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Strategic Plan Discussion, Capital Funding and Debt Policy, November 5, 2013
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Strategic Plan Discussion
Capital Funding and Debt Policy
November 5, 2013
Martin Lyons Asst. City Managerwww.cityofevanston.org
Current City Financial Policies
• Fund Reserve Policies– General – Water– Sewer– Parking
• Budget Policies– Pages 35-44 of 2013 Budget– Covers Timetable, Processes, etc
• Debt Policy– Covers Debt Limit– Provides definitions of debt
City Debt Background
• City has historically been Aa1 or Aaa rated– Solid Property Tax Base– Home Rule– Consistent Payment Record and Management
• City has used alternative debt forms– General Obligation Bonds– Revenue Bonds– Variable Bonds– IEPA Loans– Lines of Credit
• PENSION DEBT
Five Year History of Debt
• Why Five Years?– Everything changed in 2008 in Debt World– City adopted new approach to Pension Funding
– Does not include other debt (e.g. IEPA Loans)
Fiscal Year Total Bond Debt Total Pension DebtTotal Bond and Pension Debt
FY 2003-04 $ 190,740,000 $ 78,939,178 $ 269,679,178
FY 2008-09 $ 174,110,000 $ 187,712,291 $ 361,822,291
FY 2009-10 $ 151,470,000 $ 203,246,731 $ 354,716,731
FY 2010-11 $ 153,535,000 $ 168,243,070 $ 321,778,070
FY 2011 $ 157,695,000 $ 173,913,528 $ 331,608,528
FY 2012 $ 154,159,999 $ 177,493,388 $ 331,653,387
City Debt Comparison Detail - 2013
GO Other Total G.O. Debt to
EAVTotal Debt to EAV
Municipality EAV Debt Debt Debt Ratio Ratio
ARLINGTON HEIGHTS
3,399,641,981 $59,185,000 0 $59,185,000.00 1.74% 1.74%
AURORA 3,598,534,505 $147,040,000 $69,378,000.00 $216,418,000.00 4.09% 6.01%
DES PLAINES* 2,184,333,304 $64,365,000 $7,649,272.00 $72,014,272.00 2.95% 3.30%
ELGIN 2,356,508,821 $106,322,872 $106,322,872.00 4.51% 4.51%
HOFFMAN ESTATES
1,878,266,056 $105,020,000 $73,353,944.00 $178,373,944.00 5.59% 9.50%
JOLIET 2,676,345,255 $8,500,000 $57,417,998.00 $65,917,998.00 0.32% 2.46%
NAPERVILLE 6,072,976,994 $164,580,000 $164,580,000.00 2.71% 2.71%
PALATINE 1,987,066,782 $109,495,809 $116,859,000.00 $226,354,809.00 5.51% 11.39%
SCHAUMBURG 4,049,712,606 $289,575,000 $289,575,000.00 7.15% 7.15%
SKOKIE 2,561,731,480 $40,549,983 $16,449,476.00 $56,999,459.00 1.58% 2.23%
WAUKEGAN 1,442,086,224 $92,479,003 $10,045,000.00 $102,524,003.00 6.41% 7.11%
WILMETTE 1,869,928,027 $71,095,000 $2,712,695.00 $73,807,695.00 3.80% 3.95%
EVANSTON 2,727,367,573 $152,644,999 $72,485,368.00 $225,130,367.00 5.60% 8.25%
AVERAGE 3.86% 5.41%
City Debt Comparison 2010-13
GO Other Total
G.O. Debt to EAV
Total Debt to EAV
EAV Debt Debt Debt Ratio Ratio
2013 Average $2,839,761,003 $104,850,639 $39,318,376 $134,339,421 3.86% 5.41%
2013 Evanston $2,727,367,573 $152,644,999 $72,485,368 $225,130,367 5.60% 8.25%
GO Other Total
G.O. Debt to EAV
Total Debt to EAV
EAV Debt Debt Debt Ratio Ratio
2010 Average $3,677,127,906 $106,603,916 $22,752,571 $121,772,296 2.90% 4.15%
2010 Evanston $2,938,397,892 $174,110,001 $104,020,223 $278,130,224 5.93% 9.47%
Current Govt and Business Bonds
Future Considerations/Strategy
• City Pension Funding will require continued high funding levels.
• City Infrastructure (roads, water mains, sewer lines, etc) are on minimum replacement schedules currently – difficult to stretch any further.
• City Facilities in need of repair and/or replacement which will increase debt or current revenues to fund.
• To address both Capital needs, debt will still be needed.
Basic Capital Funding Strategy
• Split capital funding into two categories• Infrastructure systems moved gradually to
current revenue or “pay as you go” funding.• Facilities maintenance/ongoing upkeep also
covered through current revenues.• Facilities renovation/replacement funded
through long-term debt issuance.• Grants, and all other revenue will be
aggressively pursued.
Current Debt Plus Capital Improvements “Pay as You Go”
--
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Fiscal and Calendar Year Ending December 31st
CapitalImprovements2013A (Abated)
Abated DebtService2013A (Levy)
Sources of “Pay as You Go”
• Gradual reduction of bond issuance, with difference in Debt Levy becoming a new Capital Levy.
• One-time Revenues.– Used as reserve set aside for future facilities
replacement– Used to “catch up” on infrastructure replacement– Not used as a replacement for other revenue
sources.• Increasing ratio of Capital expenses compared to
Operating expenses without increasing revenues.• New Revenues or increases in the rates of current
revenues, dedicated to Capital Funds only.
Implementation
• Gradual reduction of bond issuance, with difference in Debt Levy becoming a new Capital Levy.
• Gradual Increase in new capital revenue sources.
• Mix of Debt and “Pay as you Go” funding.
Projected Debt Service Debt and Capital Levy
--
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Fiscal and Calendar Year Ending December 31st
Levy Suported Debt Service 2013A (Levy)
Abated Debt Service 2013A (Abated)
Pay as You Go Debt ServiceLevel New Capital Levy-No Debt
Projected Debt Service Debt Only Funding for Capital
--
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Fiscal and Calendar Year Ending December 31st
Levy Suported Debt Service 2013A (Levy)
Abated Debt Service 2013A (Abated)
Debt only
15
Comparison of Debt Service vs. Debt Service and Capital Levy
Next Steps
• Update Inventory of Facilities/Needs– Current Facilities Status Report– Utilization by Facilities
• Prioritization• Determine if alternatives exisit
• Update Infrastructure Replacement Schedules– Roadway/Sidewalk/Alley– Trees– Water/Sewer/Parking
Next Steps
• Reconcile Funding and Replacement Schedules– Compare City’s resources with Industry Best
Practices– Integrate results with Operating/staffing
needs• Engage Evanston – Prior to 2015 Budget
Process, provide findings.• Create Policy and Procedures to Guide future
Budget and Long Term Financial Plans.
QUESTIONS?