2011 -12 BUDGET
DEBT SERVICE FUNDS Amount of $4,225,000 $2,275,000 $2,570,000 $6,000,000 $3,440,000 $1,370,000 $1,445,000 $2,170.000 $1,555,000
Issue (Fire) (Public Works)
2004A 2004B 2004C 2004D 2006A 2007A 2007B 2008A 2010A 2011A 2012A
Improve Bldg Ref Improve Bldg improve Improve Improve Improve Improve Recon Improve Total
3034 3035 3036 3037 3038 3039 3040 3041 3042 3043 3044
debt maturity date 2/1/25 2/1/17 2/1/15 2/1/25 2/1/17 2/1/17 2/1/18 2/1/19 2/1/21 2/1/23
2011 to be issued in 2012
12/31/10 Cash BB 475,411 370,911 879,723 458,040 1,234,802 154,581 563,781 381,681 140,736 -
01/30/11 DS Payment (227,310) (212,132) (273,196) (348,065) (379,800) (130,800) (168,700) (224,168) (42,745)
06/30/11 Assessment 112,496 56,728 36,040 70,763 9,004 25,000 33,113
Property tax to be levied: 110,000 CNX CNX CNX CNX CNX CNX 137,440 137,440
Anticipated Transfer: 185,828
7/31/2011 DS Payment (39,450) (24,672) (19,978) (94,815) (44,200) (19,600) (21,800) (31,844) (12,670)
interest eamings 8,000 5,000 5,000 12,000 1,000 7,000 7,000
12/1/2011 Assessment 112,496 56,728 430,000 36,040 70,763 9,004 25,000 33,113
12/31/2011 Cash EB Est. 441,643 249,107 705,005 445,160 894,882 146,707 398,289 368,497 288,987 - -
2012
1/30/2012 DS Payment (324,350) (214,172) (269,978) (349,315) (383,200) (123,600) (165,800) (220,844) (202,670)
6/30/2012 Assessment 109,008 54,364 34,522 67,738 8,649 45,000 31,391
Property tax to be levied: 15}' 203,528 CNX CNX CNX 80,504 87853 16,900 66,507 163,911
7/31/2012 DS Payment (34,362) (21,347) (14,603) (90,735) (37,400) (17,500) (18,900) (28,519) (12,195)
interest eamings 4,000 2,000 3,500 2,500 5,000 1,000 2,800 2,800 2,000
12/1/2012 Assessment 109,008 54,364 440,000 34,522 67,738 8,649 45,000 31,391
2013
12/31/2012 Cash 319,947 219,116 532,652 447,610 548,325 222,587 233,686 228,834 205,410 - -
1/30/2013 DS Payment (314,362) (215,847) (270,603) (355,235) (386,400) (221,500) (157,900) (222,519) (197,195)
6/30/2013 Assessment 105,521 52,001 33,004 64,713 8,293 52,405 30,157
Debt Service to be
levied: /offset by special
assessments 120.000 236,356 CNX _ CNX 199,283 58,878 91,213 135,000 138,235 622,609
7/31/2013 DS Payment (29,287) (17,812) (9,981) (86,429) (30,400) (13,400) (16,100) (25,106) (1,151)
interest eamings 4,000 2,000 3,500 2,500 5,000 1,000 2,500 1,000 1,500
12/1/2013 Assessment 105,521 52,001 440,000 33,004 64,713 8,293 52,405 30,157
2014
12/31/2013 Cash 311,339 223,813 359,569 448,446 401,815 176,991 169,985 222,019 207,113 - -
1/30/2014 DS Payment (304,287) (217,313) (265,981) (360,929) (389,400) (172,400) (160,100) (219,106) (196,501)
6/30/2014 Assessment 102,033 49,637 31,486 61,688 7,938 50,313 28,924
Debt Service to be
levied: /offset by special
assessments 40,000 243,706 86,855 CNX 363,959 48,125 154,362 140,000 144,728 938,029
7/31/2014 DS Payment (23,787) (13,812) (5,200) (80,249) (23,200) (10,200) (13,200) (21,450) (10,576)
interest eamings 4,000 2,000 3,500 2,500 5,000 1,000 2,500 1,000 1,500
12/1/2014 Assessment 102,033 49,637 440,000 31,486 61,688 7,938 50,313 28,924
2015
12/31/2014 Cash 231,331 238,394 278,016 449,768 421,145 166,891 169,423 223,089 204,111 - -
1/30/2015 DS Payment (218,787) (228,312) (266,200) (365,429) (392,200) (164,200) (162,200) (220,450) (200,576)
6/30/2015 Assessment 93,282 Close 29,967 58,662 7,583 48,221 17,372
Debt Service to be
levied: /offset by special
assessments - 239,926 CNX 343,215 55,145 152,052 135,000 120,492 805,904
7/31/2015 DS Payment (19,887) (9,512) (74,729) (15,800) (7,100) (10,200) (17,700) (9,246)
interest eamings 3,000 2,000 2,500 2,500 5,000 1,000 1,500 1,000 1,500
12/1/2015 Assessment 93,282 440,000 29,967 58,662 7,583 48,221 17,372
12/31/2015 Cash 182,221 242,496 452,110 421,294 169,060 165,741 217,380 151,025 - -