Minutes 03/22/2021 - Laserfiche WebLink

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March 22, 2021 Tax-Supported Debt Policies Pursuant to Virginia tax code limitation on the amount of outstanding bonds; subject to §§ 15.2-2601 and 15.2-2635, no municipality may issue any bonds or other interest-bearing indebtedness which, including existing indebtedness, at any time exceeds 10% of the assessed valuation of the real estate in the municipality subject to taxation, as shown by the last preceding assessment for taxes. The City has a total tax supported debt of $400.2 million as of June 30, 2020: $264.4 million for general capital needs, and $146.7 pension obligation bonds. Tax-supported debt is repaid by general tax revenues. The city has three components to its tax-supported debt policies: Tax-supported debt service should be less than or equal to 10% of revenues; tax-supported debt should be less than 10% of the market value of the taxable property; at least 50% of debt principal should be repaid within 10 years of issuance. As noted below, the City is expected to exceed its 10% limit on debt service by 2024. It should also be noted that the city has $135.7 million in Public Utility debt, for a total city debt load of $535.9 million as of June 30, 2020. Debt service payments for FY22 equate to $42,874,549, which represents a $2.4M increase from prior year. Capital Improvement The Capital Improvement Program (CIP) is a five-year plan, FY 2022–2026, that addresses the procurement and construction of capital assets and rehabilitation and replacement of infrastructure needs. The CIP’s first year is the only appropriated year, and subsequent years provide a plan for addressing future infrastructure needs with projected expenditures and resources. Capital planning is critical to water, sewer, transportation, sanitation, stormwater drainage, and other public services. It is also an important component of the city's economic development program and strategic plan. The CIP development team reviewed and examined over 100 existing and future capital projects, which align with the City’s financial policies. In developing the CIP program, the city reviewed with our financial advisors, current and future debt service cost, and the ability to cash finance projects. Strategic recommendations have been made on the use of debt and use of fund balance to cash finance projects. The Capital Improvement Plan is constrained in meeting major capital needs of the city due to limited revenues and limited debt capacity. The use of unassigned fund balance for capital projects is appropriate and within the city’s financial policy guidelines. The city’s financial advisor recommends continuing detailed multi-year financial capital planning and modifying the city's fund balance policy to: Dedicate a portion of year-end surplus – if any – to a dedicated capital fund; and Work to identify on-going revenue sources for cash funding of capital projects in lieu of continued draw-down of unassigned fund balance and reliance on debt. Consider placing more cash into the retirement system or the OPEB liability to reduce its burden on the city. With the planned use of $2,540,500 of General Fund balance in FY 2022, fund balance at June 30, 2022 is estimated to be 24.0% of FY 2022 General Fund revenues. Highlighted Ongoing CIP Projects FY 2022 Capital Budget - $27.8 million, supported by $13.6 million in general obligation bonds, $9.7 million cash from several different funds and $4.5 million in federal and state grants. FY 2022–2026 CIP - $265.9 million, supported by $23.4 million in general obligation bonds, $182.2 million in public utility revenue bonds, $52.3 million cash and $8.0 million in federal and state grants.  Old Towne Water Pump Station  Churchland Bridge Replacement  City Fiber Network  City Park Upgrades  Children’s Museum Elevator Replacement