Debt Service Funds Long-Term Debt and Lease Obligations

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Debt Service Funds

Long-Term Debt and Lease Obligations

 

Provided herein is an overview of long-term debt and lease obligations which addresses the methods used by the City and County of Denver to finance certain capital projects including property and equipment. Included in this overview is information about general obligation and revenue bonds, and lease purchase agreements including certificates of participation.

Any information in this section dated after December 31, 2013 is estimated and unaudited.

Since May 2010, the City’s General Obligation bonds have been rated AAA, the highest bond rating, by all three major national credit ratings agencies. These strong ratings will attract investors and help lower the cost to taxpayers when the City borrows money.

General Obligation Bonds

General obligation bonds are backed by the full faith and credit of the City and are payable from ad valorem property taxes and other general revenues. Except for refunding bonds issued to achieve savings, Denver voters must approve general obligation debt prior to issuance.

Debt Limitations

The City Charter limits general obligation bonded debt, excluding self-supporting water bonds, to three percent of the actual value of taxable property within the City.

The following schedule sets forth the computation of the general obligation debt margin of the City as of August 31, 2014.

Computation of the General Obligation Debt Margin ($ in thousands)

TOTAL ESTIMATED ACTUAL PROPERTY VALUATION $79,131,647

Maximum general obligation debt allowed (3 percent of total valuation) $2,373,949

Outstanding bonds chargeable to limit 867,646

Less amount reserved for long-term debt in fund balance 26,513

Net chargeable to bond limit 841,133

LEGAL DEBT MARGIN $1,532,816

Percent of Charter limit 35.43%

In August 2014, the City issued $12 million of general obligation mini-bonds. Proceeds of the bonds will be used for the Better Denver Bond Projects authorized by the voters in 2007. With the issuance of the mini-bonds, the City has no remaining authorization to issue general obligation bonds.

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Long-Term Debt and Lease Obligations

 

Existing Debt

It is expected that the City’s outstanding general obligation debt as of December 31, 2014 will consist of the following:

Final Maturity Amount

Date Outstanding

2005 Justice System Facilities and Zoo Bonds 2025 3,655,000

2006 Justice System Facilities Bonds 2026 13,265,000

2007 Justice System Facilities (Mini-Bonds) 2022 *8,860,500

2008 Justice System Facilities Bonds 2025 132,830,000

2009A Better Denver and Zoo Bonds 2025 76,735,000

2009B Various Purpose Bonds 2015 2,595,000

2010A Better Denver Bonds (Taxable) 2016 13,560,000

2010B Better Denver Bonds (Build America Bonds) 2030 312,055,000

2010D Better Denver Bonds 2025 34,510,000

2011A Better Denver Bonds 2025 16,455,000

2013A Better Denver & Refunding Bonds 2030 105,175,000 2013B1 General Obligation Refunding Bonds 2025 47,660,000 2013B2 General Obligation Refunding Bonds 2025 88,290,000

2014A Better Denver Mini-Bonds 2028 12,000,000

Total General Obligation Bonds $867,645,500

*Amount outstanding does not include compound interest of $3,269,000.

Indicators Related to General Obligation Debt Burden

Outstanding general obligation debt $867,645,500

Total Estimated Actual Value* $79,131,647,400

Net Assessed Value* $10,589,312,990

Population (US Department of Commerce) 649,495

Ratio of net direct general obligation debt to actual value 1.10% Ratio of net direct general obligation debt to net assessed value 8.19%

Net direct general obligation debt per capita $1,336

*From August 2014 Certification of Valuation by County Assessor

Excise Tax Revenue Bonds

Revenue Bonds are payable from a specific, dedicated source of revenue which does not pledge the full faith and credit of the City. Other than the debt described below, Denver's only other revenue bonds are supported by the Denver International Airport Enterprise Fund. There are no City Charter limitations stipulating maximum revenue bond debt.

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Long-Term Debt and Lease Obligations

 

Existing Debt

The majority of Denver's non-airport revenue bond issues are backed by certain excise taxes (Sales, Occupational Privilege, Facilities Development Admission, and Lodgers' taxes). It is expected that the City's outstanding excise tax bonds as of December 31, 2014, will consist of the following:

Final Maturity Amount

Date Outstanding

2003 Excise Tax Revenue Refunding 2015 2,915,000

2005 Excise Tax Revenue Refunding 2020 114,605,000

2009A Excise Tax Revenue Refunding 2023 73,630,000

Total Excise Tax Bonds $191,150,000

The Series 2003 Excise Tax Revenue Refunding Bonds refinanced at a lower interest rate all of the outstanding excise tax revenue bonds that were issued in 1985 for capital improvements for cultural facilities. The Series 2005 Excise Tax Revenue Refunding Bonds refinanced a portion of the 2001A Series Bonds, which, in addition to the Series 2001B Excise Tax Revenue Bonds, were originally issued to finance expansion and improvements to the Colorado Convention Center. The Series 2009A Excise Tax Revenue Refunding Bonds were issued in May 2009, to refinance the Series 2001B Excise Tax Bonds.

Wastewater Revenue Bonds

In January 2012, the City issued $50,425,000 of Series 2012 Wastewater Revenue Bonds on behalf of the

Wastewater Management Enterprise Fund of the City's Department of Public Works to finance improvements to the City's Storm Drainage Facilities and to refund the remaining $20,350,000 of outstanding Series 2002 Wastewater Revenue Bonds. The bonds are payable solely from revenues derived by the City from the operation of its storm drainage and sanitary sewerage facilities. The bonds mature in 2032, and as of December 31, 2014, $43,425,000 of Wastewater Revenue bonds will remain outstanding.

Golf Enterprise Revenue Bonds

In March 2006, on behalf of the Golf Enterprise of the City's Department of Parks and Recreation, the City issued $7,365,000 of Golf Enterprise Revenue Bonds. The bonds are payable solely from revenues derived by the City from the operation of its golf facilities. The bonds mature in 2020, and as of December 31, 2014, the outstanding principal on the bonds will be $3,485,000.

Lease Purchase Agreements

The City has used lease purchase agreements to facilitate the financing of certain public capital projects and capital equipment. The leases are subject to annual appropriation by the City Council and do not constitute a general obligation or other indebtedness of the City within the meaning of any constitutional, statutory, or Charter debt limitations. The City's obligation to make payments relating to its various leases is contingent upon the City appropriating the rental payments for the then-current fiscal year. In the event of non-appropriation, the lease terminates and the pledged asset is liquidated to the benefit of the lease holders. As of December 31, 2013, the principal portions of base rentals under the lease purchase agreements, not including enterprise funds, were $413,417,000. Of this amount, $407,209,000 was attributable to certificated lease purchase agreements, and $6,208,000 was attributable to non-certificated capital leases. In 2014, the City entered into a non-certificated capital lease for fleet equipment in the amount of $18,763,000.

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Long-Term Debt and Lease Obligations

 

Principal outstanding on COP transactions as of December 31, 2014 is expected to consist of the following:

Final Maturity Amount

Lease Purchase Agreements Date Outstanding

Series 2005A Human Services Center 2020 19,000,000

Series 2008A1-3 Wellington E. Webb Office Bldg. 2029-31 236,275,000

Series 2008B Denver Botanic Gardens 2028 16,665,000

Series 2010A Central Platte Campus 2030 19,410,000

Series 2010B Wastewater Office Building/

Roslyn Maintenance Facility 2021 19,445,000 Series 2012A Denver Cultural Center Parking Garage 2021 8,330,000 Series 2012C1-3 Police Stations and other

Denver Properties 2022-31 *35,291,000

Series 2013A Buell/Jail Dorm Refunding 2023 33,755,000

TOTAL $388,171,000

*Does not include $7,419,000 attributable to Wastewater Management Enterprise Fund

The estimated 2015 payments for all certificated lease purchase agreements, including swap payments associated with the Series 2008A COPs, are $36,534,000. Of the total payments approximately $27,336,000, is paid from the General Fund or Capital Improvement Funds, $6,762,000 from special revenue funds or non-General Fund/capital fund sources, and $2,436,000 from sources outside the City. The $27,336,000 in payments from General Fund and Capital Improvement Funds represents approximately 2.0 percent of the combined projected revenues for those funds.  

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($ in thousands)

2013

2014

2015

Actual

Estimated

Recommended

Financial Resources

Property Taxes $79,102 $86,791 $87,910

Interest Income (251) 721 756

Total $78,851 $87,512 $88,666

Uses of Resources

Bond Principal Payments $47,755 $48,294 $51,970 Bond Interest Payments 44,245 42,745 39,045 Build America Bonds Subsidy (5,700) (5,405) (5,363)

Financial Service Fees 9 9 9

Total $86,309 $85,643 $85,661

Excess of Revenues Over (under) Expenditures ($7,458) $1,869 $3,005

Other Financing Sources(Uses)

General Obligation Bonds Issued $0 $0 $0

Payment to Refunding Escrow 0 0 0

Transfer In 0 0 0

Total $0 $0 $0

Net Increase (Decrease) in Fund Balance ($7,458) $1,869 $3,005

Fund Balance - January 1 50,856 43,398 45,267

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($ in thousands)

2013

2014

2015

Actual

Estimated

Recommended

Financial Resources

Facilities Development Admissions Tax $3,057 $3,054 $3,054

Sales Tax 31,235 33,859 35,823

Lodgers Tax 28,067 33,119 33,781

Interest Income 100 233 243

Total $62,459 $70,265 $72,901

Uses of Resources

Bond Principal Payments $19,325 $20,175 $19,785 Bond Interest Payments 12,248 11,357 10,433

Total 31,573 31,532 30,218

Excess of Revenues Over (under) Expenditures $30,886 $38,733 $42,683

Other Financing Sources(Uses)

Transfers In $0 $0 $0

Transfers Out (29,262) (36,685) (40,951)

Total ($29,262) ($36,685) ($40,951)

Net Increase (Decrease) in Fund Balance $1,624 $2,048 $1,732

Fund Balance January 1 $18,818 $20,442 $22,490

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