Report on Debt Payments, Existing and Proposed
Existing Debt
We use debt financing for capital assets. Our existing debt include includes payments on general obligation bonds issued from 1996 to 2003. In addition, we use installment financing for certain capital improvement projects, major equipment and computers.
At June 30, 2004, we had general obligation debt of $18,400,000 and installment notes payable for equipment, computers, and capital improvement projects of $6,526,774, for a total of $24,926,774. Interest rates on the general obligation debt range from 2% to 5.55% and from 2% to 5.4% on the installment notes. The debt payments total approximately $4.3 million in 2004-05 and will total approximately the same amount in 2005-06, gradually decreasing after that. (See Attachment 1.)
Proposed Debt
Financed Debt
We prepare multi-year plans for computer replacement, equipment replacement, and capital improvements. Based on those plans, we anticipate additional debt payments in the future for continuing these programs. (See Attachment 2.)
General Obligation Debt
In November 2003, voter approved a $29.36 million bond sale. On March 30, 2004, the Council agreed to a schedule of bond sales. The first sale of $4 million took place in fall 2004 in accordance with the schedule.
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|
Year of Issuance |
|
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|
|
2004 |
2006 |
2008 |
2009 |
Total |
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Sidewalks and Streets |
|
|
|
|
$5,600,000 |
|
A. Sidewalk Construction |
600,000 |
900,000 |
00,000 |
500,000 |
2,600,000 |
|
B. Pedestrian Amenities |
100,000 |
100,000 |
75,000 |
75,000 |
350,000 |
|
C. Neighborhood Traffic Calming and Pedestrian and Bicycle Safety Improvements |
300,000 |
150,000 |
100,000 |
100,000 |
650,000 |
|
D. Downtown Streetscape Improvements |
500,000 |
1,000,000 |
250,000 |
250,000 |
2,000,000 |
|
Library Facilities |
500,000 |
400,000 |
7,480,000 |
7,880,000 |
$16,260,000 |
|
Parks/ Recreational Facilities |
300,000 |
4,400,000 |
300,000 |
|
$5,000,000 |
|
Open Space and Areas |
1,200,000 |
800,000 |
|
|
$2,000,000 |
|
Public Buildings (Energy Efficiency Projects) |
500,000 |
|
|
|
$500,000 |
|
Total |
4,000,000 |
7,750,000 |
8,805,000 |
8,805,000 |
$29,360,000 |
Town Operations Center Debt
The Town Operations Center project is made up of two pieces: Public Works ($25 million) and Transit ($19,000). We originally thought that we would need financing for both projects. We have received federal and State commitments sufficient that we do not believe that we will need to borrow, even for the short-term, for the Transit buildings. We would need to borrow the funds for the Public Works portion of the Town Operations Center and could use Certificates of Participation to do the financing.
In the preliminary budget presented on January 13, 2005 to the Council and included in the materials for the January 26th Budget Public Hearing, we showed the debt payments necessary to pay for $25 million in debt over 20 years with even principle payments, except for a minor adjustment in the first year. In Attachment 3, we show the debt payments as presented at the January 13, 2005 meeting. Since that time, we have met with the Local Government Commission and discussed a proposal that would lower the principle payments in the first two years. Our investment banker has suggested that we would be able to establish interest rates that increase over the 20 year period to help reduce debt costs in the first years.
ATTACHMENTS