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HomeMy WebLinkAbout2024-008 Debt Summary ReportDate: February 23, 2024 Report No. 2024-008 INFORMAL STAFF REPORT TO MAYOR AND CITY COUNCIL SUBJECT: City’s Debt Summary Report (FY End 2023 Outstanding Debt) BACKGROUND: Attached is the Debt Summary Report with principal and interest outstanding as of September 30, 2023. This report is prepared on an annual basis to provide residents with a comprehensive and easy to understand summary of the City’s debt profile. Additionally, this report includes required information in accordance with Texas Local Government Code 140.008 (House Bill 1378). The report provides a high-level introduction to the types and uses of debt issued by the City as well as the most recent bond ratings. Staff has differentiated between tax-supported and revenue- supported debt to give the public a better understanding of which debt is paid for by property taxes versus rate revenues. Furthermore, the report details the principal and interest for each major service area of the City and provides two visual representations by dollar amount and percentages. This Debt Summary Report is provided annually to City Council for feedback. CONCLUSION: If no feedback is received within a week, staff will post this report on the City’s website for the public the week of March 4, 2024. The report is intended to be updated annually in conjunction with the City’s fiscal year end. ATTACHMENT(S): Debt Summary Report as of September 30, 2023 STAFF CONTACT: Randee Klingele, Treasury Manager (940) 349-8206 Randee.klingele@cityofdenton.com 1 City of Denton Debt Summary Report Fiscal Year Ending September 30, 2023 Contact: City of Denton Finance Department Attn: Vis Bouaphanthavong – Assistant Director of Finance 215 E. McKinney St. Denton, Texas 76201 Email: Vis.Bouaphanthavong@cityofdenton.com Phone: 940-349-7743 Fax: 940-349-7206 Website: www.cityofdenton.com Published: February 23, 2024 Disclaimer: Data provided in this report is as of the date of publication, constitutes existing long-term debt obligations only, and has been prepared pursuant to Texas Local Government Code 140.008 (House Bill 1378). This report does not include forward looking statements nor does it include debt that may be incurred in the future. Interested parties should refer to the City’s audited financial statements and other disclosure documents when investing. 2 TABLE OF CONTENTS Introduction…………………………………………………………………………………………. 3 CITY DEBT SECTION Schedule – Total Annual Debt Service by Type of Debt…………………………………………....6 Bar & Pie Charts – Total Annual Debt Service by Type of Debt………………………………....... 7 Schedule – Tax Supported Debt Service…………………………………………………………… 8 Bar & Pie Charts – Tax Supported Debt Service…………………………………………………… 9 Schedule – Revenue Supported Debt Service………………………………………………………. 10 Bar & Pie Charts – Revenue Supported Debt Service……………………………………………… 11 Schedule – General Government Debt Service……………………………………………………...12 Bar & Pie Charts – General Government Debt Service………………………………………….…. 13 Schedule – Electric Debt Service…………………………………………………………………… 14 Bar & Pie Charts – Electric Debt Service…………………………………………………………... 15 Schedule – Water Debt Service…………………………………………………………………….. 16 Bar & Pie Charts – Water Debt Service…………………………………………………………….. 17 Schedule – Wastewater Debt Service………………………………………………………………. 18 Bar & Pie Charts – Wastewater Debt Service……………………………………………………….19 Schedule – Solid Waste Debt Service………………………………………………………………. 20 Bar & Pie Charts – Solid Waste Debt Service………………………………………………….…... 21 Schedule – Airport and Internal Service Funds……………………………………………………. 22 Bar & Pie Charts – Airport and Internal Service Funds……………………………………….…... 23 HOUSE BILL 1378 SECTION Summary of Debt Obligations……………………………………………………………..……..….25 Individual Debt Obligations………………………………………………………………….…..….26 Glossary of Terms………………………………………………………………………….……..…31 3 INTRODUCTION This report is divided into two sections. The first section (City Debt) presents the City’s outstanding debt by the manner in which the City intends to pay for such debt (tax-supported versus revenue-supported). Additionally, this section provides a breakdown of the City’s outstanding debt by purpose (General Government, Electric, Water, Wastewater, Solid Waste and Airport). The second section (House Bill 1378) is intended to comply with reporting requirements pursuant to Texas Local Government Code 140.008. The City of Denton utilizes long-term debt to finance non-operating expenses, which may include equipment, facilities, and the acquisition of land. The City generally issues debt for the purchase or construction of capital assets and infrastructure improvements and cannot issue debt to fund operating expenses or deficit spending. All debt issued by the City must be approved by the Texas Attorney General’s Office prior to the final sale of the debt. Additional information on the City’s outstanding debt including statistical comparisons and ratios can be found in the City’s Annual Financial Report, which is located on the City’s website under the Finance Department. (www.cityofdenton.com) The City issues two types of long-term debt: General Obligation Debt and Revenue Bond Debt. The City also differentiates between tax-supported and revenue-supported debt to provide the public with a clear understanding of which debt will be paid by property taxes versus rate revenues. The following table shows the latest bond ratings for each type of debt for which ratings are given: Moody’s1 Standard & Poor’s Fitch General Obligation Debt Not Rated AA+2 AA+4 Revenue Bond Debt Not Rated A+3 A5 1Moody’s does not currently rate any of the City’s outstanding debt. 2S&P GO/CO, May 2023 3S&P Utility System Revenue Bonds, October 2022. 4Fitch GO/CO, June 2023. 5Fitch Utility System Revenue Bonds, Series 2017 & 2021, August 2023. . GENERAL OBLIGATION DEBT: The largest category of debt is General Obligation Debt. It consists of two categories of bonds: General Obligation Bonds (GOs) and Certificates of Obligation (COs). GOs are backed by the full faith and credit of the City (property tax pledge) and must be approved at an election. Voter approval may be granted during one of two general election dates each year. GOs which are issued to refund outstanding debt do not require voter approval. Under the City’s debt policy, GOs strive to have a final maturity of twenty (20) years or less. COs do not require voter approval and generally have a dual pledge of a specific City revenue source as well as the full faith and credit of the City. Some examples of pledged City revenues are electric, water, wastewater, and drainage revenues. Under the City’s debt policy, COs will strive to have a final maturity of thirty (30) years or less. In 2010, the City began issuing COs not only for general government purposes which are repaid by property taxes, but also for utility related projects of the City. The COs issued for utility purposes are repaid from the specific utility fund for which the debt was issued. COs have a lower interest rate than revenue bonds, due to the pledge of full faith and credit of the City. A portion of the interest savings to the City’s utilities through issuing COs (instead of revenue bonds) is being applied to the Street Improvement Fund. 4 REVENUE BOND DEBT: The second category of debt is Revenue Bond Debt. This debt is secured by only a pledge of the operating revenues of the City’s Electric, Water and Wastewater Funds (collectively known as the “Utility System”) and not the full faith and credit of the City. Under the City’s debt policy, revenue bonds will strive to have a final maturity of thirty (30) years or less. As of September 30, 2023, the City has the Utility System Revenue Bonds, Series 2017 and 2021’s outstanding. OUTSTANDING DEBT: The City’s total outstanding principal and interest as of September 30, 2023, is shown on page 6 of this report. 5 CITY DEBT SECTION 6 Principal Interest Total GOs 370$ 105$ 475$ COs 708$ 330$ 1,038$ Revenue Bonds 320$ 135$ 455$ Total 1,398$ 570$ 1,968$ Total Outstanding Debt (in millions) as of September 30, 2023 Fiscal Year Ending September 30, 2023 FY End Revenue 9-30 Tax Supported Revenue Supported Tax Supported Revenue Supported Bonds Total 2024 24,640,579$ 25,143,940$ 14,372,267$ 42,029,452$ 25,300,313$ 131,486,550$ 2025 23,819,294 22,507,975 13,584,238 41,553,294 25,298,018 126,762,818 2026 23,194,181 15,525,200 12,785,063 41,376,219 25,295,282 118,175,945 2027 22,641,656 15,054,625 11,869,613 41,139,369 25,298,300 116,003,563 2028 21,160,225 13,665,100 10,560,719 40,692,456 25,300,530 111,379,030 2029 19,996,128 12,523,700 8,836,187 40,243,044 25,300,299 106,899,359 2030 19,998,919 12,596,700 8,679,625 40,276,606 25,298,164 106,850,014 2031 19,681,216 7,171,625 8,667,025 40,294,350 25,298,194 101,112,409 2032 19,507,219 5,853,375 8,526,316 40,325,534 25,299,853 99,512,297 2033 19,280,809 3,269,750 8,202,869 40,364,125 25,295,276 96,412,829 2034 18,554,297 - 7,583,119 40,362,356 25,301,145 91,800,917 2035 18,288,231 - 7,199,213 38,832,447 25,296,215 89,616,106 2036 16,712,184 - 6,975,281 37,927,569 25,299,258 86,914,293 2037 15,629,053 - 6,733,719 36,771,369 25,297,732 84,431,873 2038 14,491,966 - 6,150,244 36,733,981 7,223,309 64,599,500 2039 13,119,013 - 4,345,509 36,404,575 7,224,204 61,093,301 2040 11,875,594 - 4,085,250 35,598,709 7,225,700 58,785,253 2041 10,266,138 - 2,700,525 35,014,625 7,222,724 55,204,011 2042 6,684,400 - 1,628,200 32,516,822 7,225,125 48,054,547 2043 2,427,600 - 1,463,700 27,049,600 7,223,201 38,164,101 2044 - - - 23,164,716 7,221,587 30,386,303 2045 - - - 19,799,103 7,224,314 27,023,417 2046 - - - 15,929,897 7,221,224 23,151,121 2047 - - - 12,930,897 7,222,160 20,153,057 2048 - - - 9,389,384 7,221,888 16,611,272 2049 - - - 9,391,381 7,225,170 16,616,551 2050 - - - 9,007,869 7,221,849 16,229,718 2051 - - - 7,851,331 7,221,769 15,073,100 2052 - - - 5,994,419 - 5,994,419 2053 - - - 4,018,800 - 4,018,800 341,968,701$ 133,311,990$ 154,948,680$ 882,984,299$ 455,302,803$ 1,968,516,472$ General Obligation Bonds (GOs)Certificates of Obligation (COs) City of Denton Total Annual Debt Service (Principal & Interest) - All Debt 7 8 FY End General Obligation Bonds Certificates of Obligation 9-30 (GOs)(COs)Total 2024 24,640,579$ 14,372,267$ 39,012,846$ 2025 23,819,294 13,584,238 37,403,531 2026 23,194,181 12,785,063 35,979,244 2027 22,641,656 11,869,613 34,511,269 2028 21,160,225 10,560,719 31,720,944 2029 19,996,128 8,836,187 28,832,316 2030 19,998,919 8,679,625 28,678,544 2031 19,681,216 8,667,025 28,348,241 2032 19,507,219 8,526,316 28,033,534 2033 19,280,809 8,202,869 27,483,678 2034 18,554,297 7,583,119 26,137,416 2035 18,288,231 7,199,213 25,487,444 2036 16,712,184 6,975,281 23,687,466 2037 15,629,053 6,733,719 22,362,772 2038 14,491,966 6,150,244 20,642,209 2039 13,119,013 4,345,509 17,464,522 2040 11,875,594 4,085,250 15,960,844 2041 10,266,138 2,700,525 12,966,663 2042 6,684,400 1,628,200 8,312,600 2043 2,427,600 1,463,700 3,891,300 341,968,701$ 154,948,680$ 496,917,381$ City of Denton Total Annual Debt Service (Principal & Interest) - Tax Supported Debt Fiscal Year Ending September 30, 2023 9 10 FY End General Obligation Bonds Certificates of Obligation 9-30 GOs COs Revenue Bonds Total 2024 25,143,940$ 42,029,452$ 25,300,313$ 92,473,704$ 2025 22,507,975 41,553,294 25,298,018 89,359,287 2026 15,525,200 41,376,219 25,295,282 82,196,701 2027 15,054,625 41,139,369 25,298,300 81,492,294 2028 13,665,100 40,692,456 25,300,530 79,658,086 2029 12,523,700 40,243,044 25,300,299 78,067,043 2030 12,596,700 40,276,606 25,298,164 78,171,471 2031 7,171,625 40,294,350 25,298,194 72,764,169 2032 5,853,375 40,325,534 25,299,853 71,478,762 2033 3,269,750 40,364,125 25,295,276 68,929,151 2034 - 40,362,356 25,301,145 65,663,502 2035 - 38,832,447 25,296,215 64,128,662 2036 - 37,927,569 25,299,258 63,226,827 2037 - 36,771,369 25,297,732 62,069,101 2038 - 36,733,981 7,223,309 43,957,290 2039 - 36,404,575 7,224,204 43,628,779 2040 - 35,598,709 7,225,700 42,824,410 2041 - 35,014,625 7,222,724 42,237,349 2042 - 32,516,822 7,225,125 39,741,947 2043 - 27,049,600 7,223,201 34,272,801 2044 - 23,164,716 7,221,587 30,386,303 2045 - 19,799,103 7,224,314 27,023,417 2046 - 15,929,897 7,221,224 23,151,121 2047 - 12,930,897 7,222,160 20,153,057 2048 - 9,389,384 7,221,888 16,611,272 2049 - 9,391,381 7,225,170 16,616,551 2050 - 9,007,869 7,221,849 16,229,718 2051 - 7,851,331 7,221,769 15,073,100 2052 - 5,994,419 - 5,994,419 2053 - 4,018,800 - 4,018,800 133,311,990$ 882,984,299$ 455,302,803$ 1,471,599,092$ City of Denton Total Annual Debt Service (Principal & Interest) - Revenue Supported Debt Fiscal Year Ending September 30, 2023 11 12 13 14 15 16 17 18 19 20 21 22 FY End General Obligation Bonds Airoport Only Certificates of Obligation Revenue 9-30 GOs COs Bonds Total 2024 225,651$ 1,604,270$ -$ 1,829,921$ 2025 171,100 1,260,619 - 1,431,719 2026 165,475 1,263,544 - 1,429,019 2027 125,500 1,258,844 - 1,384,344 2028 130,750 1,217,831 - 1,348,581 2029 125,750 1,174,256 - 1,300,006 2030 125,625 1,175,994 - 1,301,619 2031 130,125 1,177,169 - 1,307,294 2032 129,250 1,177,697 - 1,306,947 2033 128,125 1,191,337 - 1,319,462 2034 - 1,184,256 - 1,184,256 2035 - 1,065,309 - 1,065,309 2036 - 1,057,981 - 1,057,981 2037 - 1,058,694 - 1,058,694 2038 - 1,057,956 - 1,057,956 2039 - 722,181 - 722,181 2040 - 723,628 - 723,628 2041 - 721,113 - 721,113 2042 - 470,500 - 470,500 2043 - 163,200 - 163,200 1,457,351$ 20,726,379$ -$ 22,183,730$ City of Denton Total Annual Debt Service (Principal & Interest) - Airport and Internal Service Funds Fiscal Year Ending September 30, 2023 Internal Service Funds: Technology, Fleet, Customer Service 23 24 HOUSE BILL 1378 SECTION 25 31 Glossary of Terms The HB 1378 Section of the Annual Debt Report contains terminology provided by the Texas Comptroller’s Office. To assist the reader of this document in understanding these terms, a glossary of terms has been included in the document as provided by the Texas Comptroller’s Office. Political Subdivision. Political subdivisions are counties, municipalities, school districts, junior college districts, other special districts, or other subdivisions of state government. Total Authorized Debt Obligations. Debt obligations are defined in the bill as issued public securities which are instruments, including bonds, certificates, notes, or other types of obligations authorized to be issued by an issuer under a statute, a municipal home-rule charter, or the constitution of this state. Issuance is the process of authorizing, selling, and delivering public debt. Public security authorization means a resolution, order or ordinance that is approved or adopted, or any other action taken in a proceeding, by the governing body of an issuer in authorizing the issuance of a public security. Total Principal of all Outstanding Debt Obligations. Total amount borrowed (par) of all obligations that have yet to be repaid. Combined Principal and Interest required to pay all Outstanding Debt Obligations on time and in full. Total amount borrowed (par) that has yet to be repaid plus the cost of interest. Total Authorized Debt Obligations Secured by Ad Valorem Taxation. Total debt obligations secured by a pledge of property taxes. Total Principal of all Outstanding Debt Obligations secured by Ad Valorem Taxation. Total amount borrowed (par) of obligations secured by a pledge of property taxes that have yet to be repaid. Combined Principal and Interest required to pay all Outstanding Debt Obligations secured by Ad Valorem Taxation on time and in full. Total amount borrowed (par) of all property tax-secured obligations plus the cost of interest. Total Authorized Debt Obligations secured by Ad Valorem Taxation expressed as a Per Capita Amount. Total authorized debt obligations secured by a pledge of property taxes divided by t he population of the political subdivision. Total Principal of Outstanding Debt Obligations secured by Ad Valorem Taxation as a Per Capita Amount. Total amount borrowed (par) secured by a pledge of property taxes divided by the population of the political subdivision. Combined Principal and Interest required to pay all Outstanding Debt Obligations secured by Ad Valorem Taxation on time and in full as a Per Capita Amount. Total debt obligations secured by a pledge of property taxes plus the cost of debt service on these obligations divided by the population of the political subdivision. 32 Glossary of Terms - continued Population total used to calculate per capita figures. The denominator used to calculate per capita figures. This is a population total for the political subdivision. Source and Year of population figure used to calculate Per Capita figures. The source of population data comprising the denominator of per capita figures. Outstanding Debt Obligation. An issued public security that has yet to be repaid. Conduit or Component Debt. Debt that is not a legal liability of the political subdivision but is secured by another entity. Principal Issued. Total amount borrowed (par). Principal Outstanding. Total amount borrowed (par) of obligation that has yet to be repaid. Combined principal and interest required to pay each Outstanding Debt Obligation on time and in full. The total amount borrowed (par) plus the cost of interest for each individual debt obligation or bond series. Final Maturity Date. The final payment date of individual debt obligation at which point all principal and interest will be paid off. Secured in any way by Ad Valorem Taxes. Indicates which individual debt obligations are in part or whole pledged with property taxes. Total Proceeds Received. Total assets received from the sale of a new issue of public securities. Proceeds Spent. The portion of total proceeds received that have been spent. Proceeds Unspent. The portion of total proceeds received that are remaining to be spent. Official stated purpose for which the debt obligation was authorized. The reason for the debt issuance as defined in ballot language, if applicable, or the Official Statement. Current Credit Rating. Existing rating given by any nationally recognized credit rating organization to debt obligations.