Debt Service Funds
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. 207
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. 208
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. Certificated Lease Purchase Agreements. Certificates of participation (COPs) have been executed and delivered in conjunction with various lease purchase agreements discussed in the paragraph above. In October 2013, the City executed and delivered $34,030,000 of Series 2013A COPs to refund the Series 2003B COPs related to the Buell Theatre, Convention Center garage, Skyline Park and a jail dormitory. 209
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 $27,336,000 in payments from General Fund and Capital Improvement Funds represents approximately 2.0 percent of the combined projected revenues for those funds. 210
($ 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 Fund Balance - December 31 $43,398 $45,267 $48,272 211
($ 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 Fund Balance December 31 $20,442 $22,490 $24,222 212