HomeMy WebLinkAbout3.B. Debt Overview 20
2013 Debt Service Overview
ACTION SOUGHT
Provide an overview of the 2013 Debt Service Fund for Council to discuss during the budget process.
INTRODUCTION
Attached for your review is the updated Debt Service fund overview. This table is provided to summarize
the individual debt service issues of the City, from the 2004 Issuance, to the recently refunded 2012
debt (10 total).
Each column provides details of the debt issuance, including:
• Original amount of issue
• Final maturity of issue
• Estimated Cash position of the debt service fund
• Estimated Special assessment future collections (Deferred Revenue)
• Remaining balance of principal and interest on the specific debt service.
• Debt levy cancellation — for historic reference, this has allowed for flat levies.
The funds that are labeled "Improvement" are bonds that have been issued using General Obligation
Improvement bonds that are partially repaid through special assessments specific to projects.
The remainder of the debt service is paid through either a direct debt service levy, annually certified to
the County, or use of fund balance or fund transfers from the General Fund. In the future, this will result
in a decreased General Fund Balance.
The two Building referendum debt issues, 2004B and 2004D are specific to the Vierling Drive Fire station
(2004B) and the Public Works building (2004D). The Fire station debt (2004B) was approved by a voter
referendum, and as such, is a distinct and authorized levy. The amount of the levy authorized by the
referendum for 2012 was $248,528. The amount authorized by Council to levy in 2012 was $120,000.
While this has allowed the City to maintain a flat or lowered levy, this will also result in insufficient funds
in which to pay off the debt, in total requiring a fund transfer from the General Fund.
The Public Works debt service (2004D) is funded through the building facility rate charges that are
applied to specific City departments. The annual debt service amount, of approximately $470,000 is a
portion of the transactions that flow through the building internal service fund. This building fund is
funded through General fund departmental charges, which is a part of the levy. As Council has
previously discussed the reduction of rates for building charges, the debt service obligation for this
facility (maturing in 2025) will continue to require annual departmental charges of approximately
$470,000 to provide for the annual debt commitments.
H: \BUDGET\Budgetl3 \Council Worksession 8 -13 -12 \Debt Service memo 8- 13.docx
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STAFF RECOMMENDATION
For 2013 budget planning, staff recommendation is to address the 2006A levy which has a significant
debt service payment amount of approximately $344,000. This issue has final maturity in 2017, which
allows staff to levy for future debt service in upcoming years 2013 -2016 (4 year cycle).
By bringing a portion of the currently non - levied debt service in to the 2013 levy, the future payment
issues begin to be addressed. This is a difficult topic to address as it results in an increased levy for
several years. The debt service levies have been reduced, to maintain a flat levy environment. This was
discussed in the 2012 budget process; and Council did not increase the final levy, as requested. For the
2013 budget and levy, council is again asked to consider the re- instatement of a higher debt service levy.
Without this action, the debt service payments will continue to be a unfunded obligation of future City
Councils.
H: \BUDGET\Budgetl3 \Council Worksession 8 -13 -12 \Debt Service memo8- 13.docx
CITY OF SHAKOPEE, MINNESOTA
2013 BUDGET
DEBT SERVICE FUNDS
2004A 2004B 2004C 2004D 2006A 2007A 2007B 2008A 2010A 2012A
Improve Bldg Ref Improve Bldg Improve Improve Improve Improve Improve Refunding Total
3034 3035 3036 3037 3038 3039 3040 3041 3042 3043
Original Issuance 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 4,865,000 29,915,000
Maturity Date of Debt 2/1/2025 2/1/2017 2/1/2015 2/1/2025 2/1/2017 2/1/2017 2/1/2018 2/1/2019 2/1/2021 2/1/2025 •
Estimated Cash Balance at 12/31/12 307,220 246,981 534,126 25,962 551,039 154,912 321,619 324,092 310,099 320,227 3,096,277
Estimated Deferred Revenue for SA 12/31/12 1,893,242 - 322,721 - 176,027 708,196 61,712 426,101 228,357 153,571 3,969,927
Estimated (Current & Future) Available Funds 2,200,462 246,981 856,847 25,962 727,066 863,108 383,331 750,193 538,456 473,798 7,066,204
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Principal Payments Remaining 1,665,000 1,055,000 770,000 4,405,000 1,820,000 y 825,000 � 895,000 1,425,000 1,335,000 4,865,000 19,060,000
Interest Remaining 340,377 109,347 44,966 T 1,311,908 183,600 77,900 127,400 228,550 136,078 ry 764,708 3,324,833
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Levy 20 C oll e ct ed 2012
Debt Levy Per Debt Issuance 248,528 142,822 467,744 344,187 6,504 87,853 151,900 136,507 1,586,045
Debt Levy Cancellation 128,528 142,822 467,744 344,187 6,504 87,853 151,900 1,329,538
Debt Service Levy Collected 120,000 136,507 256,507
General Fund Levy - Through Building Rent 467,744 r
Levy 2012 Collected 2013
Debt Levy Per Debt Issuance - 246,356 139,881 469,200 344,283 8,878 91,213 148,952 138,235 96,994 1,683,991
Debt Levy Cancellation 2012 96,356 139,881 469,200 219,283 8,878 91,213 148,952 1,173,763
Staff Recommendation for 2013 Levy ` - - 150,000 - 125,000 " - ;..138;235: 96,994 . 510,229
General Fund Levy- Through Building Rent - - ` .469,200 ,
City's Debt Obligation: - 535,462' - . (808,019) ' 86,847 (4,379,038)(1,092,934) 38;108. (5,1,669) `(674,807)_ (796,544) "(4,391,202) •.(11,993,796)
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