Presentation tobudgetconference -tosend
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Transcript of Presentation tobudgetconference -tosend
OUR CAPITAL IMPROVEMENTS STORY: IT’S NOT A FAIRY TALE!6 December NCLGBA Winter Conference
First, a little quiz
Locate Chatham County on the map:
Once Upon a TimeOnce Upon a Time
Cows, chickens and goats Cows, chickens and goats GO bonds and revenue sharingGO bonds and revenue sharing Retirees, employees of UNC and Retirees, employees of UNC and
RTPRTP The old woman and the shoeThe old woman and the shoe
Once Upon a TimeOnce Upon a Time
GO or COPs?GO or COPs? $113 million in debt!$113 million in debt! A 6-fold increase in debt per A 6-fold increase in debt per
capitacapita
Enter the WizardEnter the Wizard
Doug Carter and Associates (DEC)
The debt model BOC unanimously adopts CIP
Projects begin
And we all lived And we all lived happily ever after…happily ever after…
……for a couple of yearsfor a couple of years
But is a success story
6 years later We have a lot to show for it In spite of (because of?) the recession
Before the Recession
Set aside 4 cents on the tax rate to fund the debt model
Set up the debt reserve Authorized DSS expansion, business park
construction, and new elementary school These projects were nearly complete before
recession began Funded through COPs Design work for community college buildings,
middle school and library complete
During the Great Recession
At first, no funds were available Financing was difficult to obtain, but we
were able to obtain bank loans and, eventually, an ARRA loan
Construction bids were significantly below budget: Library13% below bids received in August 2008 Community college building19% below budget School 13% below budget Justice center 17% below budget
Debt Model/Reserve
The reserve has held up through 2 complete BOC changes
Smoothes out contributions to the debt reserve Currently, 5.5 cents contribution to debt service fund
(for example, in FY 13, 5.7 cents needed for debt service)
High of 12.7 cents needed in 2019 Funds accumulated up front—favorable view from
rating agencies No tax increase is needed to fund debt service for
existing and future projects (does not include operating)
Debt Model Includes
Projection of revenues (property tax, impact fees, lottery)
Retired debt (must be put back into reserve)
Debt service, plus projection of debt for new projects
Fund balance in debt reserve Property tax equivalent of debt service
Debt Model
Debt Model
DEC is happy to share a copyDEC Associates, Inc.Douglas CarterPresident & Managing [email protected]
Debt Model
Updated annually: To ensure projections are on target To include new projects or to give BOC options to delay
projects We are on Version 32B of the model But it has held up remarkably well considering it
was developed before the Great Recession. Tweaks include: Added lottery proceeds Lowered annual property tax growth to 2% (from 5%) Lowered projections for other revenues, impact fees
dramatically affected
Our CIP is not a “Wish List” Every project scheduled in the CIP is funded (or
a source of funding identified) Projects without a funding source are classified
as “future projects” and are not scheduled This category has been useful:
Alleviates need for “pie-in-the-sky” projects Alerts the board to needs on the horizon that may
compete with scheduled project for funds Provides a mechanism for funding planning costs
We spend much time on identifying operating costs—now used as basis for expansion requests
Funding Strategy
Fund large, needed facilities through debt Fund smaller needs through fund balance Maximize grant opportunities (parks) Fund parks through grants, recreation fee,
and parks capital reserve (have funded 3 parks through these sources)
Fund other projects through capital reserves