City of Bettendorf
Debt Overview
August 25, 2014
1
I. What is City Debt?
2
The City issues debt or borrows money to
finance capital projects or equipment that
cannot be paid for immediately with cash on
hand.
Examples may include:

Infrastructure projects including: new and replacement
streets, bridges, bike paths
Traffic Signals
Sanitary and Stormwater projects
Municipal Facilities, major remodeling projects, salt dome
Land purchases
Fire trucks, garbage trucks

NOT borrowing for day-to-day operating costs like payroll





13
Two types of debt a City can issue:
Municipal Bonds:

Bonds issued by a city or other local governments, or their
agencies for a period of time typically up to 20 years (30 years for
disaster recovery, etc.). Bonds are usually issued to finance large
public capital projects over a longer term.
Loan Agreements and Capital Loan Notes:

Allowed by law, these are treated much the same way as bonds,
but look similar to the type of process a consumer would use in
borrowing money. Loan agreements are often used to finance
public capital projects with a shorter term and are privately
placed, rather than bid.
The purposes for which a government may borrow are
listed in Chapter 384 of the State Code
4
Two Types of Municipal Bonds:
1) General Obligation Bonds:
Bonds for Essential Corporate purposes – such as infrastructure
projects for new street paving, repair or replacement; traffic
signals, sanitary sewers, etc.
 No election required.
Bonds for General Corporate purposes – such as acquisition and
development of park land and construction of municipal facilities.
 Council has authority to issue up to $700,000 without an election.

To issue bonds greater than $700,000 requires an election with 60% voting
in favor.
G.O. Bonds are typically paid through the Debt Levy but may be funded from a
revenue stream such as Sewer Fees, Garbage Fees, Stormwater Fees, Gaming
revenue, etc. However, the bonds are guaranteed by the “full faith and credit” of
the city, if the revenue stream falters. That is, the city guarantees they will be
paid.
5
Two Types of Municipal Bonds, con’t:
2)




Revenue Bonds:
Revenue bonds can be either for essential or general
corporate purpose
Paid ONLY by identifiable revenue streams such as
Sanitary Sewer Fees, Stormwater fees, Garbage fees, 1
cent local option sales tax, gaming revenue, tax
increment revenues, etc (not property tax levy)
Revenue bonds do not count against the City’s 5% debt
limitation as they are NOT guaranteed to be paid by the
City.
As a result of the no guarantee of payment, interest
rates on revenue bonds are generally higher, require
reserves, and coverage ratios. Overall, revenue bonds
are more expensive than General Obligation Bonds.
6
II. What is the Legal Debt Limit
and Bettendorf’s debt level?
7
What is the legal debt limit for Cities in Iowa?
• Under the Iowa Constitution, a city can issue General Obligation
debt, in a total amount, up to 5% of total assessed valuation.
(100% assessed valuation) . There is no levy cap on debt service,
the limit is on the amount of debt.
 Revenue bonds do not count against the 5% cap as they are not
guaranteed to be paid by the City.
 EXCEPT, tax increment revenue bonds and annual TIF rebates,
by decision of the Iowa Supreme Court, must also be included
when looking at the 5% limitation even though they are a
revenue bond; no other revenue bonds count towards the 5% cap.
8
What is Bettendorf’s legal debt limit?
 For FY 2014/15 the City’s legal MAXIMUM debt
limit totals $160,050,504.
 The City will have outstanding debt totaling
$119,605,000 against that maximum limit at June
30, 2015, equating to 74.73% - (Commonly referred
to as Legal Debt Margin Used).
 The City has the legal capacity to issue an additional
$40,445,504, if needed.
9
III. How does our Debt Margin
compare to other Cities?
10
Debt Margin (6/30/13) & Credit Rating Comparison (6/30/14)
City
Population
% of Debt Limit Used
6/30/13
Moody’s Rating
Ankeny
Keokuk
Dubuque*
Bettendorf*
Burlington
Cedar Rapids*
Davenport*
Altoona
Des Moines*
Fort Dodge
Newton
Indianola
Sioux City*
Clive
Waterloo
Johnston
North Liberty
Marshalltown
Ames*
Council Bluffs
Fort Madison
Mason City
West Des Moines
Ottumwa
Muscatine
Clinton
Iowa City
Marion
Coralville
Urbandale
Spencer
Cedar Falls
Pella
45,582
10,780
57,637
33,217
25,663
126,326
99,685
14,541
203,433
25,206
15,254
14,782
82,684
15,447
68,406
17,278
13,374
27,552
58,965
62,230
11,051
28,079
56,609
25,023
22,886
26,885
67,862
34,768
18,907
39,463
11,233
39,260
10,352
81.6
80.9
78.9
77.7
77.2
73.0
72.3
71.2
69.5
68.0
67.5
62.7
61.5
59.2
49.4
47.2
45.8
44.3
40.4
37.3
35.8
35.0
34.8
32.5
28.7
28.2
25.4
23.6
23.2
22.5
18.9
9.9
9.3
Aa2
A2
Aa2
Aa2
A2
Aa1
Aa3
Aa3
Aa2
Aa3
Aa3
Aa3
Aa2
Aa1
Aa2
NA
Aa3
Aa2
Aa1
Aa2
A2
Aa2
Aaa
A1
Aa2
Aa2
Aaa
Aa1
Baa2
Aa1
NA
Aa1
Aa3
11
III. How did our Legal Debt
Margin get to the level it is?
12
Prior to FY 08/09 our legal debt margin had
been in the 50% plus range
1) August 2008 - Issued $13.8 Million TIF
bonds for Waterfront Convention Center
2) FY 09/10 – Planned decision by Council
to issue G.O. Bonds for Sanitary Sewer
and Stormwater projects vs. Revenue
Bonds


Provided significant lower interest rates than Revenue
Bonds – keeping user fees low
Did not require the City to set a side costly capital reserve
accounts or maintain revenue coverage ratios of
115% - 140% of principal and interest payments
13
3) FY 09/10 – Increased Debt Levy $0.50 from
$4.50 to $5.00.



$0.50 was crossed over, reducing the operating levy when
dispatch was consolidated at SECC.
Original plan was to keep Debt Levy at $5.00/$1,000 assessed
value for 10 years.
Timing of increasing the Debt Levy was perfect with market
conditions as:
Interest
rates were at record lows:
Borrowed money has been relatively cheap – (2.56% -4.41% True Interest Costs last 5 years,
6/1/14 3.27% )
 Council has endless list of projects to complete – so it’s been an excellent time to borrow

Bidding



on Projects was very Competitive:
Contractors HUNGRY for business
Again, a good time to bond for projects if you need to
Increasing the Debt Levy by $.50 to $5.00 has allowed the Council
to complete a record $92M in CIP projects over the last 5 years
14
4) FY 13/14 - Bonding for two years vs.
one year to save on issuance costs,
inflated debt margin
 The following chart illustrates how
these four factors contribute to the
Debt Margin
15
City of Bettendorf Debt Margin
10-Year History & 5-Year Projected
100.00%
GO bonds
$0.50 Levy Increase
GO Bonds paid by user fees (Enterprise funds)
GO Bonds paid by TIF
Refunded bonds
90.00%
84.53%
81.96%
2.56%
77.68%
80.00%
72.57%
70.00%
9.91%
72.51%
9.10%
75.04%
1.72%
52.64%
50.00%
5.49%
6.24%
40.00%
50.20%
4.47%
7.36%
51.02%
3.66%
6.57%
2.79%
9.77%
9.57%
11.24%
52.94%
(1)
5.31%
10.02%
5.34%
7.74%
8.85%
10.53%
6.56%
74.73%
5.94%
9.58%
8.56%
6.74%
73.54%
3.24%
4.01%
8.26%
8.42%
6.62%
6.11%
6.02%
5.60%
77.72%
4.98%
69.89%
2.81%
7.15%
5.99%
5.75%
(3)
8.09%
(2)
30.00%
20.00%
9.63%
8.50%
61.72%
60.00%
6.79%
1.90%
59.00%
40.91%
38.37%
40.79%
40.38%
42.39%
FY 2004/05
FY 2005/06
FY 2006/07
FY 2007/08
FY 2008/09
47.78%
48.05%
FY 2009/10
FY 2010/11
50.37%
51.76%
60.66%
55.00%
54.21%
59.60%
53.94%
10.00%
0.00%
FY 2011/12 FY 2012/13
FY 2013/14
FY 2014/15
FY 2015/16
FY 2016/17
FY 2017/18
FY 2018/19
(1) TIF Bonds for Waterfront Convention Center issued August, 2008.
(2) Increased Debt Levy $0.50 from $4.50 to $5.00 July 1, 2010. $0.50 was crossed over, reducing the operating levy when di spatch was consolidated at SECC.
(3) Bonded for two years to save on issuance costs.
16
The $5.00 Debt Levy has allowed for $90.8 Million of
CIP Projects completed in last 5 years including:

















Various Street Improvements: $20 M
Tanglefoot Lane Reconstruction: $5.5 M
Stormwater Projects – various: $5.0 M
Recreation Trails – various: $4.7 M
(60% with Federal Grants)
Hopewell Paving: $4.5 M
Sanitary Sewer Projects – various: $3.8 M
Street Patching: $3.6 M
Belmont Phase 2 Corral-Valley: $3.3 M
18th St Various Reconstruction: $3.2 M
Park Land Acquisition : $2.9 M
Valley Dr Paving: $2.4 M
Park Projects – Various: $2.2 M
Alleys: $2.2 M
Undesignated Street Resurfacing: $1.8 M
Traffic Signals: $1.8 M
Palmer Hills Improvements: $1.8 M
35th St/State to Elm: $1.7 M















Sidewalks: $1.7 M
Field Sike Dr, Park, Bridge: $1.7 M
I 80/Middle Land Acquisition: $1.5 M
Family Museum Renovation: $1.4 M
Various Sealcoating: $1.4 M
Downtown Streetscape: $1.4 M
Library Improvements: $1.4 M
Lincoln Road, various plus bridge: $1.4 M
Alcoa Ave: $1.4 M
PW Maintenance Expansion: $1.3 M
Devils Glen Hopewell to Forrest Grove:
$1.2M
4th Street Paving: $1.2 M
Various Municipal Facilities Improvements:
$1.1 M
Economic Development Including
Downtown Land Purchases: $1.0 M
6th Street Reconstruction: $1.0 M
17
FY 2014/15 Projects: $24.8 M across all funds –
without increasing debt levies

$4.3 million: Forest Grove Road Paving

$850,000: Downtown Improvements

$1.96 million: Sewer Utility Projects

$640,000: Parks Projects

$1.9 million: Various Street Reconstruction

$600,000: Street Resurfacing

$1.5 million: Patching, Sealcoating & Street

$390,000: Traffic Signals, etc.

$345,000: Sidewalk Program

$290,000: Alley Rehabilitation

$265,000: QCWCC Improvements

$250,000: Annual Funding for Parks
Preservation

$1.5 million: Utica Ridge Road

$1.5 million: Recreation & Separated Trails

$1.35 million: Hopewell Paving

$1.35 million: Storm Water Projects

$1.3 million: Forest Grove Park Development

$1.2 million: Library Renovation

$1.1 million: Bridge Maintenance

$950,000: 18th Street Reconstruction
Projects

$145,000: Life Fitness Center

$100,000: Municipal Facilities
Improvements

$55,000: Palmer Hills Golf Course

$50,000: FMAS
18
IV. How does Bettendorf
compare to other cities?
19
FY 14/15 Cost of City Services & Utilities for Typical $165,260 Residence
Including City Property Taxes, Solid Waste Fees, Sewer Fees & Storm Water Fees for a sample of 33 Iowa Cities with
2010 Census populations of 10,000 or More*
2,205
2,151
Des Moines
2,058
Muscatine
2,122
2,054
2,009
Burlington
Iowa City
2,005
Waukee
2,044
2,004
Davenport
Ankeny
2,000
Sioux City
1,975
1,900
Indianola
1,844
Cedar Rapids
1,895
1,838
Storm Lake
Fort Madison
1,837
1,753
North Liberty
1,608
Marion
1,733
1,606
Spencer
Coralville
1,605
Ames
1,675
1,595
West Des Moines
1,642
1,563
Cedar Falls
Dubuque
1,552
Pella
1,638
1,548
Johnston
Carroll
1,533
Altoona
1,273
$1,500
1,494
1,429
$2,000
Newton
$2,500
2,565
*Assumptions: Bettendorf median home value of $165,260, 65
gallon or comparable garbage cart, sewer usage of 7.33 units per
month (733 cu. ft.), and a Storm Water ERU of 1.00. For cities using
private solid waste collection, the cost above reflects rates provided
by private haulers.
--Prepared by Bettendorf finance staff with FY 14/15 tax levies and
service fees from city websites and billing departments as of
7/24/14.
Council Bluffs
$3,000
Ottumwa
Keokuk
Waterloo
Bettendorf
Clive
Urbandale
$500
Mason City
$1,000
$0
Storm Water
Sewer
Solid Waste
Property Tax
20
$200
$400
Ottumwa, 1777.28
Waterloo, 1526.81
Council Bluffs, 1509.67
Keokuk, 1450.42
Des Moines, 1439.08
Davenport, 1427.17
Iowa City, 1420.81
Sioux City, 1391.82
Fort Madison, 1385.87
Burlington, 1355.41
Newton, 1344.59
Muscatine, 1332.94
Cedar Rapids, 1294.17
Mason City, 1178.05
Coralville, 1150.56
Waukee, 1148.20
Marion, 1116.69
Storm Lake, 1107.71
Indianola, 1080.20
Bettendorf, 1067.40
West Des Moines, 1024.87
Spencer, 1020.04
Carroll, 1019.24
Ankeny, 1012.12
Cedar Falls, 1004.49
Johnston, 964.82
North Liberty, 938.35
Dubuque, 937.77
Ames, 923.27
Pella, 867.53
$1,200
Clive, 849.63
$1,400
Altoona, 845.73
Urbandale, 826.70
FY 14/15 Cost of Property Taxes for Median Bettendorf Residence
A sample of 33 Iowa Cities with 2010 Census populations of 10,000 or More*
$2,000
$1,800
$1,600
*Assumptions: Bettendorf median home value of
$165,260.
--Prepared by Bettendorf finance staff with FY 14/15
tax levies.
$1,000
$800
$600
$0
21
$200
$400
Ottumwa, 1492.98
Council Bluffs, 1289.44
Keokuk, 1254.51
Waterloo, 1254.45
Davenport, 1252.81
Newton, 1228.98
Fort Madison, 1215.77
Des Moines, 1108.22
Muscatine, 1087.09
Sioux City, 1077.70
Cedar Rapids, 1069.96
Iowa City, 1069.57
Burlington, 1032.46
Storm Lake, 1015.07
Coralville, 970.23
Cedar Falls, 953.84
Spencer, 937.23
Dubuque, 933.93
Mason City, 930.95
Marion, 922.87
Indianola, 910.09
Carroll, 907.40
Waukee, 865.83
West Des Moines, 854.77
North Liberty, 834.56
Pella, 817.80
Altoona, 812.44
Clive, 723.57
Ankeny, 646.39
Johnston, 644.13
Urbandale, 643.84
$1,400
Bettendorf, 642.14
Ames, 618.62
FY 14/15 Cost of Operating Levy Only for Median Bettendorf Residence
$1,600
A sample of 33 Iowa Cities with 2010 Census populations of 10,000 or More*
*Assumptions: Bettendorf median home value of $165,260.
--Prepared by Bettendorf finance staff with FY 14/15 tax levies.
Current Bettendorf operating (General Fund & Other) Levy = $7.55
$1,200
$1,000
$800
$600
$0
22
$50
$100
Bettendorf, 425.26
Ankeny, 365.72
Iowa City, 351.23
Des Moines, 330.85
Burlington, 322.95
Johnston, 320.69
Sioux City, 314.12
Ames, 304.65
Ottumwa, 284.3
Waukee, 282.37
Waterloo, 272.37
Mason City, 247.11
Muscatine, 245.85
Cedar Rapids, 224.20
Council Bluffs, 220.23
Keokuk, 195.91
Marion, 193.82
Urbandale, 182.86
Coralville, 180.33
Davenport, 174.36
Indianola, 170.11
Fort Madison, 170.10
West Des Moines, 170.10
Clive, 126.06
Newton, 115.61
Carroll, 111.84
North Liberty, 103.78
Storm Lake, 92.64
Spencer, 82.82
Cedar Falls, 50.65
$350
Pella, 49.73
$400
Altoona, 33.29
Dubuque, 3.84
FY 14/15 Cost of Debt Levy Only for Median Bettendorf Residence
$450
A sample of 33 Iowa Cities with 2010 Census populations of 10,000 or More*
*Assumptions: Bettendorf median home value of
$165,260.
--Prepared by Bettendorf finance staff with FY
14/15 tax levies.
Current Bettendorf Debt Levy = $5.00
$300
$250
$200
$150
$0
23
Bettendorf’s Levy Rate per $1,000
taxable valuation – FY 2014/15
General Fund
Levy
$5.44
Strictly
operations
$8.10 cap
Trust & Agency Levy
$1.85
Health Insurance
& Retirement
No cap
Tort Levy
$0.26
Liability
Insurance
No cap
Debt Levy
$5.00
Capital &
Infrastructure
Limited by
amount of debt,
not levy
Total City Levy
$12.5500
•Bettendorf has the lowest General Fund levy rate among 33 comparable Iowa cities with populations of
10,000 or more. Bettendorf is one of very few Iowa cities with a General Fund levy below $8.10. This
allows for future growth capacity of 48%, equating to nearly $5 million of potential property taxes.
•In addition, the City has the ability to levy taxes for: IPERS & FICA ($1.54 million) & Emergency levy
of $0.27 if needed. ($504,000)
•The debt levy does not affect the City’s ability to adjust other levies or fund other activities.
24
$100
Ankeny; 650.49
Waukee; 596.80
Ottumwa; 591.81
Indianola; 582.53
Keokuk; 538.42
North Liberty; 510.78
Altoona; 501.25
Pella; 483.48
Burlington; 443.89
Des Moines; 431.58
Carroll; 431.56
Storm Lake; 406.46
Iowa City; 400.88
Council Bluffs; 395.99
Johnston; 393.72
West Des Moines; 384.53
Sioux City; 382.76
Davenport; 375.98
Clive; 374.86
Dubuque; 368.55
Mason City; 348.93
Newton; 334.31
Coralville; 330.85
Ames; 325.26
Cedar Falls; 318.91
Fort Madison; 317.53
Spencer; 306.30
Muscatine; 306.26
Marion; 275.12
Cedar Rapids; 255.01
Waterloo; 252.88
Urbandale; 248.52
$600
Bettendorf; 227.55
FY 13/14 Cost of Sewer Utility Charges for Typical Bettendorf Residence
A sample of 33 Iowa Cities with 2010 Census populations of 10,000 or More*
$700
*Assumptions: Sewer usage of 7.33 units per month (733 cu. ft.)
--Prepared by Bettendorf finance staff.
$500
$400
$300
$200
$0
25
$50
Ankeny, 315.00
Ames, 315.00
North Liberty, 304.20
Muscatine, 281.16
Storm Lake, 276.00
Dubuque, 264.00
Cedar Rapids, 235.56
Coralville, 228.00
Keokuk, 216
Council Bluffs, 216.00
Indianola, 213.00
Waukee, 208.80
Cedar Falls, 204.00
Pella, 201.48
Ottumwa, 195.6
Spencer, 192.00
Iowa City, 190.80
Sioux City, 183.60
Burlington, 182.40
Fort Madison, 180.00
Urbandale, 174.00
Davenport, 171.84
Bettendorf, 162.24
Waterloo, 162.00
Marion, 159.00
Newton, 158.40
Des Moines, 156
Carroll, 150.96
Clive, 137.40
West Des Moines, 135.00
Altoona, 132.00
$300
Johnston, 129.24
Mason City, 127.20
FY 14/15 Cost of Solid Waste Charges for Typical Bettendorf Residence
A sample of 33 Iowa Cities with 2010 Census populations of 10,000 or More*
$350
*Assumptions: 65 gallon or nearest comparable garbage cart. For cities
using private waste collection, the cost reflects rates provided by private
haulers.
--Prepared by Bettendorf finance staff.
$250
$200
$150
$100
$0
26
$20
Muscatine, 137.40
Des Moines, 123.96
Spencer, 87.96
Dubuque, 71.76
Clive, 67.20
Ankeny, 66.00
Johnston, 60.60
Cedar Rapids, 58.80
Marion, 57.60
Altoona, 54.00
Waukee, 51.00
West Des Moines, 51.00
Storm Lake, 48.00
Iowa City, 42.00
Sioux City, 42.00
Ames, 41.40
Bettendorf, 36.60
Carroll, 36.00
Cedar Falls, 36.00
Waterloo, 33.00
Davenport, 29.04
Burlington, 27.48
Indianola, 24.00
Coralville, 24.00
Urbandale, 24.00
Mason City, 21.00
Fort Madison, 12.00
Ottumwa, 0.00
Keokuk, 0.00
Council Bluffs, 0.00
Newton, 0.00
$140
North Liberty, 0.00
Pella, 0.00
FY 14/15 Cost of Storm Water Utility Charges for Typical Bettendorf Residence
A sample of 33 Iowa Cities with 2010 Census populations of 10,000 or More*
$160
*Assumptions: Storm Water ERU of 1.00
--Prepared by Bettendorf finance staff.
$120
$100
$80
$60
$40
$0
27
How do we compare?
 In Summary,

Pleased to report that our overall cost of city services ranks 3rd
lowest among the 33 comparable cities.
28
V. Budget FY 15/16: Where do we
go from here?
29
As we enter goal setting with LYLE, need 3 decision
points from Mayor & Council:
1) Establish future level of debt for the City:

Stay the course with the debt levy at $5.00?
 FY 14/15 is the sixth of the planned ten years
 Continue “aggressive” plan of improving arterial streets like Middle Rd
 Accept that Debt Margin Ratio will continue to be higher than 50% for approximately the next
15 years

Or, determine a reduced “target” debt margin ratio which will drive future available CIP $
 Begin reducing $1 Million of annual bonding
 SKIP one or two years of bonding for CIP Projects EXCEPT patching
 Refinance Sewer and Stormwater GO bonds with Revenue bonds (more costly)
2) Identify plans for future WOW projects that may require significant bonding and
utilize a portion of our available debt margin




3)
Determine Future Bonding Schedule:



I-80 Development
Sports Complex
New recreational facility/Pool
Riverfront Development Project
Annual vs. 2 year bonding
Fall bonding vs. Spring bonding
These three decisions will drive staff’s recommendation on CIP for FY 15/16
30
Calendar
 Lyle Sumek GOAL SETTING:
Tuesday, September 2nd: One-on-One phone interviews with Mayor &
Council
 Friday, October 3rd: Department Heads and Mayor & Council
 Saturday, October 4th: Mayor & Council and City Administrator

 5 Year CIP:
Compilation by Department Heads, following Lyle thru 11/15/14
 Council Review late November – December 2014
 Adopt CIP by resolution: January 2015
 CIP bid letting Jan/Feb/March

 Operating Budget:
Distribution to Department Heads for requests, October 15
 Council Review February 2015, Adoption March 15, 2015
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31
Questions?
32