KEEPING YOUR
FINANCIAL
SCORECARD
Jenny Blankenship, CPA
The PFM Group
Handouts and presentation are available online at
www.iowaleague.org
Session Description
Keeping Your Financial Scorecard
The council needs to do financial planning,
but where do you start?
This session outlines some tools available
to help councils better understand the
city’s financial condition and how to plan
for major projects.
2
Outline
 Understanding Your City’s Current Financial Condition
 Capital Planning Considerations
 Making the Decision to Borrow
 Municipal Funding Sources (Internal and External)
 Financing Infrastructure for Cities
 Bonding Options
 Post-Issuance Responsibilities
3
Financial Planning at its Best…
4
UNDERSTANDING YOUR CITY’S
CURRENT FINANCIAL CONDITION
Financial Health Considerations
 Stability of current tax base
– Diverse larger taxpayers?
– Stable home values?
 General Fund
– Revenues keeping pace with expenses
– Operating surpluses or deficits
– Current unreserved cash balance as a percentage of revenues
 City’s Current Constitutional Debt Limit
– State of Iowa: 5% of current fiscal year 100% Actual Valuation
 Existing Debt
– General Obligation Debt
• Current debt service levy tax rate
– Enterprise Fund Revenue Debt
• Current revenue bond covenant requirements (debt service coverage ratios,
debt service reserve fund, improvement fund, etc.)
6
Financial Health Considerations Cont’d
 Tax Increment Financing Districts
– District valuation growth
– District sunset
– Outstanding obligations (debt, rebate agreements, etc.)
– Current cash balance
 Enterprise Funds
– Current unreserved cash balance as a percent of O & M
• 4-6 months of operating expenses or approximately 50% of O & M expenses
– Debt service coverage requirements
• SRF loans (1.10x coverage)
• Varies for revenue bonds (1.10x - 1.30x coverage)
7
CAPITAL PLANNING
CONSIDERATIONS
Capital Planning Considerations
 Identify the optimal match of revenue sources with
funding needs
 Maximize the revenues available for funding capital
projects
 Maximize the amount of projects which can be
funded
 Provide the flexibility to accommodate changes in
the actual capital needs or funding sources
 Preserve the capacity to fund additional capital
projects beyond the planning period
 Achieve the lowest cost of capital
9
Creating a Capital Improvement Plan
 Use all information gathered (Road, Sewer, Water, Storm, etc)
 Think about what is driving the timing of the improvements
– Condition of the street?
– Condition of the underground utilities?
– Budget?
 Use rankings to develop priorities
 Evaluate annual budget based on priorities
 Other Considerations
– Public Input, Politics, Funding, Other…
 Once created, the Capital Improvement Plan should:
– Guide decisions for a minimum of 5 years
– Include long range needs - 20 years & out
– Be evaluated annually
10
MAKING THE DECISION TO
BORROW
Pay-As-You-Go vs. Debt Financing
Pay-As-You-Go
Debt Financing
• Construction or acquisition as
revenues become available
• Construction or acquisition
as needed
• Current users bear cost
• Reduced current payments
• Construction/acquisition
capacity limited to available
revenues
• Current and future users
bear cost
• Lower total cost
• Enhanced construction/
acquisition capacity
• Political and economic climate
considerations
• Useful life of assets
financed
12
MUNICIPAL FUNDING SOURCES
Internal Municipal Funding Sources
 Property Taxes
–




Debt Service Levy
Local Option Sales Tax Revenues
Special Assessment Revenues
Urban Renewal Revenues
Utility Revenues
–
Water, Sewer, Stormwater, Electric, Gas or Communications
 Road Use Taxes
 Franchise Fees
 General Obligation Bonding
–
Bonding options will be discussed later in more detail
 Revenue Bonding
–
Bonding options will be discussed later in more detail
14
External Funding Sources
 Iowa Finance Authority
 Community Development Block
Grants (CDBG)
 Federal earmarks
 USDA Rural Development
– Grants and loans
 Source for other grant opportunities
– Iowa Grants Enterprise Management
System (GEMS) http://www.iagems.gov
15
FINANCING INFRASTRUCTURE
FOR CITIES
General Considerations for Issuing Debt
 Start planning the financing early in the process
–
Leave time to set and hold public hearings and for other procedural steps
 General Obligation Debt Capacity
–
5% of the 100% Assessed Valuation
–
General obligation, TIF revenue, local bank loans, leases and rebate
agreements count against the debt limit
–
Revenue debt does not count against the debt limit
–
Annual appropriation debt
• Only current fiscal year debt service payments that have been appropriated count
against the debt limit
 Debt service levies are unlimited
 May combine legal authorities
–
Larger bond issue may sell better
–
Consult with your Bond Counsel
 Cumulative effect of debt
–
Look at long-term forecasting
–
Wrap proposed debt around outstanding debt
17
General Considerations for Issuing Debt (Cont’d)
 Term of debt
–
–
–
Shorter debt can result in a better interest rate and rating
Current outstanding debt
Future planned debt
 Reimbursement resolutions
–
Do not need one to cover preliminary costs
• Preliminary costs incurred prior to the commencement of construction that
do not require a reimbursement resolution include engineering, surveying,
soil testing, reimbursement bond issuance and similar costs
• Land acquisition, site prep and similar costs incident to commencement of
construction are excluded
–
–
–
Limited to 20% of bond issue
Look back window is 60 days
Reimbursed within the later of 18 months after you expended or 18 months
after the construction is complete but no later 3 years
Do not begin spending money without consulting with your
bond counsel and financial advisor first.
18
General Considerations for Issuing Debt (Cont’d)
 Bond ratings are important
–
Smaller communities are now being rated
–
Pricing difference between non-rated and ‘A’ is, on
average, around 25 bps
Many issuers are obtaining
ratings for the first time and
are receiving pricing benefits
that far outweigh the cost of
obtaining a rating.
• 25 bps equals approximately $15,290 in savings on a
$1 million bond over ten years
–
Rating Criteria include:
• Economic data; financial policies & practices; debt
management; and administration
A1 vs. Non Rated Credit Spread Over MMD Aaa
1.00%
0.80%
15 bps
0.60%
0.40%
21 bps
54 bps
0.20%
0.00%
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
-0.20%
A1 Rated City (Priced June 6, 2011)
Non Rated City (Priced May 3, 2011)
19
Competitive vs. Negotiated Sale
Competitive Sale
 Simple or well-known bond
structure
Negotiated Sale
• Complex bond structure
• Volatile market conditions
 Stable market conditions
• Variable rate debt
 Fixed Rate Debt
 Typically has lower gross
spread for underwriting costs
 Prices obtained offer potential
bidders equal opportunity and
yields the lowest price for the
Issuer
• Typically has higher gross
spread for underwriting costs
• Leaves room for criticism as
to not receiving the best
available rates for the Issuer
20
BONDING OPTIONS
General Obligation Bonds
 Authority found in Division III of Chapter 384 of Code of Iowa
 Backed by general credit and taxing powers of governmental entity
 Counts against general obligation debt capacity
 Must levy a debt service levy unless other abatements are available, for
example:
– Utility revenues; special assessments; local option sales tax revenues;
road use tax fund revenues; or urban renewal revenues
• More secure credit structure
• Requires taxing authority
• 60% voter approval required (depending on the project)
• Property tax based
22
Sample General Obligation Debt Capacity
Sample City, Iowa
Projection of G.O. Debt Capacity
Valuation Growth &
Debt Limit Assumptions
Beginning 2012-13
3.50%
Legal Limit
5.00%
Effective Limit
90%
EXISTING DEBT ISSUES SUBJECT TO DEBT LIMIT *
Fiscal
Actual
Year
Valuation
Gross
Effective
Debt Limit Debt Limit
Proposed
2012-2025
G.O .
G.O ./REV
G.O .
Equip
Rebate
Lease
G.O . TIF
G.O . Debt
- TAXES
- TIF
- ENT
Notes
Agrmt
Purchase
11/2011
TAXES
Available
Percent
Effective
/Debt Gross
Fiscal
G.O . DEBT Capacity
Debt Limit
Year
TO TAL
FY 2007-08
703,735,086 35,186,754 31,668,079 13,215,000
10,205,000
2,070,177
83,926
457,632
0
26,031,734
5,636,345
73.98% FY 2007-08
FY 2008-09
869,228,079 43,461,404 39,115,264 12,420,000
11,705,000
1,871,333
84,008
853,530
71,066
0
27,004,937 12,110,326
62.14% FY 2008-09
FY 2009-10
957,165,252 47,858,263 43,072,436 13,012,000
13,493,000
3,405,323
44,973
879,016
81,716
0
30,916,028 12,156,408
64.60% FY 2009-10
FY 2010-11 1,012,290,926 50,614,546 45,553,092 11,870,000
12,470,000
3,201,246
10,845
859,806
67,523
0
28,479,420 16,033,672
58.32% FY 2010-11
FY 2011-12 1,047,721,446 52,386,072 47,147,465 10,426,000
11,334,000
2,883,770
712,825
53,310 10,425,000
1,040,000
36,874,905
9,232,560
72.38% FY 2011-12
FY 2012-13 1,084,391,697 54,219,585 48,797,626
8,904,000
10,161,000
2,559,686
212,139
39,097
9,470,000
2,080,000
33,425,923 14,406,704
63.43% FY 2012-13
FY 2013-14 1,122,345,406 56,117,270 50,505,543
7,319,000
8,951,000
2,223,934
90,950
24,883
8,500,000
3,045,000
30,154,767 19,465,776
55.31% FY 2013-14
FY 2014-15 1,161,627,495 58,081,375 52,273,237
5,704,000
7,691,000
1,876,450
7,515,000
3,930,000
26,716,450 24,751,787
47.38% FY 2014-15
FY 2015-16 1,202,284,458 60,114,223 54,102,801
4,584,000
6,386,000
1,636,450
6,510,000
4,735,000
23,851,450 29,526,351
40.88% FY 2015-16
FY 2016-17 1,244,364,414 62,218,221 55,996,399
3,420,000
5,035,000
1,391,450
5,485,000
5,460,000
20,791,450 34,564,949
34.45% FY 2016-17
FY 2017-18 1,287,917,168 64,395,858 57,956,273
2,470,000
3,815,000
1,136,450
4,440,000
6,100,000
17,961,450 40,479,823
27.14% FY 2017-18
FY 2018-19 1,332,994,269 66,649,713 59,984,742
1,755,000
2,905,000
871,450
3,375,000
6,655,000
15,561,450 46,033,292
20.93% FY 2018-19
FY 2019-20 1,379,649,068 68,982,453 62,084,208
1,015,000
1,950,000
826,450
2,280,000
7,125,000
13,196,450 51,552,758
15.27% FY 2019-20
FY 2020-21 1,427,936,786 71,396,839 64,257,155
395,000
950,000
781,450
1,155,000
7,505,000
10,786,450 57,110,705
10.01% FY 2020-21
FY 2021-22 1,477,914,573 73,895,729 66,506,156
140,000
215,000
736,450
7,795,000
8,886,450 62,159,706
5.88% FY 2021-22
FY 2022-23 1,529,641,583 76,482,079 68,833,871
0
0
691,450
7,990,000
8,681,450 65,512,421
4.34% FY 2022-23
FY 2023-24 1,583,179,039 79,158,952 71,243,057
0
0
646,450
8,090,000
8,736,450 68,606,607
3.33% FY 2023-24
601,450
8,090,000
8,691,450 71,700,114
2.49% FY 2024-25
FY 2024-25 1,638,590,305 81,929,515 73,736,564
23
Sample Tax Analysis
Sample City, Iowa
Debt Service Fund
Projection of Debt S ervice Levy & Tax Rate Impact
Tax Rate Impact Summary
Tax Valuation Growth Rate FY 09-10
11.25%
Tax Valuation Growth Rate FY 10-11
6.84%
Tax Impact FY 07-08
Tax Valuation Growth Rate FY 11-12
6.21%
Tax Impact FY 08-09
$0.00000
Tax Valuation Growth Rate starting FY 12-13
5.50%
Tax Impact FY 09-10
($0.00004)
Tax Impact FY 10-11
$0.00000
Current
Road
Golf
Course
G.O .
Total
G.O . *
$0.00000
O ther
Fiscal
Total Tax
Taxes
Tax Rate/
Use
O ther
Year Payable
Valuation
Levied
$1,000
Funds
Moneys
2007 - 2008
383,146,177
1,272,061
3.32004
32,308
34,453
1,338,822
1,231,466
61,441
4,692
1,297,598
7,490
48,713
237,015
285,728
2008 - 2009
464,448,647
1,541,988
3.32004
13,429
49,375
1,604,792
1,511,729
61,441
3,900
1,577,070
(59,008)
(31,286)
285,728
254,442
2009 - 2010
516,692,253
1,715,418
3.32000
0
93,701
34,985
1,844,104
1,536,971
61,441
2,800
1,601,212
45,207
288,100
254,442
542,542
2010 - 2011
552,050,508
1,832,808
3.32000
48,728
(12,179)
35,000
1,904,357
1,838,994
61,441
4,800
1,905,235
(878)
542,542
541,663
2011 - 2012
586,337,116
1,946,639
3.32000
23,700
12,700
35,000
2,018,039
1,876,710
61,441
4,800
2,045,461
(27,421)
541,663
514,242
2012 - 2013
618,585,657
2,053,704
3.32000
23,172
12,700
35,000
2,124,576
1,895,872
61,441
4,800
2,168,516
(43,940)
514,242
470,302
2013 - 2014
652,607,869
2,166,658
3.32000
23,644
12,700
35,000
2,238,002
1,878,551
61,441
4,800
2,253,488
(15,486)
470,302
454,816
2014 - 2015
688,501,301
1,760,057
2.55636
12,700
35,000
1,807,757
1,332,126
61,441
4,800
1,807,757
0
454,816
454,816
2015 - 2016
726,368,873
1,868,940
2.57299
12,700
35,000
1,916,640
1,336,916
61,441
4,800
1,916,640
0
454,816
454,816
2016 - 2017
766,319,161
1,714,873
2.23781
12,700
35,000
1,762,573
1,080,574
61,441
4,800
1,762,573
0
454,816
454,816
2017 - 2018
808,466,715
1,544,130
1.90995
12,700
35,000
1,591,830
809,614
61,441
4,800
1,591,830
0
454,816
454,816
2018 - 2019
852,932,384
1,644,838
1.92845
12,700
35,000
1,692,538
807,399
61,441
4,800
1,692,538
0
454,816
454,816
2019 - 2020
899,843,665
1,596,621
1.77433
12,700
35,000
1,644,321
658,905
61,441
4,800
1,644,321
0
454,816
454,816
2020 - 2021
949,335,067
1,309,662
1.37956
12,700
35,000
1,357,362
269,496
61,441
4,800
1,357,362
0
454,816
454,816
2021 - 2022
1,001,548,495
1,253,642
1.25170
12,700
35,000
1,301,342
144,900
30,721
4,800
1,301,342
0
454,816
454,816
2022 - 2023
1,056,633,663
1,179,022
1.11583
12,700
35,000
1,226,722
4,800
1,226,722
0
454,816
454,816
2023 - 2024
1,114,748,514
1,179,022
1.05766
12,700
35,000
1,226,722
4,800
1,226,722
0
454,816
454,816
2024 - 2025
1,176,059,682
1,179,022
1.00252
12,700
35,000
1,226,722
4,800
1,226,722
0
454,816
454,816
2025 - 2026
1,240,742,965
1,179,022
0.95025
12,700
35,000
1,226,722
4,800
1,226,722
0
454,816
454,816
Abatement Resources Debt Service
Golf
Fiscal
Total
Sources
Surplus
Beginning
Ending
Course
Fees
Uses
/ (Uses)
(Deficit)
Balance
Balance
24
Revenue Bonds
 Authority found in the Code of Iowa
–
Chapter depends on revenue source
 Does NOT count against general obligation debt limit (with the exception of TIF
Revenue Bonds)
 Debt to be paid solely by the revenues of the system or the source for which
the debt is being issued
– Utility revenues (water, sewer, storm water, etc.); Local Option Sales
Tax revenues or urban renewal revenues
• Backed by specific revenue stream
• Matches sources of payment for bonds to the project financed
• Users pay cost of project and financing
• Variety of revenues could be pledged to pay debt service
• Covenants could limit bonding capacity
25
Urban Renewal Bonds (TIF)
 Authority found in Division III of Chapter 384 and Chapter
403 of Code of Iowa
– Must have an urban renewal area set up before project is started
and project must be located within the area
– Must publish notice of proposed debt issuance and hold a
meeting to take action
– Must receive any oral or written objections, after which the City
may either proceed with debt issuance or abandon the proposal
– Decision may be appealed to local district court within 15 days
26
Sample TIF Cashflow
Sample City, Iowa
Projection of Tax Increment Revenues
FY 10-11 Tax Rates
Central TIF
District No. 55555
Fiscal
Year
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
-
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
City
County
School District
Comm College
Other
Tax Rate
0%
Assumptions:
Growth in Tax Increment Valuation
Total
Taxable
Valuation
Net
Change in
Tax
TIF
Valuation Increment Valuation
Tax
Rate
0
654,569
604,078
1,159,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
32.21997
31.79308
31.79308
31.79308
31.79308
31.79308
31.79308
31.79308
31.79308
31.79308
31.79308
31.79308
31.79308
31.79308
31.79308
31.79308
31.79308
31.79308
31.79308
31.79308
0
654,569
604,078
604,078
1,159,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
555,581
2,060,000
Central TIF District Sunset: December 31, 2029
0
654,569
604,078
1,159,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
3,219,659
City
TIF
Revenue
20,811
19,206
36,869
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
$1,714,694
11.82106
4.70129
11.35453
0.56008
3.35612
31.79308
Total
Rebate
Revenues Agreements
20,811
19,206
36,869
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
102,363
Proposed
Series
Transfers
2016
Out
18,960
39,768
80,000
30,000
32,747
32,747
32,747
98,276
108,564
107,064
110,377
108,377
111,145
108,476
110,484
107,019
108,338
109,291
109,841
Total
TIF
Expense
18,960
39,768
112,747
62,747
32,747
98,276
108,564
107,064
110,377
108,377
111,145
108,476
110,484
107,019
108,338
109,291
109,841
Annual
Surplus/
(Deficit)
Ending
Cash
Balance
20,811
246
(2,899)
(10,384)
39,616
69,616
4,087
(6,201)
(4,701)
(8,014)
(6,014)
(8,782)
(6,113)
(8,121)
(4,656)
(5,975)
(6,928)
(7,478)
102,363
0
20,811
21,057
18,158
7,774
47,390
117,006
121,093
114,892
110,191
102,177
96,163
87,381
81,268
73,147
68,491
62,516
55,588
48,110
150,473
$98,241 $1,297,248 $168,728 $1,564,216 $129,662
27
Local Option Sales Tax Bonds
 Authority found in Chapter 423B of
Code of Iowa
 May be issued as General Obligation
or Revenue Bonds
– Bonds can only be issued for the
purposes described in the ballot
– Bonds cannot be issued for the portion
of tax revenues designated for property
tax relief
28
Sample Local Option Sales Tax Cashflow
Sample City, Iowa
Summary of Local Option Sales Tax Receipts Cashflow
(Information below is presented on a calendar year basis given the City will be collecting January 1, 2004 through December 31, 2013)
Calendar Tax Beginning
Year
Year Balance
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
1
2
3
4
5
6
7
8
9
10
11
$0
24,455
30,020
54,485
79,300
101,335
126,950
152,910
180,700
207,390
234,790
Total Local
Option Tax
$563,750
615,000
615,000
615,000
615,000
615,000
615,000
615,000
615,000
615,000
0
0.0%
Other
Interest
Revenue
Income or Proceeds
$0
0
0
0
0
0
0
0
0
0
0
$0
0
0
0
0
0
0
0
0
0
0
$4.500 Mil
Revenue
Bonds
Total
Revenue
$563,750
615,000
615,000
615,000
615,000
615,000
615,000
615,000
615,000
615,000
0
Reserved
Pay-asyou-go
G.O.
Expenses Abatement
($64,295)
(584,435)
(590,535)
(590,185)
(592,965)
(589,385)
(589,040)
(587,210)
(588,310)
(587,600)
0
$0 ($475,000)
0
(25,000)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
($5,363,960)
$0 ($500,000)
$0
0
0
0
0
0
0
0
0
0
0
Total
Expenses
($539,295)
(609,435)
(590,535)
(590,185)
(592,965)
(589,385)
(589,040)
(587,210)
(588,310)
(587,600)
0
S urplus/
(Deficit)
$24,455
5,565
24,465
24,815
22,035
25,615
25,960
27,790
26,690
27,400
0
Ending
Balance
$24,455
30,020
54,485
79,300
101,335
126,950
152,910
180,700
207,390
234,790
234,790
Revenue Total
Coverage Coverage
Ratio
Ratio
8.77
1.05
1.04
1.04
1.04
1.04
1.04
1.05
1.05
1.05
n/a
8.77
1.05
1.04
1.04
1.04
1.04
1.04
1.05
1.05
1.05
n/a
** -Tax implemented on January 1, 2004 for ten years expiring December 31, 2013.
Resolution No. 0309
Capital Projects
Property Tax Relief
75%
25%
29
Utility Revenue Bonds
 Authority found in Division IV of Chapter 384 of Code of Iowa
 Repaid by revenues of utility
–
–
–
–
–
–
Water
Sewer
Stormwater
Electric
Gas
Communications
 Utility revenue debt requires issuer to establish
covenants
–
–
–
Debt service reserve fund
User rates
Parity Test
 Not general obligation debt and does not count against the general
obligation debt capacity
30
Revenue & Rate Analysis
Considerations
 Usage
 Structure of rates
– Base rates
– Usage only
 Growth of current expenses
 Debt service coverage
– 1.10x required for SRF
– Minimum 1.30x recommended
for revenue bonds
 Capital outlays
– Pay-go
– Bonding
 Other transfers
– General fund, etc.
 Ending Cash
– 50% of O & M
– 4-6 months of reserves
31
State Revolving Fund
Types of Loans:
 Planning and Design Loans
–
–
0% for up to 3 years
Can be rolled into SRF Loan or paid with
permanent financing
 Construction Loans
–
–
3% interest rate
Origination fee of 1% + 0.25% servicing fee
 SRF Source Water (SWP) Protection
–
–
–
–
0% interest rate
Up to 20 years
For purchase of land or easements, or to fund
SWP practices
Based on approved SWP plan
 Types of projects for SRF Nonpoint Source Loans
–
–
–
–
Stormwater best management practices
Brownfield cleanup
Landfill closure
Others
32
State Revolving Fund, Cont.
SRF Loan Programs:
 Clean Water SRF
– Loans for the following types of projects
• Publicly owned wastewater treatment
facilities
• Sewer system rehabilitation
• New systems for unsewered communities
• Stormwater management for water quality
 Drinking Water SRF
– Loans for the following types of projects
• Improvements to public water supply systems
• Consolidations and connections
• Source water protection
33
Sample Enterprise Fund Cashflow
SAMPLES CITY, IOWA
Water Enterprise Fund
Growth Assumptions
Water Usage
Operating Expenses
Interest Rate
1-Aug-04
1-Aug-05
1-Aug-06
1-Aug-07
0.00%
5.00%
0.25%
Audited Financial Statements
FY 2007-08 FY 2008-09
First 3,000 gallons
Next 37,000 gallons
Next 60,000 gallons
All over 100,000 gallons
2.50%
4.00%
4.00%
3.00%
WATER REVENUE ADJUSTMENTS
1-Aug-08
4.00%
1-Aug-12
4.00%
1-Aug-09
6.00%
1-Aug-13
4.00%
1-Aug-10
12.00%
1-Aug-14
4.00%
1-Aug-11
4.00%
1-Aug-15
4.00%
1-Aug-16
1-Aug-17
1-Aug-18
1-Aug-15
4.00%
-
Budget
Budget
Projected
Projected
Projected
Projected
Projected
FY 2009-10
FY 2010-11
FY 2011-12
FY 2012-13
FY 2013-14
FY 2014-15
FY 2015-16
FY 2016-17
1
2
3
4
$4.93
2.29
1.62
0.82
$5.13
2.38
1.68
0.85
$5.44
2.52
1.78
0.90
$6.09
2.82
1.99
1.01
$6.33
2.93
2.07
1.05
$6.59
3.05
2.16
1.09
$6.85
3.17
2.24
1.14
$7.12
3.30
2.33
1.18
$7.41
3.43
2.43
1.23
$7.71
3.57
2.52
1.28
Average Rate Per < 1,000 5
$2.75
$3.03
$3.45
$3.86
$4.02
$4.18
$4.35
$4.52
$4.70
$4.89
WATER (1,000 gallons) 6
Total Water Usage 7
-3.49%
87,058
-11.02%
77,465
-8.20% YTD usage is up 1.95%
71,115
72,502
72,502
72,502
72,502
72,502
72,502
72,502
OPERATING REVENUES
Usage Fees
Surcharge Fees
Miscellaneous Revenues
Total Operating Revenues
8
9
10
11
$239,520
40,810
1,188
$281,518
$234,371
40,762
1,037
$276,170
$245,283
40,786
1,996
$288,065
$277,645
40,750
600
$318,995
$290,418
40,750
650
$331,818
$302,035
40,750
650
$343,435
$314,117
40,750
650
$355,517
$326,681
40,750
650
$368,081
$339,749
40,750
650
$381,149
$353,338
40,750
650
$394,738
OPERATING EXPENSES
Personal Services
Repairs & Maintenance
Materials & Supplies
Other Expenses
Depreciation
Miscellaneous
Total Operating Expense
12
13
14
15
16
17
18
$112,691
40,380
19,946
54,302
56,425
927
$284,671
$117,121
8,598
32,191
50,164
72,767
852
$281,693
$146,495
9,375
19,106
47,916
88,296
887
$312,075
$161,444
15,500
9,850
51,357
88,296
1,300
$327,747
$168,946
16,000
10,850
60,956
88,296
1,300
$346,348
$177,393
16,800
11,393
64,004
88,296
1,365
$359,251
$186,263
17,640
11,962
67,204
88,296
1,433
$372,798
$195,576
18,522
12,560
70,564
88,296
1,505
$387,023
$205,355
19,448
13,188
74,092
88,296
1,580
$401,960
$215,623
20,421
13,848
77,797
88,296
1,659
$417,643
NET OPERATING REV
Add: Depreciation
Interest on Reserves
Revenue for Debt Service
19
20
21
22
($3,153)
56,425
49,043
$102,315
($5,523)
72,767
15,803
$83,047
($24,010)
88,296
4,422
$68,708
($8,752)
88,296
1,321
$80,865
($14,530)
88,296
1,398
$75,165
($15,815)
88,296
1,457
$73,938
($17,282)
88,296
1,512
$72,527
($18,942)
88,296
1,564
$70,917
($20,811)
88,296
1,611
$69,095
($22,905)
88,296
1,655
$67,047
34
Sample Enterprise Fund Cashflow
SAMPLES CITY, IOWA
Water Enterprise Fund
Audited Financial Statements
FY 2007-08 FY 2008-09
Budget
Budget
Projected
Projected
Projected
Projected
Projected
FY 2009-10
FY 2010-11
FY 2011-12
FY 2012-13
FY 2013-14
FY 2014-15
FY 2015-16
FY 2016-17
Revenue for Debt Service 23
$102,315
$83,047
$68,708
$80,865
$75,165
$73,938
$72,527
$70,917
$69,095
$67,047
Water Debt Service
SRF Bonds, Series 2008 24
Total Revenue Debt 25
$0
$0
$31,048
$31,048
$39,471
$39,471
$40,023
$40,023
$40,243
$40,243
$40,430
$40,430
$40,585
$40,585
$40,708
$40,708
$39,798
$39,798
$39,888
$39,888
2.67
1.74
1.74
1.74
1.68
Debt Service Coverage
Net Revenues/ Revenue Debt 26
N/A
Must at least be a 1.10x Coverage for SRF Bonds
2.02
1.87
1.83
1.79
CASHFLOW AFTER DEBT 27
$102,315
$51,999
$29,237
$40,842
$34,922
$33,508
$31,942
$30,210
$29,298
$27,159
Capital Outlays
Other cash (uses)/sources
Grant Monies
Bond Proceeds
Transfers (to)/from Other Funds
Transfers (to)/from TIF Fund
Annual Surplus/ (Deficit)
($81,382) ($1,498,058)
3,816
19,938
0
0
0
529,600
0
0
0
200,000
$24,749 ($696,521)
($2,223)
(4,912)
0
5,000
0
0
$27,102
($10,000)
0
0
0
0
0
$30,842
($11,400)
0
0
0
0
0
$23,522
($11,400)
0
0
0
0
0
$22,108
($11,400)
0
0
0
0
0
$20,542
($11,400)
0
0
0
0
0
$18,810
($11,400)
0
0
0
0
0
$17,898
($11,400)
0
0
0
0
0
$15,759
$501,330
$528,432
$528,432
$559,274
$559,274
$582,796
$582,796
$604,903
$604,903
$625,445
$625,445
$644,255
$644,255
$662,153
$662,153
$677,912
236%
234%
226%
223%
220%
216%
211%
206%
28
29
30
31
32
33
34
Beginning Cash Balance 35 $1,173,102
Ending Cash Balance 36 $1,197,851
Cash % of O&M (net of depr) 37
Restricted & Designated
Improvement Fund 38
Debt Service Reserve Fund 38
525%
$0
0
$1,197,851
$501,330
240%
$0
0
$0
0
$0
0
$0
0
$0
0
$0
0
$0
0
$0
0
$0
0
0
0
11,400
11,400
0
0
11,400
11,400
0
0
11,400
11,400
0
0
11,400
11,400
0
0
11,400
11,400
0
0
11,400
11,400
- Projects listed in City's Capital Improvement Program
Water Treatment Plant
Paint Water Towers
Miscellaneous
Total
2,223
0
0
2,223
0
0
10,000
10,000
35
ISSUER RESPONSIBILITIES
Issuer Responsibilities
Keep in mind that once debt is issued, you have certain
responsibilities for the life of the debt:
– Disclosure Requirements (All Debt Issued Over $1 million)
• Final official statement
• Annual continuing disclosure filings via EMMA
• Material event notices via EMMA
– Bond Covenants (Revenue Debt Only)
• Debt service reserve fund balances
• User rates and charges
• Debt service coverage ratios
• Parity test for new debt issuance
– Rating Agency Updates (Rated Debt Only)
• Periodic credit reviews
37
QUESTIONS?
For More Information, please contact:
Jenny Blankenship, CPA
The PFM Group
Phone: 515-724-5734
E-mail: blankenshipj@pfm.com