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Transcript of KEEPING YOUR FINANCIAL SCORECARD Jenny Blankenship, CPA The PFM Group Handouts and presentation are...
KEEPING YOUR FINANCIAL
SCORECARD
Jenny Blankenship, CPA The PFM Group
Handouts and presentation are available online at www.iowaleague.org
2
Session Description
Keeping Your Financial Scorecard
The council needs to do financial planning, but where do you start?
This session outlines some tools available to help councils better understand the city’s financial condition and how to plan for major projects.
3
Outline
Understanding Your City’s Current Financial Condition
Capital Planning Considerations
Making the Decision to Borrow
Municipal Funding Sources (Internal and External)
Financing Infrastructure for Cities
Bonding Options
Post-Issuance Responsibilities
4
Financial Planning at its Best…
UNDERSTANDING YOUR CITY’S CURRENT FINANCIAL CONDITION
6
Financial Health Considerations
Stability of current tax base– Diverse larger taxpayers?– Stable home values?
General Fund – Revenues keeping pace with expenses– Operating surpluses or deficits– Current unreserved cash balance as a percentage of revenues
City’s Current Constitutional Debt Limit– State of Iowa: 5% of current fiscal year 100% Actual Valuation
Existing Debt– General Obligation Debt
• Current debt service levy tax rate
– Enterprise Fund Revenue Debt• Current revenue bond covenant requirements (debt service coverage ratios,
debt service reserve fund, improvement fund, etc.)
7
Financial Health Considerations Cont’d
Tax Increment Financing Districts – District valuation growth– District sunset– Outstanding obligations (debt, rebate agreements, etc.)– Current cash balance
Enterprise Funds– Current unreserved cash balance as a percent of O & M
• 4-6 months of operating expenses or approximately 50% of O & M expenses
– Debt service coverage requirements• SRF loans (1.10x coverage)
• Varies for revenue bonds (1.10x - 1.30x coverage)
CAPITAL PLANNING CONSIDERATIONS
9
Capital Planning Considerations
Identify the optimal match of revenue sources with
funding needs
Maximize the revenues available for funding capital
projects
Maximize the amount of projects which can be
funded
Provide the flexibility to accommodate changes in
the actual capital needs or funding sources
Preserve the capacity to fund additional capital
projects beyond the planning period
Achieve the lowest cost of capital
10
Creating a Capital Improvement Plan
Use all information gathered (Road, Sewer, Water, Storm, etc)
Think about what is driving the timing of the improvements– Condition of the street?
– Condition of the underground utilities?
– Budget?
Use rankings to develop priorities
Evaluate annual budget based on priorities
Other Considerations– Public Input, Politics, Funding, Other…
Once created, the Capital Improvement Plan should:– Guide decisions for a minimum of 5 years
– Include long range needs - 20 years & out
– Be evaluated annually
MAKING THE DECISION TO BORROW
12
Pay-As-You-Go vs. Debt Financing
Debt FinancingPay-As-You-Go
• Construction or acquisition as revenues become available
• Current users bear cost
• Construction/acquisition capacity limited to available revenues
• Lower total cost
• Political and economic climate considerations
• Construction or acquisition as needed
• Reduced current payments
• Current and future users bear cost
• Enhanced construction/ acquisition capacity
• Useful life of assets financed
MUNICIPAL FUNDING SOURCES
14
Internal Municipal Funding Sources
Property Taxes– Debt Service Levy
Local Option Sales Tax Revenues Special Assessment Revenues Urban Renewal Revenues Utility Revenues
– Water, Sewer, Stormwater, Electric, Gas or Communications
Road Use Taxes
Franchise Fees
General Obligation Bonding– Bonding options will be discussed later in more detail
Revenue Bonding– Bonding options will be discussed later in more detail
15
External Funding Sources
Iowa Finance Authority
Community Development Block
Grants (CDBG)
Federal earmarks
USDA Rural Development
– Grants and loans
Source for other grant opportunities
– Iowa Grants Enterprise Management System (GEMS) http://www.iagems.gov
FINANCING INFRASTRUCTURE FOR CITIES
17
General Considerations for Issuing Debt
Start planning the financing early in the process– Leave time to set and hold public hearings and for other procedural steps
General Obligation Debt Capacity– 5% of the 100% Assessed Valuation– General obligation, TIF revenue, local bank loans, leases and rebate
agreements count against the debt limit– Revenue debt does not count against the debt limit– Annual appropriation debt
• Only current fiscal year debt service payments that have been appropriated count against the debt limit
Debt service levies are unlimited
May combine legal authorities– Larger bond issue may sell better– Consult with your Bond Counsel
Cumulative effect of debt– Look at long-term forecasting– Wrap proposed debt around outstanding debt
18
General Considerations for Issuing Debt (Cont’d)
Term of debt– Shorter debt can result in a better interest rate and rating– Current outstanding debt– Future planned debt
Reimbursement resolutions– Do not need one to cover preliminary costs
• Preliminary costs incurred prior to the commencement of construction that do not require a reimbursement resolution include engineering, surveying, soil testing, reimbursement bond issuance and similar costs
• Land acquisition, site prep and similar costs incident to commencement of construction are excluded
– Limited to 20% of bond issue– Look back window is 60 days– Reimbursed within the later of 18 months after you expended or 18 months
after the construction is complete but no later 3 years
Do not begin spending money without consulting with your bond counsel and financial advisor first.
19
General Considerations for Issuing Debt (Cont’d)
Bond ratings are important– Smaller communities are now being rated
– Pricing difference between non-rated and ‘A’ is, on average, around 25 bps
• 25 bps equals approximately $15,290 in savings on a $1 million bond over ten years
– Rating Criteria include:• Economic data; financial policies & practices; debt
management; and administration
Many issuers are obtaining ratings for the first time and are receiving pricing benefits that far outweigh the cost of
obtaining a rating.
-0.20%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
A1 vs. Non Rated Credit Spread Over MMD Aaa
A1 Rated City (Priced June 6, 2011) Non Rated City (Priced May 3, 2011)
15 bps
54 bps21 bps
20
Competitive vs. Negotiated Sale
Simple or well-known bond structure
Stable market conditions
Fixed Rate Debt
Typically has lower gross spread for underwriting costs
Prices obtained offer potential bidders equal opportunity and yields the lowest price for the Issuer
• Complex bond structure
• Volatile market conditions
• Variable rate debt
• Typically has higher gross spread for underwriting costs
• Leaves room for criticism as to not receiving the best available rates for the Issuer
Competitive Sale Negotiated Sale
BONDING OPTIONS
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General Obligation Bonds
Authority found in Division III of Chapter 384 of Code of Iowa
Backed by general credit and taxing powers of governmental entity
Counts against general obligation debt capacity
Must levy a debt service levy unless other abatements are available, for
example:
– Utility revenues; special assessments; local option sales tax revenues; road use tax fund revenues; or urban renewal revenues
• More secure credit structure
• Requires taxing authority
• 60% voter approval required (depending on the project)
• Property tax based
23
Sample General Obligation Debt Capacity
Sample City, IowaProjection of G.O. Debt Capacity
Beginning 2012-13 3.50%
Legal Limit 5.00%
Effective Limit 90%
Proposed 2012-2025 Available Percent
Fiscal Actual Gross Effective G.O . G.O ./REV G.O . Equip Rebate Lease G.O . TIF G.O . Debt TO TAL Effective /Debt Gross Fiscal
Year Valuation Debt Limit Debt Limit - TAXES - TIF - ENT Notes Agrmt Purchase 11/2011 TAXES G.O . DEBT Capacity Debt Limit Year
FY 2007-08 703,735,086 35,186,754 31,668,079 13,215,000 10,205,000 2,070,177 83,926 457,632 0 26,031,734 5,636,345 73.98% FY 2007-08
FY 2008-09 869,228,079 43,461,404 39,115,264 12,420,000 11,705,000 1,871,333 84,008 853,530 71,066 0 27,004,937 12,110,326 62.14% FY 2008-09
FY 2009-10 957,165,252 47,858,263 43,072,436 13,012,000 13,493,000 3,405,323 44,973 879,016 81,716 0 30,916,028 12,156,408 64.60% FY 2009-10
FY 2010-11 1,012,290,926 50,614,546 45,553,092 11,870,000 12,470,000 3,201,246 10,845 859,806 67,523 0 28,479,420 16,033,672 58.32% FY 2010-11
FY 2011-12 1,047,721,446 52,386,072 47,147,465 10,426,000 11,334,000 2,883,770 712,825 53,310 10,425,000 1,040,000 36,874,905 9,232,560 72.38% FY 2011-12
FY 2012-13 1,084,391,697 54,219,585 48,797,626 8,904,000 10,161,000 2,559,686 212,139 39,097 9,470,000 2,080,000 33,425,923 14,406,704 63.43% FY 2012-13
FY 2013-14 1,122,345,406 56,117,270 50,505,543 7,319,000 8,951,000 2,223,934 90,950 24,883 8,500,000 3,045,000 30,154,767 19,465,776 55.31% FY 2013-14
FY 2014-15 1,161,627,495 58,081,375 52,273,237 5,704,000 7,691,000 1,876,450 7,515,000 3,930,000 26,716,450 24,751,787 47.38% FY 2014-15
FY 2015-16 1,202,284,458 60,114,223 54,102,801 4,584,000 6,386,000 1,636,450 6,510,000 4,735,000 23,851,450 29,526,351 40.88% FY 2015-16
FY 2016-17 1,244,364,414 62,218,221 55,996,399 3,420,000 5,035,000 1,391,450 5,485,000 5,460,000 20,791,450 34,564,949 34.45% FY 2016-17
FY 2017-18 1,287,917,168 64,395,858 57,956,273 2,470,000 3,815,000 1,136,450 4,440,000 6,100,000 17,961,450 40,479,823 27.14% FY 2017-18
FY 2018-19 1,332,994,269 66,649,713 59,984,742 1,755,000 2,905,000 871,450 3,375,000 6,655,000 15,561,450 46,033,292 20.93% FY 2018-19
FY 2019-20 1,379,649,068 68,982,453 62,084,208 1,015,000 1,950,000 826,450 2,280,000 7,125,000 13,196,450 51,552,758 15.27% FY 2019-20
FY 2020-21 1,427,936,786 71,396,839 64,257,155 395,000 950,000 781,450 1,155,000 7,505,000 10,786,450 57,110,705 10.01% FY 2020-21
FY 2021-22 1,477,914,573 73,895,729 66,506,156 140,000 215,000 736,450 7,795,000 8,886,450 62,159,706 5.88% FY 2021-22
FY 2022-23 1,529,641,583 76,482,079 68,833,871 0 0 691,450 7,990,000 8,681,450 65,512,421 4.34% FY 2022-23
FY 2023-24 1,583,179,039 79,158,952 71,243,057 0 0 646,450 8,090,000 8,736,450 68,606,607 3.33% FY 2023-24
FY 2024-25 1,638,590,305 81,929,515 73,736,564 601,450 8,090,000 8,691,450 71,700,114 2.49% FY 2024-25
Valuation Growth &
Debt Limit Assumptions
EXISTING DEBT ISSUES SUBJECT TO DEBT LIMIT *
24
Sample Tax Analysis
Sample City, IowaDebt Service FundProjection of Debt Service Levy & Tax Rate Impact
Tax Valuation Growth Rate FY 09-10 11.25%
Tax Valuation Growth Rate FY 10-11 6.84% Tax Impact FY 07-08 $0.00000
Tax Valuation Growth Rate FY 11-12 6.21% Tax Impact FY 08-09 $0.00000
Tax Valuation Growth Rate starting FY 12-13 5.50% Tax Impact FY 09-10 ($0.00004)
Tax Impact FY 10-11 $0.00000
Current Road Golf G.O . O ther
Fiscal Total Tax Taxes Tax Rate/ Use O ther Course Total G.O . * Golf Fiscal Total Sources Surplus Beginning Ending
Year Payable Valuation Levied $1,000 Funds Moneys Abatement Resources Debt Service Course Fees Uses / (Uses) (Deficit) Balance Balance
2007 - 2008 383,146,177 1,272,061 3.32004 32,308 34,453 1,338,822 1,231,466 61,441 4,692 1,297,598 7,490 48,713 237,015 285,728
2008 - 2009 464,448,647 1,541,988 3.32004 13,429 49,375 1,604,792 1,511,729 61,441 3,900 1,577,070 (59,008) (31,286) 285,728 254,442
2009 - 2010 516,692,253 1,715,418 3.32000 0 93,701 34,985 1,844,104 1,536,971 61,441 2,800 1,601,212 45,207 288,100 254,442 542,542
2010 - 2011 552,050,508 1,832,808 3.32000 48,728 (12,179) 35,000 1,904,357 1,838,994 61,441 4,800 1,905,235 (878) 542,542 541,663
2011 - 2012 586,337,116 1,946,639 3.32000 23,700 12,700 35,000 2,018,039 1,876,710 61,441 4,800 2,045,461 (27,421) 541,663 514,242
2012 - 2013 618,585,657 2,053,704 3.32000 23,172 12,700 35,000 2,124,576 1,895,872 61,441 4,800 2,168,516 (43,940) 514,242 470,302
2013 - 2014 652,607,869 2,166,658 3.32000 23,644 12,700 35,000 2,238,002 1,878,551 61,441 4,800 2,253,488 (15,486) 470,302 454,816
2014 - 2015 688,501,301 1,760,057 2.55636 12,700 35,000 1,807,757 1,332,126 61,441 4,800 1,807,757 0 454,816 454,816
2015 - 2016 726,368,873 1,868,940 2.57299 12,700 35,000 1,916,640 1,336,916 61,441 4,800 1,916,640 0 454,816 454,816
2016 - 2017 766,319,161 1,714,873 2.23781 12,700 35,000 1,762,573 1,080,574 61,441 4,800 1,762,573 0 454,816 454,816
2017 - 2018 808,466,715 1,544,130 1.90995 12,700 35,000 1,591,830 809,614 61,441 4,800 1,591,830 0 454,816 454,816
2018 - 2019 852,932,384 1,644,838 1.92845 12,700 35,000 1,692,538 807,399 61,441 4,800 1,692,538 0 454,816 454,816
2019 - 2020 899,843,665 1,596,621 1.77433 12,700 35,000 1,644,321 658,905 61,441 4,800 1,644,321 0 454,816 454,816
2020 - 2021 949,335,067 1,309,662 1.37956 12,700 35,000 1,357,362 269,496 61,441 4,800 1,357,362 0 454,816 454,816
2021 - 2022 1,001,548,495 1,253,642 1.25170 12,700 35,000 1,301,342 144,900 30,721 4,800 1,301,342 0 454,816 454,816
2022 - 2023 1,056,633,663 1,179,022 1.11583 12,700 35,000 1,226,722 4,800 1,226,722 0 454,816 454,816
2023 - 2024 1,114,748,514 1,179,022 1.05766 12,700 35,000 1,226,722 4,800 1,226,722 0 454,816 454,816
2024 - 2025 1,176,059,682 1,179,022 1.00252 12,700 35,000 1,226,722 4,800 1,226,722 0 454,816 454,816
2025 - 2026 1,240,742,965 1,179,022 0.95025 12,700 35,000 1,226,722 4,800 1,226,722 0 454,816 454,816
Tax Rate Impact Summary
25
Revenue Bonds
Authority found in the Code of Iowa
– Chapter depends on revenue source
Does NOT count against general obligation debt limit (with the exception of TIF
Revenue Bonds)
Debt to be paid solely by the revenues of the system or the source for which
the debt is being issued
– Utility revenues (water, sewer, storm water, etc.); Local Option Sales Tax revenues or urban renewal revenues
• Backed by specific revenue stream
• Matches sources of payment for bonds to the project financed
• Users pay cost of project and financing
• Variety of revenues could be pledged to pay debt service
• Covenants could limit bonding capacity
26
Urban Renewal Bonds (TIF)
Authority found in Division III of Chapter 384 and Chapter
403 of Code of Iowa
– Must have an urban renewal area set up before project is started and project must be located within the area
– Must publish notice of proposed debt issuance and hold a meeting to take action
– Must receive any oral or written objections, after which the City may either proceed with debt issuance or abandon the proposal
– Decision may be appealed to local district court within 15 days
27
Sample TIF CashflowSample City, IowaProjection of Tax Increment Revenues
Central TIF City 11.82106District No. 55555 County 4.70129
School District 11.35453Comm College 0.56008
Other 3.356120% Growth in Tax Increment Valuation Tax Rate 31.79308
Total Net City Proposed Total Annual EndingTaxable Change in Tax TIF Tax TIF Total Rebate Series Transfers TIF Surplus/ Cash
Valuation Valuation Increment Valuation Rate Revenue Revenues Agreements 2016 Out Expense (Deficit) Balance
2009 - 2010 1 0 0 0 32.21997 02010 - 2011 2 654,569 654,569 654,569 31.79308 20,811 20,811 20,811 20,8112011 - 2012 3 604,078 604,078 604,078 31.79308 19,206 19,206 18,960 18,960 246 21,0572012 - 2013 4 604,078 555,581 1,159,659 1,159,659 31.79308 36,869 36,869 39,768 39,768 (2,899) 18,1582013 - 2014 5 1,159,659 2,060,000 3,219,659 3,219,659 31.79308 102,363 102,363 32,747 80,000 112,747 (10,384) 7,7742014 - 2015 6 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 32,747 30,000 62,747 39,616 47,3902015 - 2016 7 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 32,747 32,747 69,616 117,0062016 - 2017 8 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 98,276 98,276 4,087 121,0932017 - 2018 9 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 108,564 108,564 (6,201) 114,8922018 - 2019 10 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 107,064 107,064 (4,701) 110,1912019 - 2020 11 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 110,377 110,377 (8,014) 102,1772020 - 2021 12 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 108,377 108,377 (6,014) 96,1632021 - 2022 13 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 111,145 111,145 (8,782) 87,3812022 - 2023 14 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 108,476 108,476 (6,113) 81,2682023 - 2024 15 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 110,484 110,484 (8,121) 73,1472024 - 2025 16 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 107,019 107,019 (4,656) 68,4912025 - 2026 17 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 108,338 108,338 (5,975) 62,5162026 - 2027 18 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 109,291 109,291 (6,928) 55,5882027 - 2028 19 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 109,841 109,841 (7,478) 48,1102028 - 2029 20 3,219,659 3,219,659 3,219,659 31.79308 102,363 102,363 102,363 150,473
Central TIF District Sunset: December 31, 2029 $1,714,694 $98,241 $1,297,248 $168,728 $1,564,216 $129,662
FiscalYear
Assumptions:
FY 10-11 Tax Rates
28
Local Option Sales Tax Bonds
Authority found in Chapter 423B of
Code of Iowa
May be issued as General Obligation
or Revenue Bonds
– Bonds can only be issued for the purposes described in the ballot
– Bonds cannot be issued for the portion of tax revenues designated for property tax relief
29
Sample Local Option Sales Tax Cashflow
Sample City, IowaSummary of Local Option Sales Tax Receipts Cashflow
0.0% Other $4.500 Mil Pay-as- Revenue Total
Calendar Tax Beginning Total Local Interest Revenue Total Revenue you-go G.O. Total Surplus/ Ending Coverage Coverage
Year Year Balance Option Tax Income or Proceeds Revenue Bonds Reserved Expenses Abatement Expenses (Deficit) Balance Ratio Ratio
2004 1 $0 $563,750 $0 $0 $563,750 ($64,295) $0 ($475,000) $0 ($539,295) $24,455 $24,455 8.77 8.77
2005 2 24,455 615,000 0 0 615,000 (584,435) 0 (25,000) 0 (609,435) 5,565 30,020 1.05 1.05
2006 3 30,020 615,000 0 0 615,000 (590,535) 0 0 0 (590,535) 24,465 54,485 1.04 1.04
2007 4 54,485 615,000 0 0 615,000 (590,185) 0 0 0 (590,185) 24,815 79,300 1.04 1.04
2008 5 79,300 615,000 0 0 615,000 (592,965) 0 0 0 (592,965) 22,035 101,335 1.04 1.04
2009 6 101,335 615,000 0 0 615,000 (589,385) 0 0 0 (589,385) 25,615 126,950 1.04 1.04
2010 7 126,950 615,000 0 0 615,000 (589,040) 0 0 0 (589,040) 25,960 152,910 1.04 1.04
2011 8 152,910 615,000 0 0 615,000 (587,210) 0 0 0 (587,210) 27,790 180,700 1.05 1.05
2012 9 180,700 615,000 0 0 615,000 (588,310) 0 0 0 (588,310) 26,690 207,390 1.05 1.05
2013 10 207,390 615,000 0 0 615,000 (587,600) 0 0 0 (587,600) 27,400 234,790 1.05 1.05
2014 11 234,790 0 0 0 0 0 0 0 0 0 0 234,790 n/a n/a
($5,363,960) $0 ($500,000)
** -Tax implemented on January 1, 2004 for ten years expiring December 31, 2013.
Capital Projects 75%
Property Tax Relief 25%
Resolution No. 0309
(Information below is presented on a calendar year basis given the City will be collecting January 1, 2004 through December 31, 2013)
30
Utility Revenue Bonds
Authority found in Division IV of Chapter 384 of Code of Iowa
Repaid by revenues of utility– Water– Sewer– Stormwater– Electric– Gas– Communications
Utility revenue debt requires issuer to establish
covenants– Debt service reserve fund– User rates– Parity Test
Not general obligation debt and does not count against the general
obligation debt capacity
31
Revenue & Rate Analysis
Considerations
Usage
Structure of rates– Base rates– Usage only
Growth of current expenses
Debt service coverage– 1.10x required for SRF– Minimum 1.30x recommended
for revenue bonds
Capital outlays – Pay-go– Bonding
Other transfers– General fund, etc.
Ending Cash– 50% of O & M– 4-6 months of reserves
32
State Revolving Fund
Types of Loans:
Planning and Design Loans– 0% for up to 3 years– Can be rolled into SRF Loan or paid with
permanent financing
Construction Loans– 3% interest rate– Origination fee of 1% + 0.25% servicing fee
SRF Source Water (SWP) Protection– 0% interest rate– Up to 20 years– For purchase of land or easements, or to fund
SWP practices– Based on approved SWP plan
Types of projects for SRF Nonpoint Source Loans– Stormwater best management practices– Brownfield cleanup– Landfill closure– Others
33
State Revolving Fund, Cont.
SRF Loan Programs:
Clean Water SRF– Loans for the following types of projects
• Publicly owned wastewater treatment facilities
• Sewer system rehabilitation• New systems for unsewered communities• Stormwater management for water quality
Drinking Water SRF– Loans for the following types of projects
• Improvements to public water supply systems• Consolidations and connections• Source water protection
34
Sample Enterprise Fund CashflowSAMPLES CITY, IOWAWater Enterprise Fund
Growth Assumptions 1-Aug-04 2.50% 1-Aug-08 4.00% 1-Aug-12 4.00% 1-Aug-16 4.00%
Water Usage 0.00% 1-Aug-05 4.00% 1-Aug-09 6.00% 1-Aug-13 4.00% 1-Aug-17 -Operating Expenses 5.00% 1-Aug-06 4.00% 1-Aug-10 12.00% 1-Aug-14 4.00% 1-Aug-18 -Interest Rate 0.25% 1-Aug-07 3.00% 1-Aug-11 4.00% 1-Aug-15 4.00% 1-Aug-15 -
Budget Budget Projected Projected Projected Projected Projected
FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17
First 3,000 gallons 1 $4.93 $5.13 $5.44 $6.09 $6.33 $6.59 $6.85 $7.12 $7.41 $7.71Next 37,000 gallons 2 2.29 2.38 2.52 2.82 2.93 3.05 3.17 3.30 3.43 3.57Next 60,000 gallons 3 1.62 1.68 1.78 1.99 2.07 2.16 2.24 2.33 2.43 2.52
All over 100,000 gallons 4 0.82 0.85 0.90 1.01 1.05 1.09 1.14 1.18 1.23 1.28
Average Rate Per < 1,000 5 $2.75 $3.03 $3.45 $3.86 $4.02 $4.18 $4.35 $4.52 $4.70 $4.89
WATER (1,000 gallons) 6 -3.49% -11.02% -8.20% YTD usage is up 1.95%
Total Water Usage 7 87,058 77,465 71,115 72,502 72,502 72,502 72,502 72,502 72,502 72,502
OPERATING REVENUESUsage Fees 8 $239,520 $234,371 $245,283 $277,645 $290,418 $302,035 $314,117 $326,681 $339,749 $353,338
Surcharge Fees 9 40,810 40,762 40,786 40,750 40,750 40,750 40,750 40,750 40,750 40,750Miscellaneous Revenues 10 1,188 1,037 1,996 600 650 650 650 650 650 650
Total Operating Revenues 11 $281,518 $276,170 $288,065 $318,995 $331,818 $343,435 $355,517 $368,081 $381,149 $394,738
OPERATING EXPENSESPersonal Services 12 $112,691 $117,121 $146,495 $161,444 $168,946 $177,393 $186,263 $195,576 $205,355 $215,623
Repairs & Maintenance 13 40,380 8,598 9,375 15,500 16,000 16,800 17,640 18,522 19,448 20,421Materials & Supplies 14 19,946 32,191 19,106 9,850 10,850 11,393 11,962 12,560 13,188 13,848
Other Expenses 15 54,302 50,164 47,916 51,357 60,956 64,004 67,204 70,564 74,092 77,797Depreciation 16 56,425 72,767 88,296 88,296 88,296 88,296 88,296 88,296 88,296 88,296
Miscellaneous 17 927 852 887 1,300 1,300 1,365 1,433 1,505 1,580 1,659Total Operating Expense 18 $284,671 $281,693 $312,075 $327,747 $346,348 $359,251 $372,798 $387,023 $401,960 $417,643
NET OPERATING REV 19 ($3,153) ($5,523) ($24,010) ($8,752) ($14,530) ($15,815) ($17,282) ($18,942) ($20,811) ($22,905)Add: Depreciation 20 56,425 72,767 88,296 88,296 88,296 88,296 88,296 88,296 88,296 88,296
Interest on Reserves 21 49,043 15,803 4,422 1,321 1,398 1,457 1,512 1,564 1,611 1,655Revenue for Debt Service 22 $102,315 $83,047 $68,708 $80,865 $75,165 $73,938 $72,527 $70,917 $69,095 $67,047
Audited Financial Statements
WATER REVENUE ADJUSTMENTS
35
Sample Enterprise Fund CashflowSAMPLES CITY, IOWAWater Enterprise Fund
Budget Budget Projected Projected Projected Projected Projected
FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17
Revenue for Debt Service 23 $102,315 $83,047 $68,708 $80,865 $75,165 $73,938 $72,527 $70,917 $69,095 $67,047
Water Debt ServiceSRF Bonds, Series 2008 24 $0 $31,048 $39,471 $40,023 $40,243 $40,430 $40,585 $40,708 $39,798 $39,888
Total Revenue Debt 25 $0 $31,048 $39,471 $40,023 $40,243 $40,430 $40,585 $40,708 $39,798 $39,888
Debt Service Coverage Must at least be a 1.10x Coverage for SRF BondsNet Revenues/ Revenue Debt 26 N/A 2.67 1.74 2.02 1.87 1.83 1.79 1.74 1.74 1.68
CASHFLOW AFTER DEBT 27 $102,315 $51,999 $29,237 $40,842 $34,922 $33,508 $31,942 $30,210 $29,298 $27,159
Capital Outlays 28 ($81,382) ($1,498,058) ($2,223) ($10,000) ($11,400) ($11,400) ($11,400) ($11,400) ($11,400) ($11,400)Other cash (uses)/sources 29 3,816 19,938 (4,912) 0 0 0 0 0 0 0
Grant Monies 30 0 0 0 0 0 0 0 0 0 0Bond Proceeds 31 0 529,600 5,000 0 0 0 0 0 0 0
Transfers (to)/from Other Funds 32 0 0 0 0 0 0 0 0 0 0Transfers (to)/from TIF Fund 33 0 200,000 0 0 0 0 0 0 0 0
Annual Surplus/ (Deficit) 34 $24,749 ($696,521) $27,102 $30,842 $23,522 $22,108 $20,542 $18,810 $17,898 $15,759
Beginning Cash Balance 35 $1,173,102 $1,197,851 $501,330 $528,432 $559,274 $582,796 $604,903 $625,445 $644,255 $662,153Ending Cash Balance 36 $1,197,851 $501,330 $528,432 $559,274 $582,796 $604,903 $625,445 $644,255 $662,153 $677,912
Cash % of O&M (net of depr) 37 525% 240% 236% 234% 226% 223% 220% 216% 211% 206%
Restricted & DesignatedImprovement Fund 38 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Debt Service Reserve Fund 38 0 0 0 0 0 0 0 0 0 0
- Projects listed in City's Capital Improvement Program
Water Treatment Plant 2,223 0 0 0 0 0 0 0Paint Water Towers 0 0 0 0 0 0 0 0
Miscellaneous 0 10,000 11,400 11,400 11,400 11,400 11,400 11,400Total 2,223 10,000 11,400 11,400 11,400 11,400 11,400 11,400
Audited Financial Statements
ISSUER RESPONSIBILITIES
37
Issuer Responsibilities
Keep in mind that once debt is issued, you have certain
responsibilities for the life of the debt:
– Disclosure Requirements (All Debt Issued Over $1 million)• Final official statement
• Annual continuing disclosure filings via EMMA
• Material event notices via EMMA
– Bond Covenants (Revenue Debt Only)• Debt service reserve fund balances
• User rates and charges
• Debt service coverage ratios
• Parity test for new debt issuance
– Rating Agency Updates (Rated Debt Only)• Periodic credit reviews
QUESTIONS?For More Information, please contact:
Jenny Blankenship, CPAThe PFM GroupPhone: 515-724-5734E-mail: [email protected]