CITY OF MINNEAPOLIS Capital Planning and Debt Overview Presentation to the Board of Estimate & Taxation February 10, 2016 1
Agenda Review Key Terms High Level Capital Funding 2016 2020 Park Board Capital Program 2016 2020 City Debt Capacity Bond Redemption Levy 2011 2020 Net Debt Bond Considerations Debt Service Statistics and 2016 Budget Conclusion 2
Review of Key Terms Net Debt Bonds: General Obligation property tax supported bonds issued to finance general infrastructure improvements. Bond Redemption Levy: A dedicated tax levy used for payment of principal and interest on property tax supported bonds (NDB). Debt Service: Refers to payments required for principal and interest on outstanding bonds. 3
Funding Sources for Five Year Capital Program $668.90 M MSA 7% Assessments 10% Net Debt Bonds 23% Other/Grants 9% Reimbursable 7% Federal Grants 3% Enterprise Revenues 21% Park Capital Levy 1% Enterprise Bonds 23% 4
Funding Sources for 2016 Capital Program $134.80 M MSA 7% Assessments 9% Other/Grants 10% Federal Grants 5% Net Debt Bonds 24% Reimbursements 7% Park Capital Levy 1% Enterprise Revenues 19% Enterprise Fund Bonds 18% 5
Net Debt Bond Allocation Five Year Total $155.0 M Infrastructure Category 2016 2017 2018 2019 2020 Total Percent (in 000's) MBC 1,470 1,105 1,380 1,495 470 5,920 3.8% PARK BOARD 2,500 1,500 1,000 3,315 1,840 10,155 6.6% PUBLIC WORKS : STREET PAVING 13,135 9,630 9,800 11,090 6,740 50,395 32.5% SIDEWALKS 315 325 335 345 355 1,675 1.1% BRIDGES 400 2,285 4,330 5,685 13,660 26,360 17.0% TRAFFIC CONTROL & LIGHTING 4,460 3,355 3,890 4,780 4,560 21,045 13.6% BIKE TRAILS 760 1,250 1,000 1,140 1,940 6,090 3.9% Public Works Sub-Total 19,070 16,845 19,355 23,040 27,255 105,565 68.1% INFORMATION TECHNOLOGY 3,300 1,500 200 5,000 3.2% PUBLIC GROUNDS & FACILITIES 5,910 6,350 1,000 13,260 8.6% MISCELLANEOUS PROJECTS 580 600 6,620 6,640 660 15,100 9.7% Total Net Debt Bonds Allocated 32,830 27,900 29,555 34,490 30,225 155,000 100.0% *Only the first year funding is adopted as part of the budget. 6
2016 2020 CIP Park Board Neighborhood Capital Projects $18.801 M Projects Council 2016 NDB Council 5 yr NDB Playground and Site Improvements Program $0.00 M $3.115 M Shelter Pool Site Improvements Program $0.00 M $2.05 M Athletic Fields and Site Improvements Program $0.00 M $0.70 M Bossen Park Field Improvements $2.50 M $2.95 M Bryn Mawr Meadows Field Improvements $0.00 M $1.34 M Total NDB Funding for Parks $2.50 M $10.155 M Neighborhood Parks Capital funded with Park Capital Levy $1.652 M $8.646 M Total Neighborhood Capital Projects (excluding Dis Tree) $4.152 M $18.801 M 7
City Debt Capacity Debt Capacity is determined by State Statute but utilized based on policymaker s willingness to tax and raise fees to ensure adequate debt service coverage Net Debt is subject to a Legal Debt Margin of 3.33% of Assessed Market Value (as adjusted) For 2015, legal debt margin was $1.22 B and usage was $.11 B, leaving $1.11 B of capacity to issue In the last decade, the City has made great strides in improving our capacity to pay by paying off debt Capacity to pay is equal to or more important than Capacity to issue! 8
Net Debt Bond Considerations (the moving parts) Cash Balance in Debt Service Fund Bond Redemption Levy Plans 2016 2020 $37.8 to $38.8 M Debt Service for bonds already issued Bonds authorized but not yet issued for prior years ~ $49 M 2016 NDB authorized $32.8 M 2017 2020 NDB Plans = $122.2 M Future 2021 2025 NDB Plans = $180 M 9
Bond Redemption Levy 2011 2020 $45.0 Millions $40.0 $35.0 $30.0 $25.0 $20.0 $15.0 26.0 18.5 16.4 18.8 21.2 40.2 29.3 31.7 35.9 36.5 37.8 37.8 38.3 32.8 29.6 27.9 38.8 34.5 38.8 30.2 $10.0 $5.0 $0.0 Adopted/Projected Levy Net Debt Spending 10 Years 2017-2020 Per Five-Year Financial Direction with other tax supported budget demands
$1.6 12/31/2015 Outstanding City Debt Year Ending 2004 to 2015 (in billions) $1.4 $1.2 $1.0 $0.8 $0.6 $0.4 $0.2.15.13.12.12.11.09 1.30 1.28 1.21 1.15 1.09 1.08.12.98.12.88.11.12.11.77.73.72.11.64 $0.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Obligation Bonds/Notes Non-General Obligation Bonds 11
12/31/2015 GO Debt Outstanding Debt Type with 2004 Peak Debt Balances* 12/31/15 Balances** Change from 2004 Enterprise Funds - $407.28 M $211.67 M ($195.61) M Convention Center - $244.09 M $116.05 M ($128.04) M Tax Increment - $206.31 M $80.00 M ($126.31) M Special Assessment - $49.30 M $39.29 M ($10.01) M Other Self Supporting - $22.70 M $74.73 M $52.03 M Internal Service Funds - $101.16 M $16.01 M ($85.15) M Library Referendum - $93.40 M $73.75 M ($19.65) M Net Debt Bonds - $56.85 M $31.42 M ($25.43) M Pension - $117.87 M $0.00 M ($117.87) M Total GO 2004 vs 2015 $1,298.96 M $642.92 M (656.04) M Peak GO Debt in 2004, 1996 was $766 M ** Includes 2015 issuances for NDB of $15 M and $5 M for Nicollet Mall. 12
Outstanding Principal @ 12/31/15 $642.92 M Enterprise Funds 33% Convention Center 18% Library Referendum 11% Net Debt Bonds 5% Internal Services 3% Self Supporting 12% Special Assessment 6% Tax Increment 12% 13
2016 Estimated Debt Service Budget (Including 2016 estimated debt issuances) Debt Type Principal Interest Total Enterprise Funds $21.62 M $7.15 M $28.77 M Convention Center $21.15 M $3.46 M $24.61 M Net Debt Bonds $34.42 M $.62 M $35.04 M Tax Increment $5.77M $3.57 M $9.34 M Library Referendum $6.80 M $1.52 M $8.32 M Special Assessment $7.52 M $1.18 M $8.70 M Internal Services $4.99 M $.52 M $ 5.51 M Self Supporting $.77 M $3.05 M $3.82 M Total Debt Service Budget $103.04 M $21.07M $124.11 M 83% Principal 17% Interest 2016 Avg Interest Rate 3.06% Variable Rate Debt 0.34% 14
2016 Debt Service Budget $124.12 M Net Debt Bonds 28% Self-Supporting 3% Library Referendum 7% Convention Center 20% Special Assessment 7% Enterprise Funds 23% Internal Service Funds 4% Tax Increment 8% 15
City of Minneapolis Property Tax Supported Debt Per Capita Debt (millions $) 2006 2015 $700 $600 $500 $400 $300 $200 $100 $0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Year 16
Questions/Conclusions? Michael Abeln Director of Capital & Debt Management 612 673 3496 Thank You 17