Maryland Transportation Authority v. Maryland Transportation
Capital Debt Affordability Committee€¦ · Maryland Water Quality Financing Administration: Jag...
Transcript of Capital Debt Affordability Committee€¦ · Maryland Water Quality Financing Administration: Jag...
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Capital Debt Affordability Committee Treasurer Nancy K. Kopp, Chair
Louis L. Goldstein Treasury Building
80 Calvert Street, Assembly Room
Annapolis, MD 21401
Agenda
September 7, 2016 at 2:00 PM
1) Treasurer’s Opening Comments
2) 2016 Legislative Session General Assembly Actions Department of Legislative Services: Patrick Frank, Manager – 2016 Legislative Session
3) Review of the Size and Condition of Tax Supported Debt: Summary of fiscal year 2016 bond issuances Amount issued in prior five fiscal years Amount outstanding Amount authorized but unissued Current projections for new issuances Debt service projections Status of refunding potential Status of Affordability Ratios
A) General Obligation Bonds State Treasurer’s Office: Christian Lund, Director of Debt Management
B) Capital Leases State Treasurer’s Office: Christian Lund, Director of Debt Management
C) GARVEE Bonds Maryland Transportation Authority: Alison Williams, Debt Management
Director
D) Maryland Stadium Authority Maryland Stadium Authority: David Raith, Chief Financial Officer
E) Bay Restoration Bonds Maryland Water Quality Financing Administration: Jag Khuman, Director
F) Consolidated Transportation Bonds Maryland Department of Transportation, Office of Finance: David
Fleming, Chief Financial Officer
The next CDAC meeting will be September 15, 2016 at 10:00AM. All materials from today’s presentation can
be found on the STO website: treasurer.state.md.us/reports.aspx
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2016 Legislative Session General Assembly Action
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2016 Legislative Session General Assembly Highlights Bonds Authorized by the General Assembly • New General Obligation (GO) Bond Debt Authorized Totals $995.0 Million: The
Capital Debt Affordability Committee (CDAC) modified its authorization policies in 2015. Previously, the policy was to increase authorization each year while limiting GO bond debt service to 8% of State revenues and debt outstanding to 4% of revenues. The Department of Budget and Management recommended that debt be limited to $995.0 million beginning in fiscal 2017. Senate Bill 191 (Chapter 27) authorized $995.0 million in net new debt, which includes $1,005.1 million in new authorizations that are offset by reducing prior year authorizations by $10.1 million.
• Exhibit 1 shows how authorizations fluctuated prior to fiscal 2017 as the State managed
its authorizations to provide an increasing capital program within affordability limits.
Exhibit 1
General Obligation Bond Authorizations Fiscal 2011-2020
($ in Millions)
Source: Department of Legislative Services
$0
$200
$400
$600
$800
$1,000
$1,200
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
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Department of Legislative Services
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• Qualified Zone Academy Bonds (QZABs): Senate Bill 379 (Chapter 198) authorizes $4.6 million in QZABs. This is the federal allocation that must be issued by the end of calendar 2016. QZABs support the Aging Schools Program.
• New Academic Revenue Debt Authorization Totals $24.5 Million: CDAC recommended that academic revenue bond debt issued in fiscal 2017 be limited to $22.0 million. Committee narrative in the 2014 Joint Chairmen’s Report requested that an additional $2.5 million be authorized to support University System of Maryland (USM) projects in fiscal 2015 and 2016. The full amount was not provided. The Spending Affordability Committee recommended that the limit be increased to $24.5 million. As introduced, Senate Bill 1182 (Chapter 61) authorized $24.5 million in academic revenue bonds. This provides $17.0 million for facilities renewal projects budgeted within the USM system office and $7.5 million to support a new bioengineering building at the University of Maryland, College Park.
Reserve Fund Operating Budget Appropriation Restricts Funds for Capital Projects • An amendment adopted by the General Assembly restricts $80.0 million of the Revenue
Stabilization Account’s (Rainy Day Fund) operating budget appropriation so that the funds can be used to support other programs. This includes $42.3 million for capital projects. The amendment requires that the Administration spend either all or none of these restricted appropriations on these other programs and capital projects.
• If the Administration does not approve the uses specified for these funds, the restricted
funds will be reverted to the General Fund. The Administration has indicated that it plans to fund $30.2 million for three projects in the capital budget introduced during the 2017 legislative session although it is unclear the impact this will have on the overall debt level or fiscal 2018 funding for the programs affected. Exhibit 2 shows the appropriations in the Reserve Fund and the amount of appropriations proposed by the Administration for the 2017 legislative session.
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Department of Legislative Services
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Exhibit 2
Capital Projects Funded with Restricted Rainy Day Fund Appropriations ($ in Thousands)
Project
Amount in Reserve Fund
Amount Proposed in 2017
Board of Public Works Facilities Renewal $15,000 $15,000 Public Safety Communication System 9,190 9,190 Demolition of Baltimore City Correctional Complex 6,581 0 Aging Schools 6,109 0 Agricultural Cost Share Program 6,000 6,000 Total $42,880 $30,190 Source: Fiscal 2017 Operating Budget Bill and Department of Budget and Management
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General Obligation Bonds
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2016 Update on
Maryland General Obligation Bonds
for the
Capital Debt Affordability Committee
September 7, 2016
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Topics of Discussion
1) FY 2016 and FY 2017 YTD General Obligation (GO) Bond Issuances
2) Amount of GO Bonds Issued in Prior Five Fiscal Years
3) Outstanding GO Debt and Amounts Authorized but Unissued
4) Current Projections for Future Issuances
5) Summary of Projected Debt Activity
6) Status of Refunding Potential
7) Use of Variable Rate Debt, Derivatives and GICS
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Fiscal Year 2016 GO Bond Issuances
Series Dates of
Sales
($ in millions)
Overall True
Interest Cost
(TIC)
Tax-Exempt:
New Money
Competitive
Tax-Exempt:
New Money
Negotiated
Tax-Exempt:
Refunding
Competitive
Taxable
Taxable:
Federal Tax
Credit
2015 Second
Series A 8/3/15 $450.0
2.78% 2015 Second
Series B 8/3/15 $50.0
2015 QZAB 12/17/15 $4.6 0.00%(a)
2016 First
Series 6/8/16 $1,036.0(b) 2.17%
Fiscal Year 2016 General Obligation Bond Issues Totaled $1.54 Billion
(a) The 2015 Qualified Zone Academy Bonds (QZABs) are special, federally-authorized taxable bonds where the
bondholders receive federal tax credits in lieu of interest payments.
(b) Maryland typically holds two sales each year in February/March and July/August. Because the first sale was
delayed until June, the State combined the two sales to save issuance costs. The State will resume its normal
practice of two sales a year in CY 2017.
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GO Bonds Issued in Prior Five Fiscal
Years (2012 – 2017 YTD)
$6.16 billion in General Obligation Bonds issued since July 1, 2012:
$5.99 billion in tax-exempt bonds (decrease of $400m from previous 5 years)
• $4.39 billion in tax-exempt, new money bonds (73%)
• $1.60 billion in tax-exempt, refunding bonds (27%)
$169.0 million in taxable bonds (decrease of $91.3m from previous 5 years)
• $140.0 million in taxable bonds (83%)
• $29.0 million in taxable, direct subsidy Qualified Zone Academy
Bonds (QZABs) (17%)
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Outstanding GO Debt and Amounts
Authorized but Unissued
General obligation debt outstanding:
• $9.465 billion was outstanding as of June 30, 2016
• $557.7 million retired since June 30, 2016
• $8.907 billion outstanding as of September 7, 2016
$1.986 billion of general obligation debt was authorized but unissued as of July 1, 2016 (which includes the FY 2017 authorization amount of $995.0 million).
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Current Projections for Future
Issuances
For planning purposes only, the Committee in October 2015 voted 4-1 to
hold authorizations to $995 million annually through FY 2021. The
following authorizations and issuances incorporates that plan:
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Fiscal Year Authorizations Issuances
2017 $995 $1,036
2018 $995 $1,035
2019 $995 $1,014
2020 $995 $998
2021 $995 $995
Projections as of the 2015 CDAC Report. All figures preliminary and subject to change.
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Events Following the October 2015
CDAC Report
Both the Spending Affordability Committee and the Governor’s Proposed Capital
Budget recommended an authorization amount of $995 million for FY 2017.
The net final authorization amount for FY 2016 approved in the 2016 Legislative
Session was $995 million.
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Fiscal
Year
Debt Outstanding
Start of Year
New
Issues Redeemed
Debt Outstanding
End of Year Debt Service
2017 $8,961 $1,036 $786 $9,211 $1,191
2018 $9,211 $1,035 $836 $9,410 $1,250
2019 $9,410 $1,014 $853 $9,571 $1,311
2020 $9,571 $998 $898 $9,671 $1,339
2021 $9,671 $995 $908 $9,756 $1,358
2022 $9,756 $993 $939 $9,810 $1,396
2023 $9,810 $986 $973 $9,823 $1,435
2024 $9,823 $993 $995 $9,820 $1,460
2025 $9,820 $995 $1,007 $9,808 $1,475
Summary of Projected Debt Activity
Under Governor’s Plan ($995 Annually)
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Future Issuances assume a 5.0% interest rate. All dollars in millions
All debt matures within 15 years and principal payments begin in year 3. Projections as of 2015 CDAC Report. Preliminary and
subject to change.
The following debt outstanding and debt service is projected for GO
Bonds, using the Governor’s capital plan assumptions for
authorizations.
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Status of Refunding Potential
An analysis is prepared by the State’s financial advisor before each bond sale to
determine the financial feasibility of a refunding.
Benchmarks are 3% net present value savings and an Opportunity Cost Index
(OCI) which is greater than 70%. The OCI is a measure of the refunding
savings in comparison to projected savings in the future.
There were no refundings in FY 2016.
The State has been aggressive in pursuing refunding savings, resulting in a debt
service savings of $138 million over the past five fiscal years to date.
The State’s financial advisor does not believe a refunding is prudent at this time.
The State will reevaluate refunding potential in advance of the 2017 First Series
sale.
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Use of Variable Rate Debt, Bond Insurance,
Derivatives, and Guaranteed Investment
Contracts (GICS)
The State is authorized to issue variable interest rate bonds in an amount
no more than 15% of the outstanding general obligation indebtedness.
The State has not issued any variable rate debt as of August 31, 2015
and has not executed any derivatives. The State did not enter into any
new GICs related to the issuance of general obligation bonds in FY
2016.
Because of the State’s strong credit profile, perception in the market and
maintenance of its AAA credit rating, there has been no need for bond
insurance.
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Status of Affordability Ratios
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Status of Affordability Ratios
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7.6% 7.8% 7.7% 7.5% 7.5% 7.6% 7.7% 7.4% 7.3%
3.5% 3.5% 3.4% 3.4% 3.3% 3.2% 3.1% 3.0% 2.9%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
Debt Service as a Percentage of Revenue Debt Outstanding as a Percentage of Personal Income
Projections as of the 2015 CDAC Report. All figures preliminary and subject to change.
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Capital Leases
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An Update of
Tax-Supported Leases
for the
2016 Capital Debt Affordability
Committee
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Topics of Discussion
Status of
• Capital Lease Guidelines
• Tax-Supported Leases in the CDAC Analysis
• Tax-Supported Energy Leases that are included in the CDAC Analysis
• Tax-Supported Energy Leases that are not included in the CDAC Analysis
• Capital Equipment and Energy Lease Activity in Fiscal Year 2016
• Projections of Future Tax-Supported Lease Financings
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Capital Lease Guidelines
• STO on behalf of BPW, determines the size, timing, and method to finance
capital assets for State agencies and manages the lease procurement and
payment of debt service.
• Capital Facility Lease terms range from 15 – 25 years.
• Energy Performance Contract (EPC) Leases for energy conservation
projects at State facilities are limited to a 15 year term and require the
ESCO to post a bond to guarantee the energy savings. – DGS in cooperation with STO monitors whether the guarantee continues to cover debt
service on an annual basis.
– If the guarantee lapses or falls below the annual debt service amount, the lease is included in
tax-supported debt ratios.
• Capital Equipment Lease terms are limited to 3, 5 or 10 years.
• Equipment is required to:
– Have a useful life at least as long as the financing term and the cost
should be a material amount;
– Be re-possessable and easily identifiable.
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Tax-Supported Equipment Leases in the
CDAC Analysis
The following table summarizes the current tax-supported equipment leases included in the 2016 CDAC Affordability Analysis.
*Maryland Stadium Authority reports the Stadium Authority Capital leases in their debt.
FY 2016 Tax-Supported Lease Financings Outstanding
State Agency Equipment and Facilities Financed
Principal Amount
Outstanding as of
6/30/16
Debt Service for FY 2016
State Treasurer’s Office on behalf of
State Agencies
Capital Equipment Leases
Various communications, computers and other
equipment $15,490,121* $4,651,508*
State Treasurer’s Office on behalf of
State Agencies
Energy Performance Projects 1,035,693* 5,046,709*
Department of Transportation Headquarters Office Building 14,580,000 2,790,975
MAA Shuttle Buses - BWI 1,200,000 1,365,950
Department of General Services Hilton Street Facility 455,000 242,981
Prince George’s County Justice Center 16,011,497 1,515,793
Transportation Authority State office parking facility 18,011,000 427,321
Department of Health and Mental
Hygiene
Public Health Lab 158,200,000 13,988,313
Total Tax-Supported Leases $224,978,311 $30,029,550
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Tax-Supported Energy Leases that are
not included in the CDAC Analysis
The following table summarizes the current energy leases not included in the 2016 CDAC analysis. An energy lease is not included in the
CDAC analysis if it has a surety guaranty, which ensures that debt service will be fully offset by utility savings.
* The listing does not include the Maryland Stadium Authority projects.
Energy lease project * Debt Service for FY 2016
Debt Outstanding
as of 6/30/2016
Maryland School for the Deaf $383,326 $141,559
DPSCS – Hagerstown Prison 255,946 1,582,893
DHMH- Deer’s Head Hospital 205,295 711,332
Spring Grove Hospital 194,960 6,645,325
Department of Agriculture 1,588,714 1,281,854
DGS - Multi-Service Centers 649,125 11,064,072
University of Baltimore 1,999,457 4,789,792
UMCP 21,450 13,835,678
UMCES (Horn Point Lab) 483,258 1,102,576
State Police 56,638 3,547,664
Workforce Technology 263,232 1,196,650
DPSCS – Jessup 1,600,404 7,314,883
Maryland Aviation Administration 1,828,852 13,335,267
State Highway Administration 493,823 4,227,120
Maryland Transit Administration 1,006,742 4,227,120
Total $11,031,220 $75,003,785
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Tax-Supported Energy Leases
included in the CDAC Analysis
Energy lease project
Debt Service
for FY 2016
Debt Outstanding
as of 6/30/2016
UMS – Baltimore Campus (UMBC) $388,320 -
DGS – District Court 907,233 188,614
DGS - State Office Complex 291,257 441,082
DHMH - Rosewood Center 318,956 186,797
DHMH - Rosewood Center 488,395 151,096
St. Mary's College of Maryland 3,603,398 755,848
Veterans Affairs 169,101 419,145
DHMH – Springfield Hospital 156,934 -
Stadium Authority (Ravens) 716,435 1,489,205
Stadium Authority (Oriole Park) 1,712,050 3,796,248
Maryland Port Administration 42,320 9,035,353
Total $8,794,399 $16,463,390
The following table summarizes the current energy leases included in the 2016 CDAC analysis. An energy lease is included in the CDAC
analysis if it lacks a surety guaranty, meaning debt service may not be offset by utility savings.
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Capital Equipment and Energy Lease
Activity in Fiscal Year 2016
Equipment • Provides financing of capital equipment to state agencies.
• Capital Equipment lease contracts financed $8.6 million during Fiscal Year 2016.
Summary of the Lease Terms for Equipment
Financed in Fiscal Year 2016
3-yr leases $1,633,399.07 5-yr leases 7,015,907.99
Total $8,649,307.06
Energy • Provides financing for energy conservation projects for State agencies.
• Lease payments are made from the participating agencies’ annual utility appropriations using savings achieved through the implementation of energy performance contracts.
• Capital Energy lease contract financed $5.2 million during Fiscal Year 2016.
Summary of the Lease Terms for Energy Projects
Financed in Fiscal Year 2016
Energy lease $5,282,358
Total $5,282,358
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Projections of Future Tax-Supported
Lease Financings
in the CDAC Analysis
Types of Financing Period CDAC projections as of June 2016*
Equipment Leases (1) Fiscal Years 2017 – 2019 $20 million for FY 2017, $10 million
for FY 2018, and $5 million in FY
2019.
Energy Leases (2) Fiscal Years 2017 – 2019 $5 million for FY 2017, $16 million
for FY 2018, and $15 million through
FY 2019.
(1) Fiscal Year 2017- 2019 estimates are based on agency surveys.
(2) DGS estimates that approximately $5 million in energy projects will be financed in FY 2017, $16
million will be financed in FY 2018 and $15 million will be financed in FY 2019. All of the projected
Energy Lease financings include projects that will have surety bond guarantees that equal or exceed the
debt service payments through out the term of the lease; therefore, these projects are not included in the
CDAC Affordability Analysis.
* Preliminary, subject to change.
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GARVEE Bonds
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CDAC September 2016
MARYLAND TRANSPORTATION AUTHORITY
Summary of
Grant Anticipation Revenue Vehicles “GARVEE” Bonds,
Series 2007 & Series 2008 Alison B. Williams Director, Debt Management
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Grant Anticipation Revenue Vehicles (“GARVEE”) Bonds
Purpose Grant Anticipation Revenue Vehicles (“GARVEE”) Bonds are authorized by State statute
to leverage federal aid to finance the cost of transportation facilities. GARVEEs were used as a part of the funding plan for the Intercounty Connector (“ICC”) project, in addition to various other debt instruments and cash. The use of GARVEEs for the ICC allowed the project to be constructed sooner than otherwise would have been possible and with less reliance on the State’s available funds.
Security
GARVEE bonds are secured by a pledge of federal transportation funds received by the State which approximate $548.64 million annually. In addition, there is a subordinate pledge of certain State Transportation Trust Fund (“TTF”) tax sources. The GARVEEs were also structured to include debt service reserve funds for additional security.
Limitations to Debt Issuance
Statute limits the total amount that can be issued for GARVEEs to an aggregate principal amount of $750.0 million, with a maximum maturity of 12 years. Under State law, the proceeds could only be used for the ICC. Legislation enacted by the 2005 General Assembly specified that GARVEE bonds be considered tax-supported debt. Current Status: Debt Outstanding as of June 30, 2016: $279,780,000 Ratings GARVEEs are currently rated AAA by Standard and Poor’s, Aa1 by Moody’s Investors Service and AA by Fitch Ratings.
Use of Variable Rate Debt, Bond Insurance, Derivatives and Guaranteed Investment Contracts
The GARVEE bonds are fixed rate bonds, and were issued without bond insurance due to the subordinate pledge of the TTF and the availability of debt service reserve funds. The Authority has not used derivatives or guaranteed investment contracts. Trends in GARVEE Debt A total of $750.0 million in GARVEE bonds have been issued by the Maryland Transportation Authority. The first issuance occurred in May 2007 and totaled $325.0 million with a true interest cost of 3.99%. In December 2008, the Authority sold the remaining $425.0 million of GARVEE bonds with a true interest cost of 4.31%. GARVEE debt outstanding and required debt service for the past seven (7) fiscal years and projections until the debt is repaid are shown in Graph 4.1. The final GARVEE bond matures on March 1, 2020 and no further issuances are projected, except in the event of a refunding opportunity.
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Maryland Stadium Authority
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Maryland Stadium Authority Briefing
Capital Debt Affordability Committee
September 7, 2016
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Maryland Stadium Authority Debt Issued over the past five years
Fiscal Year
Amount Purpose
2012 $105,450,000 $11.1 million - Revenue Bond for Warehouse and Oriole Park Improvements $94.35 million - Series 2011 Refunding Bonds (Terminate Swap with AIG for Series 1998A and 1999)
2013 $26,990,000 $14.1million – Series 2012 Hippodrome Performing Arts Center Refunding Bonds $12.9 million - Series 2012 Montgomery County Conference Center Refunding Bonds
2014 $8,635,000 Refund the Series 2010 Revenue Bond for Oriole Park Improvements
2015 $9,535,000 Refund the Series 2011 Revenue Bond for Oriole Park Improvements, reduce the outstanding balance refunded by $500,000 by negotiating a lower debt service reserve
2016 $320,000,000 First series of bonds issued for Baltimore City Public Schools. Revenue bond with the pledge being lottery, Baltimore City Beverage taxes, a percentage of the casino facility rental fee, a portion of table game proceeds, and funds from the education grant from Baltimore City Public Schools.
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Maryland Stadium Authority Amount of Outstanding Debt and Revenues
Fiscal Year
Amount Outstanding
Tax Supported Bonds and Equipment
Revenue Bond
Energy (not tax
supported debt)
Debt Service for Tax
Supported and
Equipment
Revenues (Lottery/
Camden Yards Operating
Revenue and $2 ticket charge)
2013 $219,601,249 $193,005,129 $19,435,000 $7,161,120 $34,488,483 $24,602,696
2014 $185,442,082 $168,862,603 $10,010,000 $6,569,479 $32,760,702 $23,440,000
2015 $168,421,865 $145,021,979 $17,455,000 $5,944,886 $31,447,251 $21,851,391
2016 $466,291,738 $125,181,285 $335,825,000 $5,285,453 $26,394,035 $21,837,615
2017 $439,642,623 $105,883,444 $329,170,000 $4,589,179 $48,900,045 $21,893,973
2018 $412,060,220 $85,806,273 $322,400,000 $3,853,947 $48,819,476 $21,817,415
2019 $383,684,063 $65,281,548 $315,325,000 $3,077,515 $48,364,517 $21,359,802 2020 $354,102,509 $43,910,000 $307,935,000 $2,257,509 $48,265,285 $21,258,143 2021 $337,531,417 $35,920,000 $300,220,000 $1,391,417 $34,193,622 $7,193,770 2022 $320,156,576 $27,520,000 $292,160,000 $476,576 $34,208,009 $7,201,477 2023 $304,015,000 $20,275,000 $283,740,000 $0 $32,142,326 $7,211,633 2024 $287,555,000 $12,615,000 $274,940,000 $0 $31,664,302 $7,215,824 2025 $272,825,000 $6,080,000 $266,745,000 $0 $29,337,127 $7,434,296 3
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Maryland Stadium Authority
Fixed Rate Debt Ratings
Series S&P Moody’s Fitch
2004 AA+ Aa2 AA
2011 AA+ Aa2 AA
2012 HPAC AA+ Aa2 AA
2012 MCCC AA+ Aa2 AA
2016 AA- Aa3 AA
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Maryland Stadium Authority Maryland Stadium Authority
Summary of Swaps and Variable Rate Demand Bonds
as of June 30, 2015
Sports Facilities Lease Revenue Refunding Bonds
Football Stadium Issue
Series Name Series 2007
Tax Status Tax-Exempt
Dated Date 2/8/2007
Original Issue Par 73,500,000
Current Outstanding 47,900,000
Maturity 3/1/2008 – 2026
Remarketing Agent Goldman Sachs & Co.
Current Remarketing Rate 5 Basis Points
Liquidity/LOC Provider SBPA: Sumitumo
LOC Expiration 12/15/2019
Current LOC Fee 36 Basis Points
Current Reset Frequency 7-Day
Date of Last Reset 8/24/16
Reset Rate 0.58%
Hedges Synthetic Fixed Rate (MSA paid Fixed Amounts = 5.69% - 5.8%,
receives SIFMA)
Counterparty Barclays
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Maryland Stadium Authority
Variable Rate Debt Ratings
Series S&P Moody’s Fitch
2007 Short Term A-1+ VMIG 1 F1+
2007 Long Term AA+ Aa2 AA
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Maryland Stadium Authority Baltimore City Public Schools Construction and Revitalization Program
Revenue Bond, Series 2016 ◦ Negotiated sale on April 20, 2016
Par Amount of $320 million Received orders in excess of $1.0 billion
Premium of $66.1 million to be used for construction Tax-exempt 30 year debt 5% coupon Average annual debt service is $20.8 million
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Maryland Stadium Authority Current projections for new issuances
◦ FY 2017 Evaluating the possibility of terminating the swap on the series 2007
Convert the variable rate debt to a fixed rate debt Termination fee approximately $13.8 million with a potential discount by Barclays Projected present value savings of $575,500 Does not meet the thresholds for a refunding Other benefits including interest rate risk
◦ FY 2018 Issue $300 million in Baltimore City Public School Revenue Bonds
Proceeds to be used for the balance of the Year 1 projects ($70 million) and the Architect and Pre-construction of the Year 2 projects ($230 million)
Structured the same way as the first series, unless we don’t receive a AA blended credit
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Bay Restoration Bonds
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Bay Restoration Fund (BRF) Capital Debt Affordability Committee Briefing
September 7, 2016
Jag Khuman, Director Maryland Water Quality Financing Administration
1800 Washington Boulevard Baltimore, MD 21230
410-537-3119
www.mde.maryland.gov/wqfa
mailto:[email protected]://www.mde.state.md.us/wqfa
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FY Amount ($ Million) Primary Purpose 2008 $ 50.00 Provide grants for the Enhanced 2009 - Nutrient Removal (ENR) 2010 - upgrades at the 67 major Waste 2011 - Water Treatment Plants (Estimated 2012 - Total ENR Capital Cost $1.25 billion) 2013 - 2014 $100.00 2015 - 2016 $180.00 ______________________ Total $330.00 Page 2
Bay Restoration Fund Debt Issued in Prior Fiscal Years
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Series 2008 Series 2014 Series 2015 Debt Issued: $50,000,000 $100,000,000 $180,000,000 Issue Date: 4/29/2008 5/14/2014 12/03/2015 Ratings: Aa2 (Moody’s) Aa2 (Moody’s) Aa2 (Moody’s) AA (S&P) AA (S&P) True Interest Cost: 4.03% 2.55% 2.59% Interest: Fixed Rate Fixed Rate Fixed Rate Final Bond Maturity: 3/1/2023 3/1/2029 3/1/2030 Security: BRF (WWTP)Fee BRF (WWTP)Fee BRF (WWTP) Fee Debt Service Reserve: None None None Optional Redemption After: 3/1/2018 3/1/2024 3/1/2024 Refunding Potential: Yes/Will consider No/Low Savings No/Low Savings refunding next bond sale FY 2017 Page 3
Bay Restoration Fund Existing Bonds/Refunding Potential
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BRF Current Outstanding Debt & Annual Debt Service ($ Million)
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Fiscal Year Ending Outstanding Debt Annual Debt Service 2008 50.000 0.000 2009 46.825 4.655 2010 44.185 4.710 2011 41.560 4.616 2012 38.820 4.614 2013 35.995 4.617 2014 133.055 4.614 2015 129.980 8.248 2016 301.615 14.330 2017 292.880 23.431 2018 273.590 31.756 2019 253.375 31.717 2020 232.075 31.827 2021 209.715 31.829 2022 186.245 31.823 2023 161.605 31.824 2024 140.360 27.216 2025 118.055 27.214 2026 94.715 27.134 2027 70.375 27.297 2028 44.905 27.697 2029 18.250 28.049 2030 0.007 18.798 2031 0.000 0.000
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Debt Authorized through FY 2015: $530,000,000 Debt Issued through FY 2016: $330,000,000 Future Authorized Debt Issuance: $200,000,000 Projected Future Debt Issuance: $100,000,000 Assumptions for future debt issuance
• Wt. Avg. Coupon Rate of 4.50% per year • Annual Level Debt Service • Maximum 15-Year Bond Term • Final Debt Service Payment by FY 2030
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Bay Restoration Fund Total Debt Authorized and Amount Unissued
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Projected Debt Issuance, Debt Service Payments & Annual Revenue ($ Millions)
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1 . Actual revenue through FY 2016 BRF fee increase in FY 2013. * One time additional revenue of ~$13.6M resulting from audit settlement.
Fiscal Year New Issues Debt Outstanding at
6/30 Debt Service for
FY Revenue (Cash) 1
2008 50.000 50.000 0.000 55.068 2009 0.000 46.825 4.655 53.356 2010 0.000 44.185 4.710 54.818 2011 0.000 41.560 4.616 54.598 2012 0.000 38.820 4.614 54.552 2013 0.000 35.995 4.617 92.767 2014 100.000 133.055 4.614 108.466 2015 0.000 129.980 8.248 111.785 2016 180.000 301.615 14.330 123.708 *
2017 100.000 392.880 23.431 114.021 2018 0.000 373.590 36.256 115.161 2019 0.000 346.908 42.684 116.313 2020 0.000 318.850 42.794 117.476
FY 2017 Bond Sale projected for March/April 2017.
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Projected Debt Issuance, Debt Service Payments & Annual Revenue ($ Million)
Fiscal Year New Issues Debt Outstanding at
6/30 Debt Service for
FY Revenue (Cash) 1
2021 0.000 289.428 42.796 118.651 2022 0.000 258.578 42.790 119.838 2023 0.000 226.226 42.791 121.036 2024 0.000 196.922 38.183 122.246 2025 0.000 166.195 38.181 123.468 2026 0.000 134.054 38.101 124.703 2027 0.000 100.517 38.264 125.950 2028 0.000 65.436 38.664 127.210 2029 0.000 28.738 39.016 128.482 2030 0.000 0.000 29.765 129.767 2031 0.000 0.000 0.000 65.532
Page 7
Continued….
1. Actual revenue through FY 2016 BRF fee increase in FY 2013
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Consolidated Transportation Bonds
-
Presented by David Fleming
Chief Financial Officer Office of Finance
September 7, 2016
Maryland Department of Transportation
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Structure: Fixed rate Interest only first 2 years As required by statute Maximum maturity of 15 years Level debt service payments
Additional Bonds Test: Pledged taxes at least 2.0x maximum annual debt service Net revenue at least 2.0x maximum annual debt service
-1-
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Management Practice: Pledged Taxes at least 2.5x maximum annual Debt Service Net Revenue at least 2.5x maximum annual Debt Service
Fiscal Year 2015 Actual: Pledged taxes coverage 6.0x Net revenue coverage 3.6x
Fiscal Year 2016 Estimated : Pledged taxes coverage 6.3x Net revenue coverage 3.9x
-2-
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Amount issued in prior 5 fiscal years: $1.030 billion new construction $ 260 million refunding
-3-
Series
Sale Date
New Money
Refunding
True Interest Cost (TIC)
Series 2015 Third Issue
12/2/2015
$300.0
2.47%
Series 2015 Second Issue 6/3/2015 $136.0 2.75%
Series 2015 Refunding 6/3/2015 $259.72 1.85%
Series 2015 2/11/2015 $265.54 2.59%
Series 2014 6/11/2014 $100.0 2.66%
Series 2013 Second Issue 11/20/2013 $225.0 2.90%
Series 2013 2/13/2013 $165.0 2.45%
Series 2012 5/23/2012 $115.0 2.36%
Total $1,306.54 $259.72
($ in millions)
-
Amount outstanding: FY16 - $2.15 billion Legislative debt ceiling increased to $4.5 billion effective June 1, 2013
Amount authorized but unissued: FY16 - $2.85 billion authorized FY16 - $ 700 million unissued
Maryland Department of Transportation Consolidated Transportation Bonds
-4-
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Status of refunding potential Refunding analysis is periodically completed by the department’s
financial advisor Benchmarks are 3% net present value savings and an Opportunity
Cost Index of at least 70% Potential refunding opportunities have been identified for FY17
at this time. Approximately $250 million with a net present value savings
potential of $20 million (8% of Refunded Bonds)
Variable rate debt, swaps and bond insurance None
Bond Insurance Not needed because of MDOT’s stable credit profile
-5-
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Preliminary projections for new issuances Debt Debt
Outstanding Outstandingat Beginning New at End
Fiscal Year of Year Issues Redeemed of Year
2017E $2,146 $810 $207 $2,7492018E $2,749 $905 $222 $3,4322019E $3,432 $695 $199 $3,9282020E $3,928 $455 $219 $4,1642021E $4,164 $370 $289 $4,2452022E $4,245 $395 $333 $4,3072023E $4,307 $475 $370 $4,4122024E $4,412 $405 $343 $4,4742025E $4,474 $355 $366 $4,4632026E $4,463 $385 $394 $4,454
(E = based on July 2016 Estimate)
-6-
Sheet1
Current Projections for New Issuances
($ in millions)
DebtDebt
OutstandingOutstanding
at BeginningNewat End
Fiscal Yearof YearIssuesRedeemedof Year
2017E$2,146$810$207$2,749
2018E$2,749$905$222$3,432
2019E$3,432$695$199$3,928
2020E$3,928$455$219$4,164
2021E$4,164$370$289$4,245
2022E$4,245$395$333$4,307
2023E$4,307$475$370$4,412
2024E$4,412$405$343$4,474
2025E$4,474$355$366$4,463
2026E$4,463$385$394$4,454
(E = based on July 2016 Estimate)
Sheet2
Sheet3
-
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026DS Projected New Issues 7 37 77 149 219 271 322 369 411 461DS Current Outstanding 301 305 272 234 241 235 228 162 148 130Total Debt Service 308 342 349 383 460 506 550 531 559 591
0
100
200
300
400
500
600
700
Debt service preliminary projections for the next 10 years ($ in millions)
-7-
Chart1
201720172017
201820182018
201920192019
202020202020
202120212021
202220222022
202320232023
202420242024
202520252025
202620262026
Total Debt Service
DS Current Outstanding
DS Projected New Issues
308
301
7
342
305
37
349
272
77
383
234
149
460
241
219
506
235
271
550
228
322
531
162
369
559
148
411
591
130
461
Sheet1
20132014201520162017201820192020202120222023202420252026
Total Debt Service188211246264308342349383460506550531559591
DS Current Outstanding180203232258301305272234241235228162148130
DS Projected New Issues8814673777149219271322369411461
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Rating Agency Updates:
Standard & Poor’s – AAA
Moody’s – Aa1 Fitch – AA+
as of December 2015
-8-
05 GARVEE Presentation.pdfGrant Anticipation Revenue Vehicles (“GARVEE”) Bonds
06 MSA CDAC Presentation 2016.pdfSlide Number 1Maryland Stadium AuthorityMaryland Stadium AuthorityMaryland Stadium AuthorityMaryland Stadium AuthorityMaryland Stadium AuthorityMaryland Stadium AuthorityMaryland Stadium Authority
07 BRF-CDAC-2016_jag.pdfBay Restoration Fund (BRF) �Capital Debt Affordability Committee Briefing�September 7, 2016Slide Number 2Slide Number 3 �BRF Current Outstanding Debt & Annual Debt Service ($ Million)Slide Number 5Projected Debt Issuance, Debt Service Payments & Annual Revenue ($ Millions)Projected Debt Issuance, Debt Service Payments & Annual Revenue ($ Million)
08 MDOT CDAC presentation September 2016 0825 -Final.pdfMaryland Department of TransportationMaryland Department of Transportation Consolidated Transportation BondsMaryland Department of Transportation� Consolidated Transportation BondsMaryland Department of Transportation Consolidated Transportation BondsSlide Number 5Maryland Department of Transportation Consolidated Transportation Bonds�����Maryland Department of Transportation�Consolidated Transportation Bonds�����Maryland Department of Transportation Consolidated Transportation BondsMaryland Department of Transportation� Consolidated Transportation Bonds