Capital Financing Presentation Purpose/Desired Outcomes An - - PDF document

Capital Financing

April 23, 2018 Presentation to the Finance Committee of the Whole

Presentation Purpose/Desired Outcomes

An understanding of the following:

• The various types of debt issued by

municipalities in Ohio and the limitations that exist

• The City’s current debt profile
• City’s current Debt Policy as approved by City

Council through Ordinance No. 31-16 (September 12, 2016)

• The factors analyzed by Moody’s Investor

Services as part of the rating process and the estimated impact of future financings on the City’s rating

• Mechanisms built into our policies/practices

that help mitigate against declines in revenue

• Dedicated revenue stream to retire debt

service

• Conservative revenue , realistic

expenditure estimates

• Limit amount available to spend on debt

service to 90% of estimated revenue

• Significant cash balances
• Additional coverage for debt supported by

TIF revenues (subject to changes in property valuations)

• 5-year CIP that is updated annually
• Affirmation of the City’s existing Debt Policy

2

General Debt Information

Two primary categories of debt issued by municipalities: General Obligation Bonds and Revenue Bonds General Obligation (GO) Bonds Secured by the City’s pledge to use all legally available resources to repay bondholders Two subcategories: Limited Tax (Unvoted GO Bond) (LTGO)

• Pledges the full faith and credit of the City subject to the maximum rate at which taxes may be levied

without voter approval

• Does not require voter approval to be issued
• Subject to state statutory and constitutional debt limitations
• Special Assessment – A type of LTGO bond in which bond proceeds are repaid by a special assessment

tax levied on a specific parcel of land that directly benefits from the financed improvements 3

General Debt Information

Two primary categories of debt issued by municipalities: General Obligation Bonds and Revenue Bonds General Obligation (GO) Bonds Secured by the City’s pledge to use all legally available resources, including tax revenues, to repay bondholders Two subcategories: Unlimited Tax (Voted GO Bond) (ULTGO)

• Pledges the full faith and credit of the City and obligates the City to raise property tax revenues in order to

satisfy debt service requirements

• Does require voter approval to be issued
• Not subject to state constitutional debt limitations

4

General Debt Information

Two primary categories of debt issued by municipalities: General Obligation Bonds and Revenue Bonds Revenue Bonds Secured by a specific revenue of the City. Examples include Water, Sewer, Income Tax and Nontax Revenue Bonds.

• Debt of the City payable solely from the revenue pledged
• Not backed by the full faith and credit of the City
• Does not count towards the City’s GO debt limit
• Does not require voter authorization

5

General Debt Information

Two primary categories of debt issued by municipalities: General Obligation Bonds and Revenue Bonds

• GO debt is traditionally rated higher rating by the rating agencies than any other debt given the backing of the

entity to pledge the full faith and credit (utilizing all available resources) to repay bondholders.

• The City has chosen to use the GO pledge on most of the City’s outstanding debt, even the debt which is funded

by water, sewer and income tax revenues. This was done to obtain the highest bond rating to lower the interest costs on the bonds. 2017 GO Aaa AAA AAA 2016 NTR Aa1 6

Debt Limitations

General Obligation Debt Limitations

8

Statutory Limits

• Chapter 133 of the Ohio Revised Code
• Establishes debt limits which are tied to assessed valuation
• 133.04 and 133.05 define what securities are not included in calculation

Constitutional Limits

• In conjunction with ORC, establishes debt limits based on assessed valuation and debt of overlapping entities

Dublin Limit

• Based on adopted Debt Policy

General Obligation Debt Limitations – Statutory Limits

• Applies to GO debt solely supported by ad valorem

property taxes

• 10.5% of assessed value for total (unvoted + voted) GO

Debt

• 5.5% of assessed value for unvoted GO Debt
• All unvoted GO debt that pledges income tax revenue

is considered exempt;

• Issuing exempt GO debt is common practice among

Ohio issuers The State’s statutory limits likely pose no issue for the City now or for the foreseeable future as it relates to borrowing capacity Calculation of Debt Limits for City of Dublin as of 12/31/17

Assessed Value $2,063,082,690 10.5% AV Value for Total GO Debt 216,623,682 (less) Non-Exempt Debt <2,700,000>

Debt Capacity within 10.5% Limitation

$213,932,682

5.5% AV Value for Unvoted GO Debt $113,469,548 (less) Non-Exempt Unvoted Debt

• Debt Capacity within 5.5% Limitation

$113,469,548

Statutory Limit

General Obligation Debt Limitations – Statutory Limits

How does Dublin compare to other cities?

Source: CAFR for FY 2016

10 Entity (Rating) 10.5% Limitation 5.5% Limitation Westerville (Aaa) $85,531,625 $31,373,520 Mason (Aaa) $94,524,591 $38,958,282 Dublin (Aaa) $213,932,682 $113,469,548 Blue Ash (Aa1) $76,125,201 $39,875,105 Hudson (Aaa) $68,346,419 $28,158,001 Beavercreek (Aa2) $137,313,636 $68,090,017

General Obligation Debt Limitations – Constitutional Limits

• Applies to GO debt
• 10 mill overlapping debt limitation
• Only some entities may levy ad valorem property taxes

within the ten-mill limitation

• City must consider overlapping subdivisions within

Delaware, Franklin and Union Co. when issuing debt.

• The City’s highest overlapping subdivision is within

Union County; Estimated that 7.3088 mills are ‘utilized’ (based on the year of its highest potential debt due)

• 2.6912 mills remain available to the City and
• verlapping subdivisions in connection with the

issuance of additional unvoted GO debt.

• 2.6912 mills = $75.0 million in par value – based
• n 5% over 20 years

How is one mill calculated? One mill = 1/10 of a percent of assessed valuation (0.10%) The maximum combined unvoted ad valorem property tax an

• verlapping subdivision may impose on a taxpayer is one percent of

assessed valuation 0.10% x 10 mills = 1% Dublin is located within three counties with overlapping subdivisions which includes:

Counties School Districts Regional Transit Authorities Townships Park/Preservation Districts Library Districts Mental Health Districts Airports SWACO

Constitutional Limit

Debt Limitations – Dublin Debt Policy

• Debt Policy approved by City Council September 12, 2016 (Ord No. 31-16); reviewed April 24, 2017; Formalized

long-standing practice of City

• Of the Income Tax revenue dedicated to the Capital Improvement Tax Fund, 60% will be allocated to pay debt

service on projects while the remaining 40% will be used to cash fund projects

• Excess of the debt allocation may be used to cash fund projects
• The maximum amount of debt (both existing and proposed) shall not exceed 90% of the allocation of income tax

revenue allocated to pay debt service

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2% Income Tax 75% General Fund 25% Capital Improvement Tax Fund 60% for debt service on capital projects Limited to 90% of available revenue 40% to cash fund capital projects

Dublin Limits

Debt Capacity Limitations – Dublin Debt Policy

Year Estimated Income Tax Revenue1 2018 $86,000,000 2019 87,290,000 2020 88,600,000 2021 89,929,000 2022 91,300,000 2023 91,300,000 2024 91,300,000 2025 91,300,000

1 1.5%% growth annually in income tax revenue is projected from 2018 – 2022; 0% growth 2023-2025.

13

Income Tax revenue estimates determined during CIP; modified as needed 1.5% growth annually 0% growth annually

Income Tax Estimates

$- $10 $20 $30 $40 $50 $60 $70 $80 $90 $100

Millions

Budget versus Actual Income Tax Revenues

Budgeted Revenue Actual Revenue 14

Income Tax Estimates

15

Considerations when estimating Income Tax revenue

• Existing companies
• Companies downsizing or leaving the City
• Actual income tax revenue is analyzed and removed from future year projections based on timing of

reduction or departure

• Chase, Nationwide
• Look at overall performance of existing businesses
• New companies
• For new companies in which EDAs have been executed in prior years, we do not plan on that revenue until it

actually materializes

• For new companies (with no EDA), information gathered from Economic Development and/or other sources

is used to determine revenue estimates

• United Healthcare
• Remain conservative!

Debt Capacity Limitations – Dublin Debt Policy

Year Estimated Income Tax Revenue1 Allocation to Capital Fund2 Debt Service Allocation3 90% of Debt Service Allocation 2018 $86,000,000 $21,500,000 $12,900,000 $11,610,000 2019 87,290,000 21,822,500 13,093,500 11,784,150 2020 88,600,000 22,150,000 13,290,000 11,961,000 2021 89,929,000 22,482,250 13,489,350 12,140,415 2022 91,300,000 22,825,000 13,695,000 12,325,500 2023 91,300,000 22,825,000 13,695,000 12,325,500 2024 91,300,000 22,825,000 13,695,000 12,325,500 2025 91,300,000 22,825,000 13,695,000 12,325,500

1 1.5% growth annually in income tax revenue is projected from 2018 – 2022; 0% growth 2023-2025. 2 25% of income tax revenue dedicated to the Capital Improvement Tax Fund 3 60% of the income tax revenue in the Capital Improvement Tax Fund reserved to pay debt service on capital projects

16

Establishes Revenue Set Aside (per Debt Policy to Fund Debt Service)

Debt Capacity Limitations – Dublin Debt Policy

Year Estimated Income Tax Revenue1 Allocation to Capital Fund2 Debt Service Allocation3 90% of Debt Service Allocation Existing IT Supported Debt Service4 2018 $86,000,000 $21,500,000 $12,900,000 $11,610,000 $4,847,341 2019 87,290,000 21,822,500 13,093,500 11,784,150 6,100,261 2020 88,600,000 22,150,000 13,290,000 11,961,000 5,220,157 2021 89,929,000 22,482,250 13,489,350 12,140,415 6,342,237 2022 91,300,000 22,825,000 13,695,000 12,325,500 6,134,061 2023 91,300,000 22,825,000 13,695,000 12,325,500 5,890,256 2024 91,300,000 22,825,000 13,695,000 12,325,500 5,637,092 2025 91,300,000 22,825,000 13,695,000 12,325,500 6,049,423

1 1.5% growth annually in income tax revenue is projected from 2018 – 2022; 0% growth 2023-2025. 2 25% of income tax revenue dedicated to the Capital Improvement Tax Fund 3 60% of the income tax revenue in the Capital Improvement Tax Fund reserved to pay debt service on capital projects 4 Actual debt service payments for existing debt funded by Income Tax 5 Based on 20-year level debt service at 5% interest rate

17

Represents Debt Service that Relies on the Revenue Set Aside to Fund Debt Service

Existing Income Tax Supported Debt

When calculating existing Income Tax supported debt (utilizing the allocation defined in the policy) the following are considered:

• Debt service in which there are no other sources of revenue that can be used
• City facilities
• Roadways
• Debt service in which other sources of revenue may be used but contain an income tax revenue as a

backing

• TIF funded debt service
• Reserve income tax funding if 110% of annual debt service payment isn’t available between annual

TIF revenues and TIF fund balances 18

Debt Capacity Limitations – Dublin Debt Policy

Year Estimated Income Tax Revenue1 Allocation to Capital Fund2 Debt Service Allocation3 90% of Debt Service Allocation Existing IT Supported Debt Service4 Debt Allocation not Committed Additional Debt that Could be Supported5 2018 $86,000,000 $21,500,000 $12,900,000 $11,610,000 $4,847,341 $6,762,659 $84,533,237 2019 87,290,000 21,822,500 13,093,500 11,784,150 6,100,261 5,683,889 71,048,612 2020 88,600,000 22,150,000 13,290,000 11,961,000 5,220,157 6,740,843 84,260,537 2021 89,929,000 22,482,250 13,489,350 12,140,415 6,342,237 5,798,178 72,477,225 2022 91,300,000 22,825,000 13,695,000 12,325,500 6,134,061 6,191,439 77,392,987 2023 91,300,000 22,825,000 13,695,000 12,325,500 5,890,256 6,435,244 80,440,550 2024 91,300,000 22,825,000 13,695,000 12,325,500 5,637,092 6,688,408 83,605,100 2025 91,300,000 22,825,000 13,695,000 12,325,500 6,049,423 6,276,077 78,450,962

1 1.5% growth annually in income tax revenue is projected from 2018 – 2022; 0% growth 2023-2025. 2 25% of income tax revenue dedicated to the Capital Improvement Tax Fund 3 60% of the income tax revenue in the Capital Improvement Tax Fund reserved to pay debt service on capital projects 4 Actual debt service payments for existing debt funded by Income Tax 5 Based on 20-year level debt service at 5% interest rate

19

Debt Capacity Limitations – Dublin Debt Policy

Year Estimated Income Tax Revenue1 Allocation to Capital Fund2 Debt Service Allocation3 90% of Debt Service Allocation 2018 $86,000,000 $21,500,000 $12,900,000 $11,610,000 2019 87,290,000 21,822,500 13,093,500 11,784,150 2020 88,600,000 22,150,000 13,290,000 11,961,000 2021 89,929,000 22,482,250 13,489,350 12,140,415 2022 91,300,000 22,825,000 13,695,000 12,325,500 2023 91,300,000 22,825,000 13,695,000 12,325,500 2024 91,300,000 22,825,000 13,695,000 12,325,500 2025 91,300,000 22,825,000 13,695,000 12,325,500

1 1.5% growth annually in income tax revenue is projected from 2018 – 2022; 0% growth 2023-2025. 2 25% of income tax revenue dedicated to the Capital Improvement Tax Fund 3 60% of the income tax revenue in the Capital Improvement Tax Fund reserved to pay debt service on capital projects 4 Actual debt service payments for existing debt funded by Income Tax 5 Based on 20-year level debt service at 5% interest rate

20

Conservative Revenue Estimates 1.5% growth annually (through 2022); 0% growth thereafter 5-year average growth 3% 10-year average growth 3%

Debt Capacity Limitations – Dublin Debt Policy

Year Estimated Income Tax Revenue1 Allocation to Capital Fund2 Debt Service Allocation3 90% of Debt Service Allocation 2018 $86,000,000 $21,500,000 $12,900,000 $11,610,000 2019 87,290,000 21,822,500 13,093,500 11,784,150 2020 88,600,000 22,150,000 13,290,000 11,961,000 2021 89,929,000 22,482,250 13,489,350 12,140,415 2022 91,300,000 22,825,000 13,695,000 12,325,500 2023 91,300,000 22,825,000 13,695,000 12,325,500 2024 91,300,000 22,825,000 13,695,000 12,325,500 2025 91,300,000 22,825,000 13,695,000 12,325,500

1 1.5% growth annually in income tax revenue is projected from 2018 – 2022; 0% growth 2023-2025. 2 25% of income tax revenue dedicated to the Capital Improvement Tax Fund 3 60% of the income tax revenue in the Capital Improvement Tax Fund reserved to pay debt service on capital projects 4 Actual debt service payments for existing debt funded by Income Tax 5 Based on 20-year level debt service at 5% interest rate

21

Allows only 90% of amount reserved for debt to be available

Debt Capacity Limitations – Dublin Debt Policy

Year Estimated Income Tax Revenue1 Allocation to Capital Fund2 Debt Service Allocation3 90% of Debt Service Allocation Existing IT Supported Debt Service4 Debt Allocation not Committed Additional Debt that Could be Supported5 2018 $86,000,000 $21,500,000 $12,900,000 $11,610,000 $4,847,341 $6,762,659 $84,533,237 2019 87,290,000 21,822,500 13,093,500 11,784,150 6,100,261 5,683,889 71,048,612 2020 88,600,000 22,150,000 13,290,000 11,961,000 5,220,157 6,740,843 84,260,537 2021 89,929,000 22,482,250 13,489,350 12,140,415 6,342,237 5,798,178 72,477,225 2022 91,300,000 22,825,000 13,695,000 12,325,500 6,134,061 6,191,439 77,392,987 2023 91,300,000 22,825,000 13,695,000 12,325,500 5,890,256 6,435,244 80,440,550 2024 91,300,000 22,825,000 13,695,000 12,325,500 5,637,092 6,688,408 83,605,100 2025 91,300,000 22,825,000 13,695,000 12,325,500 6,049,423 6,276,077 78,450,962

1 1.5% growth annually in income tax revenue is projected from 2018 – 2022; 0% growth 2023-2025. 2 25% of income tax revenue dedicated to the Capital Improvement Tax Fund 3 60% of the income tax revenue in the Capital Improvement Tax Fund reserved to pay debt service on capital projects 4 Actual debt service payments for existing debt funded by Income Tax 5 Based on 20-year level debt service at 5% interest rate

22

Actual IT and TIF supported debt

where TIF cannot provide 110% coverage mitigates against decrease in property values in TIF areas

Debt Capacity Limitations – Dublin Debt Policy

Year Estimated Income Tax Revenue1 Allocation to Capital Fund2 Debt Service Allocation3 90% of Debt Service Allocation Existing IT Supported Debt Service4 Debt Allocation not Committed Additional Debt that Could be Supported5 2018 $86,000,000 $21,500,000 $12,900,000 $11,610,000 $4,847,341 $6,762,659 $84,533,237 2019 $86,000,000 $21,500,000 $12,900,000 $11,610,000 6,100,261 5,509,739 68,871,737 2020 $86,000,000 $21,500,000 $12,900,000 $11,610,000 5,220,157 6,389,843 79,873,037 2021 $86,000,000 $21,500,000 $12,900,000 $11,610,000 6,342,237 5,267,763 65,847,037 2022 $86,000,000 $21,500,000 $12,900,000 $11,610,000 6,134,061 5,475,939 68,449,237 2023 $86,000,000 $21,500,000 $12,900,000 $11,610,000 5,890,256 5,719,744 71,496,800 2024 $86,000,000 $21,500,000 $12,900,000 $11,610,000 5,637,092 5,972,908 74,661,350 2025 $86,000,000 $21,500,000 $12,900,000 $11,610,000 6,049,423 5,560,577 69,507,212

1 0% growth annually in income tax revenue. 2 25% of income tax revenue dedicated to the Capital Improvement Tax Fund 3 60% of the income tax revenue in the Capital Improvement Tax Fund reserved to pay debt service on capital projects 4 Actual debt service payments for existing debt funded by Income Tax 5 Based on 20-year level debt service at 5% interest rate

23

Current Debt Profile

Outstanding Debt Summary (as of April 23, 2018)

Three credits outstanding: unlimited (voted) GO, limited (unvoted GO) and nontax revenue bonds

25

Outstanding Bonds by Credit Type

Credit Type Series Name Dated Date Final Maturity Call Date Original Par Outstanding Par Callable Par Limited Tax GO Municipal Pool South (OMB) 4/14/2004 1/1/2025 Non-Callable $2,986,000 $1,250,000

• Various Purpose Imp. and Ref'g Bonds, Series 2009B

11/18/2009 12/1/2021 12/1/2019 $10,375,000 $3,915,000 $1,530,000 Various Purpose Imp. and Ref'g Bonds, Series 2012 10/2/2012 6/1/2032 6/1/2022 $10,820,000 $6,270,000 $2,805,000 Capital Facilities Imp. Bonds, Series 2013 12/19/2013 12/1/2033 12/1/2021 $9,855,000 $9,815,000 $8,480,000 Capital Facilities Imp. and Ref'g Bonds, Series 2014 1/7/2014 12/1/2029 12/1/2021 $23,645,000 $15,705,000 $8,440,000 Various Purpose Bonds, Series 2015 9/30/2015 12/1/2035 12/1/2025 $49,200,000 $46,290,000 $29,805,000 Capital Facilities Bonds, Series 2016 12/6/2016 12/1/2036 12/1/2025 $9,325,000 $8,980,000 $5,840,000 Various Purpose Bonds, Series 2017 8/2/2017 12/1/2037 6/1/2027 $31,880,000 $31,880,000 $20,390,000 Limited Tax GO Total $148,086,000 $124,105,000 $77,290,000 Unlimited Tax GO Various Purpose Ref'g Bonds, Series 2009A 11/18/2009 12/1/2020 12/1/2019 $15,105,000 $2,700,000 $200,000 Unlimited Tax GO Total $15,105,000 $2,700,000 $200,000 Nontax Revenue Special Ob. Nontax Revenue Bonds, Series 2015A 10/28/2015 12/1/2044 12/1/2025 $16,000,000 $16,000,000 $16,000,000 Special Ob. Nontax Revenue Bonds, Series 2015B 10/28/2015 12/1/2035 12/1/2025 $16,000,000 $16,000,000 $10,145,000 Nontax Revenue Total $32,000,000 $32,000,000 $26,145,000 Grand Total $195,191,000 $158,805,000 $103,635,000

Outstanding Debt Summary (as of April 23, 2018)

Three other forms of (non-traditional) debt outstanding:

26

**Outstanding Par is based on Dublin’s amount of the loan that was drawn upon as of December 31, 2017.

Outstanding Bonds by Credit Type

Credit Type Series Name Dated Date Final Maturity Call Date Original Par Outstanding Par Callable Par Other Debt Upper Scioto West Branch Interceptor (OWDA) 1/1/1999 7/1/2018 Non-Callable $19,716,717 $661,066

• 270/33 Interchange (SIB Loan)**

2/10/2015 2/1/2035 Non-Callable $35,000,000 $6,650,441

• Dublin Road/Glick Road Improvements (OPWC)

7/1/2014 7/1/2026 Non-Callable $250,000 $200,000

• Other Debt Total

$54,966,717 $7,511,507

• Grand Total

$54,966,717 $7,511,507

Debt Service Analysis – Total Outstanding Principal from 1991 – 2044 (as of January 1)

27

$- $20 $40 $60 $80 $100 $120 $140 $160 $180 Millions

Unvoted GO - Water Unvoted GO - Sewer Unvoted GO - Income Tax/TIF/Other Voted GO - Sewer Voted SA NTR Unvoted SA Voted GO - Other

Debt Service Analysis – Total Outstanding Principal from 2018 – 2044 (as of January 1)

28

$- $20 $40 $60 $80 $100 $120 $140 $160 $180 Millions

Unvoted GO - Water Unvoted GO - Sewer Unvoted GO - Income Tax/TIF/Other NTR Unvoted SA Voted GO - Income Tax/TIF/Other

Unvoted GO – Water

Source of Repayment: Water Fund

• Darree Fields Water Tower (2029)
• Dublin Road Water Tower (2032)

Unvoted GO – Sewer

Source of Repayment: Sewer Fund

• Upper Scioto West Branch Interceptor (2018)
• Sanitary Sewer Lining (2029)
• Sewer Lining & Repairs (2032)
• Sewer Lining & Repairs (2035)
• Sewer Lining & Repairs/Extensions (2037)

Unvoted Special Assessment

Source of Repayment: Special Assessment

• Ballantrae (2021)

Debt Service Analysis – Total Outstanding Principal from 2018 – 2044 (as of January 1)

29

$- $20 $40 $60 $80 $100 $120 $140 $160 $180 Millions

Unvoted GO - Water Unvoted GO - Sewer Unvoted GO - Income Tax/TIF/Other NTR Unvoted SA Voted GO - Income Tax/TIF/Other

Voted GO – Income Tax/TIF/Other

Source of Repayment – Income Tax/TIF/Other

• Rec Center Expansion (2018)
• Woerner-Temple Road (2019)
• Emerald Pkwy Overpass – Phase 7 (2019)
• Coffman Park Expansion (2020)

Debt Service Analysis – Total Outstanding Principal from 2018 – 2044 (as of January 1)

30

$- $20 $40 $60 $80 $100 $120 $140 $160 $180 Millions

Unvoted GO - Water Unvoted GO - Sewer Unvoted GO - Income Tax/TIF/Other NTR Unvoted SA Voted GO - Income Tax/TIF/Other

Unvoted GO – Income Tax/TIF/Other

Source of Repayment: Income Tax/TIF

• Avery-Muirfield Interchange (2019)
• Rings Road (2020)
• Arts Facility Acquisition/Renovation (2020)
• Perimeter Drive Extension (2020)
• Emerald Pkwy – Phase 7 (2020)
• Service Center (2021)
• South Pool (2025)
• Industrial Pkwy/SR 161 Improvements (2029)
• LED Street Lights (2022)
• Emerald Pkwy – Phase 8 (2033)
• BSD Land Acquisition (2033)
• 270/33 Interchange (Design/ROW) (2023)
• Justice Center (2035)
• BSD Transportation (2035)
• Bridge Park Transportation (2035)
• 270/33 Interchange (Construction) (2035)
• Dublin Rd/Glick Road Intersection (2026)
• John Shields Pkwy – Phase 2 (2036)
• Service Center Renovation/Expansion (2037)
• Pedestrian Bridge/N. High Street (2037)

Debt Service Analysis – Total Outstanding Principal from 2018 – 2044 (as of January 1)

31

$- $20 $40 $60 $80 $100 $120 $140 $160 $180 Millions

Unvoted GO - Water Unvoted GO - Sewer Unvoted GO - Income Tax/TIF/Other NTR Unvoted SA Voted GO - Income Tax/TIF/Other

Non-Tax Revenue (NTR)

Source of Repayment: TIF/MSP

• BSD Parking Garage (Taxable) (2035)
• BSD Parking Garage (Tax Exempt) (2044)

Bridge Park Debt Service

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2015 City issued $43.1 million in bonds for Bridge Park (total principal and interest $74,031,193)

$11.1 million for Bridge Park roadway system $32.0 million for two parking garages (Blocks B & C)

Unvoted GO, 20 year debt Non-Tax Revenue, 30 year debt to match TIF period Total debt service (P & I) $15,663,100 $16 million (taxable); $16 million (tax-exempt) Total debt service (P & I) $58,368,092

Revenue to fund debt service - Minimum Service Payment Guarantee (MSP) on Blocks B & C

Calendar year 2018 - $1,887,978 Calendar year 2047 - $2,333,630 Calendar years 2019 – 2046 - $2,432,351

TOTAL $72,327,436

MSP is the minimum amount City will receive. If property values (as determined by County Auditor) are higher than conservative estimates used when agreement was executed, additional revenue will be received by the City MSP runs with the land. If property sells (regardless of sales price), the MSP becomes the responsibility of the new owner.

Bridge Park Debt Service

33 Total Debt Service Bridge Park - $74,031,193 Total Revenue from MSP Guarantee - $72,327,436

Worst case scenario, City must provide alternate funding for the roads in the amount of $1,703,757 (difference between debt service and MSP). MSP covers debt service of garages entirely. $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 Thousands

Total Debt Service MSP Guarentee

Average cash flow <$609,039> Average cash flow $873,085

Debt Service Analysis

34

$- $20 $40 $60 $80 $100 $120 $140 $160 Millions

Total Debt O/S as of 1/1 Income Tax

Year

• /s principal as

% of IT Revenue Year

• /s principal as

% of IT Revenue 1991 113% 2005 129% 1992 99% 2006 121% 1993 110% 2007 107% 1994 95% 2008 93% 1995 103% 2009 90% 1996 117% 2010 96% 1997 100% 2011 83% 1998 202% 2012 72% 1999 186% 2013 67% 2000 225% 2014 67% 2001 194% 2015 72% 2002 180% 2016 163% 2003 164% 2017 168% 2004 150% Indicates periods when % was in excess of present day

Debt Service Analysis – 2000 - 2017

35

$- $2 $4 $6 $8 $10 $12 $14 $16 $18 $20

Millions

Additional IT Allocation Available for Debt Premium (Within Bond Retirement Fund Balance) Transfers from Capital Improvement Tax Fund (Income Tax) Transfers from TIF/Other Funds Net Debt Expenses

Debt Service Analysis – 2000 - 2025

36

$- $5 $10 $15 $20 $25

Millions

Additional IT Allocation Available for Debt Premium (Within Bond Retirement Fund Balance) Transfers from Capital Improvement Tax Fund (Income Tax) Transfers from TIF/Other Funds Net Debt Expenses

Credit Ratings

Credit Ratings

38

• Strong tax base
• Robust operating fund

reserves and liquidity

• Strong, proactive

management team

• High debt burden
• Above average

unfunded pension burden

Moody’s

• Economy
• Management
• Strong Policies
• Budgetary Flexibility
• Budgetary Performance
• Strong Liquidity
• Debt & Pension

Position

S&P

• Economy
• Financial Management

Practices

• LT Liability Burden is low

relative to personal income

• Revenue raising ability
• Expenditure flexibility
• Prudent budget controls
• Moderate Carrying
• Costs for Debt Service

and Pension

Fitch

Rating Analysis – Quantitative Factors

City’s estimated ‘score’ by Moody’s Investor Services – Aa1 (based on 2016 financials) Economy/Tax Base (30%)

• Tax Base Size (Full Value) (10%)

Aa

• Full Value per Capita (10%)

Aa

• Wealth (median Family Income) (10%)

Aaa

Finances (30%)

• Fund Balance as a Percentage of Revenue (10%)

Aaa

• 5-Year Dollar Change in Fund Balances as a Percentage of

Revenues (5%) A

• Cash Balance as a Percentage of Revenues (10%)

Aaa

• 5-Year Dollar Change in Cash Balance as a Percentage of

Revenues (5%) Aa

Management (20%)

• Institutional Framework (10%)

A

• Operating History: 5-Year Average of Operating

Revenue/Operating Expenditures (10%) Aaa

Debt and Pensions (20%)

• Net Direct Debt/Full Value (5%)

A

• Net-Operating Revenues (5%)

A

• 3-Year Average of Moody’s ANPL/Full Value (5%)

A

• 3-Year Average of Moody’s ANPL/Operating Revenues Direct

Debt (5%) A

Final Estimated Moody’s Score 1.67 = Aa1

39

Rating Analysis – Qualitative Factors

Finances (30%)

• Fund Balance as a Percentage of Revenue (10%)

Aaa

• 5-Year Dollar Change in Fund Balances as a Percentage of

Revenues (5%) A

• Cash Balance as a Percentage of Revenues (10%)

Aaa

• 5-Year Dollar Change in Cash Balance as a Percentage of

Revenues (5%) Aa

40 City’s estimated ‘score’ by Moody’s Investor Services – Aa1 (based on 2016 financials)

• 5-Year Dollar Change in Fund Balances as a % of

Revenues Aaa A

• 5-Year Dollar Change in Cash Balance as a % of

Revenues Aaa Aa

Moody’s methodology considers forward-looking elements that may not be captured in historical data

“Below the Line” Adjustments:

• If tax base is a regional economic center (positive)
• Institutional presence such as universities (positive)
• Outsized enterprise or contingent liability risk (negative)
• Unusually strong or weak security features (negative or positive)
• Unusually strong or weak budget management and planning (positive or negative)

Conclusion/ Recommendations

Conclusion/Recommendations

Recent CIP have reflected programming to support proactive investment throughout the City

• Responsive to our residents
• Emphasis on maintenance of existing infrastructure and assets
• Efforts to continue strengthening the City’s tax base (both income tax base and property tax base) through

development and redevelopment Current Debt

• Adheres to City’s Debt Policy
• Is affordable based on revenue estimates
• Does not overextend the City; able to absorb decline in IT funding, decline in TIF revenues which support debt

service

• Provides additional capacity

Future financings proposed as part of CIP process

• Will be fluid in which the timing of projects and overall project costs will change over time as more refined details

are obtained

• Will utilize conservative revenue estimates to ensure affordability
• Will adhere to City’s Debt Policy and be in compliance with restrictions imposed by State law
• Will look at all options available, including utilizing cash on hand or non-GO debt where appropriate to preserve GO

capacity

42

Discussion Regarding Current Debt Policy

Current Debt Policy, approved September 2016, formalized a long-standing practice (in place since AT LEAST the 1996-2000 CIP approved in 1995):

• Allocates 60% of the income tax revenue dedicated to the Capital Improvement Tax Fund to support debt service
• Provides that only 90% of the amount noted above is available to be programmed

Staff recommends maintaining the current Debt Policy which provides appropriate safeguards which help mitigate against declines in revenue:

• Dedicated revenue stream to retire debt service
• Conservative revenue estimates
• Limit amount available to spend on debt service to 90% of estimated revenue
• Significant cash balances
• Additional coverage for debt supported by TIF revenues (subject to changes in property valuations)*
• 5-year CIP that is updated annually

While it is important to remain mindful with regard to debt levels with future projects, a Debt Policy should be a strategic policy that can be used in long-term capital planning; promote stability.

43

44

Adopted September 12, 2016 Ordinance No. 31‐16

1

CI TY OF DUBLI N, OHI O DEBT POLI CY

I. Purpose The purpose of this debt policy is to provide guidelines to City Council and the Administration regarding the use of debt to finance capital projects. The City’s legacy of financial stability is built upon a conservative approach to spending as well as a long-term commitment to full and timely repayment of debt. For a debt management policy to be an effective tool, the provisions of the policy must be compatible with the City’s goals pertaining to the Five-Year Capital Improvement Program (CIP). Multi-year forecasts of debt service requirements will be included in the City’s annual update of the Five-Year CIP. II. Authorized methods of sale There are two basic types of debt sales: Competitive Sale and Negotiated Sale. In a competitive sale, the City (along with its financial advisors and bond counsel) structures a bond or note sale internally and offers the securities for sale through a competitive bidding process. In a negotiated sale, the City selects an underwriter or team of underwriters to represent it in the market. The underwriting team selected sets the rates on the bonds in consultation with the City and its advisors. The City will maintain a bias toward the competitive sale format under the following conditions:

• On general obligation sales: The City is a highly rated entity and has a high level
• f market acceptance for its general obligation bonds and notes. These attributes

are conducive to accessing the market via competitive bid.

• Stable market conditions: During periods of low volatility, market timing is less

critical than when conditions are rapidly changing. The advantages of a negotiated sale are reduced during periods of stable market conditions.

• Traditional structure: Debt structured with level annual debt service payments or

level annual principal payments are easily accommodated through a competitive sale. The City will maintain a bias toward the negotiated sale format under the following conditions:

• On revenue bond issues or project backed financing: The City will consider issues

supported only by a specific revenue stream or the revenues of a particular project from time to time. Market acceptance may be lower on these types of financings and investor education will be beneficial on such sales. This is more easily achieved through a negotiated sale.

Adopted September 12, 2016 Ordinance No. 31‐16

2

• Volatile market conditions: The City may want to access the market quickly when

market conditions are volatile in order to take advantage of brief “windows of

• pportunity”. Negotiated sales are advantageous when these conditions exist.
• Refinancing: When considering a refinancing opportunity, the City will generally

establish a “target” level of savings. The City will want to know that its target can be met prior to offering the bonds for sale. A negotiated sale provides a higher degree of certainty with regard to timing and pricing of the bonds.

• “Non-traditional” structures: Whenever the debt must be structured in a tailored

manner, the desired structure is best achieved through a negotiated sale. When zero coupons or variable rate securities are anticipated, the negotiated format is preferred. III. Credit objectives The City seeks to maintain the highest possible credit rating for all categories of its debt without compromising the delivery of its basic services. The Administration and City Council will attempt to take prudent steps to maintain the highest ratings possible, but recognizes that external factors impact the rating decision making process. The City will maintain an ongoing dialogue with rating analysts in an effort to ensure that the analysts fully understand its capital program, operations, and decision making processes. The City’s debt policy will be communicated to the rating agencies, and deviations from the stated policy will be fully disclosed.

• Use of credit enhancements: The City will use bond insurance and/or letters of

credit when it is economically or administratively advantageous to do so, or when required for the marketing of the bonds. IV. Refunding debt There are two types of refundings, as defined by Federal Tax Laws; a current refunding in which a refunding takes place within 90 days of the optional call date; and an advance refunding in which refunding bonds are sold more than 90 days prior to the first call date. Federal regulations permit issuers to advance refund an issue of bonds only once during the life of the issue. The City intends to be prudent in using this one opportunity. Regulations do not restrict the number

• f times that debt can be refinanced on a current basis, and the City will consider reducing its

minimum savings threshold for current refunding issues. The City will consider refunding its debt

• bligations when it can be clearly demonstrated that such refunding will result in present value

savings of 3-5% of the debt being refinanced. However, in certain circumstances, lower savings thresholds may be justified. V. Investment of bond proceeds The City will invest bond proceeds in investments that are consistent with the adopted Investment

• Policy. Any fees charged in relation to the investment of bond proceeds will be paid from interest

earnings on the bond proceeds.

Adopted September 12, 2016 Ordinance No. 31‐16

3

VI. Compliance with federal regulations, including arbitrage requirements The City will comply with Internal Revenue Code Section 148, Arbitrage Rebate regulations by monitoring bond proceed expenditures against deposits and investment earnings on each of their respective bond funds. The City will make the necessary rebate filings and, if necessary, rebate payments to the Internal Revenue Service and will continue to take all actions required and recommended by bond counsel and or the municipal advisor to assure that any bonds issued as tax-exempt securities shall remain as such throughout the life of the issue. The City will follow a policy of full disclosure on every financial report and bond prospectus and will adhere to SEC Rule 10b-5 which establishes a two-pronged standard for disclosure: what the disclosure statement says must be accurate and it must not suffer from any “material omission.” This includes, but is not limited to, providing accurate financial information, especially audited financial statements, and disclosing information about pending or threatened litigation that would be considered material to the bond issue or the City. SEC Rule 10b-5 provides that it is unlawful for any person, directly or indirectly, in connection with the purchase or sale of any security “to make any untrue statement of a material fact or to omit to state a material fact necessary in

• rder to make the statements made, in the light of the circumstances under which they were

made, not misleading.” VII. Compliance with Annual Continuing Disclosure Requirements. As part of the bond issuance process, the City is required to provide or cause to be provided to the Municipal Securities Rulemaking Board such annual financial information and operating data, audited financial statements and notices of the occurrences of certain events in such manner as may be required to fully disclose certain information that may be beneficial to current and potential bond holders in making investment decisions. The requirements are fully detailed in the Continuing Disclosure Agreement that is undertaken with each bond issue. The City will endeavor to keep the terms and requirements of each Continuing Disclosure Agreement consistent with respect to each category of debt being offered. The City will cause all such disclosure to occur in a timely and thorough manner consistent with the terms of each agreement.

• SEC Rule 15c2-12 requires that entities disclose any of the following events, if

material, that relate to the bonds in question:

• Principal and interest payment delinquencies;
• Non-payment related defaults;
• Unscheduled draws on debt service reserves reflecting financial difficulties;
• Unscheduled draws on credit enhancements reflecting financial difficulties;
• Substitution of credit or liquidity providers, or their failure to perform;
• Adverse tax opinions or events affecting the tax-exempt status of the

security;

• Modifications to rights of security holders;
• Bond calls;
• Defeasances;
• Release, substitution, or sale of property security repayment of the

securities;

• Rating changes; and

Adopted September 12, 2016 Ordinance No. 31‐16

4

• Bankruptcy, insolvency, receivership or similar event of the obligated

person; VIII. Hiring of Underwriters The City will, from time to time, issue requests for qualifications or requests for proposals for

• Underwriters. It is Dublin’s position that it benefits from having a team of professionals pre-
• approved. Those Underwriters become familiar with the needs and programs of the City which

enables them to provide a higher quality of service. Such firms are also motivated to present innovative ideas to the City, because they have a reasonable expectation of being rewarded for their efforts. It is important to have the members of the underwriting team that have access to the retail as well as the institutional market and that bring different but complementary banking skills to the table on behalf of the City. On a deal-by-deal basis, the City will select its underwriting team from the pool or pre-approved firms with the assistance of its financial advisor. The City intends to initiate the RFQ or RFP process every three to five years. IX. Debt limitations Ohio Revised Code provides two debt limitations on general obligation debt that are directly based

• n tax (assessed) valuation, applicable to all municipal corporations, including the City.
• Direct debt limitations:
• The net principal amount of both voted and unvoted debt of the City,

excluding “exempt debt”, may not exceed 10½ % of the total tax (assessed) valuation of all property in the City as listed and assessed for taxation.

• The net principal amount of unvoted debt of the City, excluding exempt

debt, may not exceed 5½ % of that valuation. Additionally, provisions of the Ohio Constitution and the Ohio Revised code impose an indirect debt limitation.

• Indirect debt limitation:
• The City’s ability to incur unvoted debt (whether or not exempt from the

direct debt limitations) is limited in that all outstanding unvoted general

• bligation bonds of the combination of overlapping taxing subdivisions

including the City resulting in the highest tax required for such debt charges in any year is 10 mills or less per $1.00 of assessed valuation. The City will ensure that prior to any new debt issuance, the total existing general obligation debt as well as the projected new general obligation debt are within the direct and indirect debt limitations. Given that certain debt that the City issues is considered exempt from the direct and/or indirect debt limitations, a more conservative debt limitation guideline will be followed. That guideline, applied to income tax supported debt, provides the following:

Adopted September 12, 2016 Ordinance No. 31‐16

5

• Of the 25% of income tax revenue that is dedicated to the Capital Improvement

Tax Fund, the City will allocate 60% of the revenue to pay the debt service on capital improvements.

• Each year, as part of the annual update of the five-year CIP, the Administration

will account for existing debt service as well as anticipated debt service on proposed projects.

• Anticipated debt service will be calculated using conservative interest rate

assumptions.

• The maximum amount of debt (both existing and proposed new debt) shall not

exceed 90% of the allocation of income tax revenue allocated to pay debt service. X. Sources of revenue to retire debt The City has several sources of revenue that are available or may become available for the repayment of debt, including but not limited to, income tax revenue, enterprise fund revenue, or tax increment revenue. The City will identify a specific stream of revenue intended to support each issuance of debt.

• Income Tax Revenue

The primary source of revenue to repay debt is income tax revenue. Pursuant to Ordinance No. 17-87, approved by Dublin City Council on July 20, 1987, (and the subsequent approval by the voters of Dublin to increase the income tax from 1% to 2% ), 25% of the income tax revenue collected will be allocated to the Capital Improvements Tax Fund. Of that amount, the City will allocate 40% to cash fund capital projects. The projects funded by cash will generally be recurring in nature

• r not have a useful life that meets the criteria of projects to be financed by debt.

The remaining 60% will be allocated to retire debt issued for capital projects (See Debt Limitation Section). Any excess income tax revenues remaining after funding the annual debt service may be used to 'buy down’ other capital project costs in

• rder to issue less debt, cash fund capital projects, or accelerate the repayment
• f outstanding debt, when appropriate.

Examples of projects that may be funded using income tax revenue: roadway improvements; park improvements; public facilities.

• Enterprise Fund Revenue

Revenues generated from user fees and other charges within the City’s water and sewer systems will be used to pay the debt service on improvements made to the respective systems. Examples of projects that may be funded using enterprise fund revenue: water and sewer projects; projects in which a dedicated enterprise fund has been established.

Adopted September 12, 2016 Ordinance No. 31‐16

6

• Tax Increment Revenue

The City utilizes tax increment financing (TIF) to fund improvements that benefit the property owners within the respective TIF districts. TIF revenues received within these TIF areas may be used to pay the debt service on the improvements. However, until a stable TIF revenue stream is available, the City will consider the debt service on these projects to be income tax funded, and will be included in the analysis of existing and proposed debt, in terms of determining additional debt capacity. Examples of projects that may be funded using tax increment revenue: roadway improvements; park improvements; improvements benefiting the TIF district.

• (Unlimited) Property Tax Revenue

Certain capital projects may lend themselves to financing through voter supported bond issues. A key benefit to this financing method is the fact that such debt is not counted against the 10-mill bond limit for “unvoted debt”. This financing approach may be used for specific voter approved purposes and may be a desirable option for certain projects if debt capacity limits are constraining or for projects that are outside the scope of general operations of the City. Revenue from a voter approved levy is segregated from all other revenue and available only for the voter approved project and related debt repayment. To the extent that money is available from the income tax allocation for debt service for payment of the debt charges on voted debt, the amount of the property tax levied to pay the debt service may be reduced or not collected at all. This does not diminish the pledge of the full faith and credit and property taxing powers of the City to the prompt payment of the debt charges on voter approved debt. Examples of projects that may be funded using (unlimited) property tax revenue: roadway improvements; park improvements; public facilities. XI. Structural features of debt

• Use of General Obligation Debt:
• The City intends to use general obligation debt for non-enterprise capital

improvements which it considers to be part of its core mission. To the extent that the City has ample general obligation capacity under the ten mill limitation and direct and indirect statutory debt limits, it will consider issuing general obligation bonds for its various enterprises (water and sewer).

Adopted September 12, 2016 Ordinance No. 31‐16

7

• Use of Revenue Bonds
• The City may issue revenue bonds for projects that have a definable user
• r revenue base. Revenue bonds are secured only by a specific source of

funds, either from the operations of the project being financed or from a dedicated revenue stream, rather than the general taxing power of the City.

• If there is capacity, it may be in the best interest of the City to issue

“double-barreled” bonds which are secured both by a dedicated revenue stream as well as by the City’s general taxing powers (general obligation bonds)

• Duration:
• Ohio Revised Code provides guidelines on the maximum period of time for

which capital improvements may be financed. However, the duration permitted by law may often exceed the City’s expectations of the practical economic life of an asset. The City intends to have debt fully retired during the expected useful life of the asset being financed. However, generally the City of Dublin does not expect to issue debt with a final maturity more than 20 years from the date of issuance.

• Bond Anticipation Notes:
• Bond anticipation notes are an interim means of financing and, by their

very nature, expose the City to interest rate and market risk upon renewal. Notes may be used to:

• Finance small projects until such time as the project or projects can

be rolled into a larger bond sale;

• During times of high interest rates and when the expectation that

interest rates are stable or trending downward; and

• On an interim basis during the construction period for a revenue

producing project until such time as the project is placed into service. XII. Waiver of debt policy The City may deviate from the requirements of this Debt Policy when City Council concludes it is in the best interest of the City to do so. XIII. Conclusion Adherence to a debt management policy signals to rating agencies and the capital markets that the City is well managed and should meet its obligations in a timely manner. Debt levels and their related annual costs are important long-term obligations that must be managed within available resources. This policy provides guidelines for the City to manage its debt program within those available resources and provides a foundation for prudent long-term financial management.

Capital Financing

April 24, 2017 Presentation to the Finance Committee of the Whole

Introductions

Municipal Advisor - H. J. Umbaugh & Associates

• Mr. Brian S. Cooper, Principal

(614) 987-1681 cooper@umbaugh.com

• Mr. James J. Hargrove, Director

(614) 987-1682 hargrove@umbaugh.com

• Mr. Thomas Ricchiuto

(614) 987-1686 ricchiuto@umbaugh.com

Legal Counsel – Squire, Patton, Boggs

• Mr. Christopher Franzmann, Partner

(614) 365-2737 chris.franzmann@squirepb.com

2

Presentation Purpose/Desired Outcomes

An understanding of the following:

• The various types of debt issued by municipalities in Ohio and the limitations that exist
• The City’s current debt profile
• The City’s financing plan for 2017
• The factors analyzed by Moody’s Investor Services as part of the rating process and the estimated impact of future

financings on the City’s rating

3

Outstanding Debt Summary (as of April 24, 2017)

Credit Type Series Name Dated Date Final Maturity Call Date Original Par Outstanding Par Callable Par Limited Tax GO Municipal Pool South (OMB) 4/14/2004 1/1/2025 Non-Callable $2,986,000 $1,402,000

• Various Purpose Imp. and Ref'g Bonds, Series 2009B

11/18/2009 12/1/2021 12/1/2019 $10,375,000 $5,025,000 $1,530,000 Various Purpose Imp. and Ref'g Bonds, Series 2012 10/2/2012 6/1/2032 6/1/2022 $10,820,000 $7,245,000 $2,805,000 Capital Facilities Imp. Bonds, Series 2013 12/19/2013 12/1/2033 12/1/2021 $9,855,000 $9,825,000 $8,480,000 Capital Facilities Imp. and Ref'g Bonds, Series 2014 1/7/2014 12/1/2029 12/1/2021 $23,645,000 $17,730,000 $8,440,000 Various Purpose Bonds, Series 2015 9/30/2015 12/1/2035 12/1/2025 $49,200,000 $48,090,000 $29,805,000 Capital Facilities Bonds, Series 2016 12/6/2016 12/1/2036 12/1/2025 $9,325,000 $9,325,000 $5,840,000 Limited Tax GO Total $116,206,000 $98,642,000 $56,900,000 Unlimited Tax GO Various Purpose Ref'g Bonds, Series 2009A 11/18/2009 12/1/2020 12/1/2019 $15,105,000 $4,550,000 $200,000 Unlimited Tax GO Total $15,105,000 $4,550,000 $200,000 Nontax Revenue Special Ob. Nontax Revenue Bonds, Series 2015A 10/28/2015 12/1/2044 12/1/2025 $16,000,000 $16,000,000 $16,000,000 Special Ob. Nontax Revenue Bonds, Series 2015B 10/28/2015 12/1/2035 12/1/2025 $16,000,000 $16,000,000 $10,145,000 Nontax Revenue Total $32,000,000 $32,000,000 $26,145,000 Grand Total $163,311,000 $135,192,000 $83,245,000

Outstanding Bonds by Credit Type

Three credits outstanding: unlimited (voted) GO, limited (unvoted GO) and nontax revenue bonds

4

Outstanding Debt Summary (as of April 24, 2017)

Three other forms of (non-traditional) debt outstanding:

5

Credit Type Series Name Dated Date Final Maturity Call Date Original Par Outstanding Par Callable Par Other Debt Upper Scioto West Branch Interceptor (OWDA) 1/1/1999 7/1/2018 $19,716,717 $1,942,036

• 270/33 Interchange (SIB Loan)

2/10/2015 2/1/2035 $35,000,000 $14,895,959 **

• Dublin Road/Glick Road Improvements (OPWC)

7/1/2014 7/1/2020 $250,000 $225,000

• Other Debt Total

$54,966,717 $17,062,995 $0 Grand Total $54,966,717 $17,062,995 $0

Outstanding Bonds by Credit Type

**Outstanding Par is based on amount of a portion of the loan that was drawn upon as of December 31, 2016.

General Obligation Debt Capacity Limitations – Statutory Limits

Statutory Debt Limit

• Applies to GO debt solely supported by ad valorem

property taxes

• 10.5% of assessed value for total (unvoted + voted) GO

Debt

• 5.5% of assessed value for unvoted GO Debt
• All unvoted GO debt that pledges income tax revenue

is considered exempt;

• Issuing exempt GO debt is common practice among

Ohio issuers The State’s statutory limits likely pose no issue for the City now or for the foreseeable future as it relates to borrowing capacity Calculation of Debt Limits as of 12/31/16

Assessed Value $2,039,280,850 10.5% AV Value for Total GO Debt 214,124,489 (less) Non-Exempt Debt <3,292,000> Debt Capacity within 10.5% Limitation $210,832,489 5.5% AV Value for Unvoted GO Debt $112,160,447 (less) Non-Exempt Unvoted Debt

• Debt Capacity within 5.5% Limitation

$112,160,447

General Obligation Debt Capacity Limitations – Constitutional Limits

Constitutional Debt Limit (General Obligation)

• 10 mill overlapping debt limitation
• Only some entities may levy ad valorem property

taxes within the ten-mill limitation

• The City’s highest overlapping subdivision is

within Union County and is estimated to currently have utilized 7.1145 mills (for the year of its highest potential debt due)

• 2.885 mills remain available within the ten-mill

limitation to the City and overlapping subdivisions in connection with the issuance of additional unvoted general obligation debt. (2.885 mills = $73.3 million in par value – based on 5% over 20 years)

How is one mill calculated? One mill = 1/10 of a percent of assessed valuation (0.10%) The maximum combined unvoted ad valorem property tax an

• verlapping subdivision may impose on a taxpayer is one percent of

assessed valuation 0.10% x 10 mills = 1% Dublin is located within three counties with overlapping subdivisions which includes:

Counties School Districts Regional Transit Authorities Townships Park/Preservation Districts Library Districts Mental Health Districts Airports SWACO

Summary of Available Millage - Other Issuers Mentor – 7.55451 mills Worthington – 6.43125 mills Beavercreek – 5.90537 mills Blue Ash – 5.3095 mills Mason – 4.25025 mills Hudson – 4.10813 mills New Albany – 3.23217 mills Dublin – 2.8855 mills Westerville – 2.32389 mills Hilliard – 1.78145 mills Grove City – 1.68667 mills Upper Arlington – 0.91350 mills Columbus – 0.30405 mills

8 Constitutional Debt Limit

Required Tax Rates (within the 10 mills)

City of Dublin - Special Assessment Bonds 0.0632 mills City of Dublin - All Other Bonds 4.7530 mills Union County 1.3813 mills Dublin School District 0.3521 mills Tolles Career & Technical Center 0.1528 mills SWACO 0.4122 mills Remaining Millage Available 2.8855 mills

General Obligation Debt Capacity Limitations – Constitutional Limits

Debt Capacity Limitations – Dublin Debt Policy

Year Income Tax Funding1 Debt Service Allocation2 90% of Debt Service Allocation Existing Debt Service3 Debt Allocation not Committed Additional Debt that Could be Supported4 2017 $21,183,525 $12,710,115 $11,439,103 $4,125,520 $7,313,589 $91,419,862 2018 21,501,250 12,900,750 11,610,675 2,836,926 8,773,749 109,671,863 2019 21,823,750 13,094,250 11,784,825 2,651,818 9,133,007 114,162,588 2020 22,483,250 13,489,950 12,140,955 2,270,687 9,870,268 123,378,350 2021 22,820,500 13,692,300 12,323,070 2,969,089 9,353,981 116,924,762 5-Year Average $111,111,485

1 25% of income tax revenue dedicated to the Capital Improvement Tax Fund 2 60% of the income tax revenue in the Capital Improvement Tax Fund reserved to pay debt service on capital projects 3 Actual debt service payments for existing debt funded by Income Tax 4 Based on 20-year level debt service at 5% interest rate

9

Source of Payment for Debt Service

Income Tax Revenue TIF Revenues Property Taxes Special Assessment Water/Sewer Revenue Other Sources

10

Future Financing Plan

2017 – 2021 Capital Improvements Program (Ordinance No. 26-16 Approved September 12, 2016)

Repayment Source 2017 2018 2019 2020 2021 City Facilities Income Tax $4,445,000 $0 $0 $0 $0 Transportation Income Tax & TIF $39,850,000 $3,930,000 $6,530,000 $9,500,000 $13,660,000 Parks & Recreation Income Tax & TIF $9,400,000 $1,000,000 $7,000,000 $6,900,000 $0 Sewer Improvements/Extensions Sewer Revenue $1,140,000 $3,610,000 $2,065,000 $7,000,000 $3,205,000 Total $54,835,000 $8,540,000 $15,595,000 $23,400,000 $16,865,000 Five-Year Total $119,235,000

11

2017 Plan of Finance

City Facilities - $6,750,000

• Service Center Expansion - $3,300,000
• Resolution No. 29-16 approved May 23, 2016
• Originally planned to be financed in 2016; expenditures have been covered through Advance from the General Fund
• 5800 Building Renovations - $3,450,000
• Bid Summer 2017

Transportation - $27,200,000

• Scioto River Pedestrian Bridge/Park - $22,300,000
• Resolution No. 06-17 approved January 23, 2017 (GMP with Kokosing for bridge west abutment) – $152,343
• Resolution No. 22-17 approved April 10, 2017 (GMP with Kokosing for bridge construction) - $22,165,570
• N. High Street - $4,900,000
• Resolution No. 01-17 approved January 10, 2017

Sanitary Sewer Improvements - $1,475,000

• Deer Run Sanitary Sewer - $550,000
• Resolution 55-16 approved November 7, 2016
• Deer Run Sewer Upsizing - $95,000
• Manhole Rehab – $275,000
• Sewer Extensions to Area 11A, 11B, and 13 - $555,000
• Bid in Fall 2017

Original Plan $54.8 million Revised $35.4 million

12

2017 Plan of Finance Timeline

May 8, 2017

• First Reading
• f Bond

Ordinances May 22,2017

• Second

Reading/Public Hearing of Bond Ordinances May 31, 2017*

• Rating Calls

with Moody’s and Fitch June 9, 2017*

• Receive

Ratings from Moody’s and Fitch June 22, 2017*

• Bonds Price

July 13, 2017*

• Bonds Close

13

*Dates are approximate

Debt Service Analysis – Total Debt Service vs. Income Tax Revenue (reserved for debt)

Based on 2017-2021 CIP 14

$- $5 $10 $15 $20 $25 Millions Income Tax Revenue Reserved for Debt Service Total Debt Service In addition to Income Tax Revenue, debt Service is paid from various sources:

• Property Taxes
• TIF Revenues
• Special Assessments
• Water/Sewer Revenues
• Hotel/Motel Taxes
• State Highway Funds

Debt Service Analysis – Total Debt Service vs. Income Tax Revenue (reserved for debt)

Based on 2017-2021 CIP (excludes water, sewer & special assessment debt) 15

$- $5 $10 $15 $20 $25 Millions

Income Tax Revenue Reserved for Debt Service Other Revenue (TIF, Bed Tax, Other) Debt Service (existing & new) Debt Service Funded by IT Revenue (existing & new)

Rating Analysis

City’s current rating by Moody’s Investor Services – Aaa (based on November 2016 transaction) Economy/Tax Base (30%)

• Tax Base Size (Full Value) (10%)

Aa

• Full Value per Capita (10%)

Aa

• Wealth (median Family Income) (10%)

Aaa

Finances (30%)

• Fund Balance as a Percentage of Revenue (10%)

Aaa

• 5-Year Dollar Change in Fund Balances as a Percentage of

Revenues (5%) Aaa

• Cash Balance as a Percentage of Revenues (10%)

Aaa

• 5-Year Dollar Change in Cash Balance as a Percentage of

Revenues (5%) Aaa

Management (20%)

• Institutional Framework (10%)

A

• Operating History: 5-Year Average of Operating

Revenue/Operating Expenditures (10%) Aaa

Debt and Pensions (20%)

• Net Direct Debt/Full Value (5%)

A

• Net-Operating Revenues (5%)

A

• 3-Year Average of Moody’s ANPL/Full Value (5%)

A

• 3-Year Average of Moody’s ANPL/Operating Revenues Direct

Debt (5%) A

Final Estimated Moody’s Score 1.50 = Aaa

16

Rating Impact of Future Debt* – Debt and Pension Section

(20%)

2016 (November Transaction) 2017 2018 2019 2020 2021

Net Direct Debt/Full Value A A A A A A Net Direct Debt/Operating Revenues* A A A A A A Final Estimated Moody’s Score 1.50 1.53 1.54 1.54 1.55 1.56 Rating – Based on Scorecard Alone Aaa Aa1 Aa1 Aa1 Aa1 Aa1

Note: Table is based on 2017-2021 CIP *Based on conservative estimates reflecting no growth in revenue

17

Conclusion

2017-2021 CIP reflects programming to support an aggressive capital plan

• Responsive to our residents
• Emphasis on maintenance of existing infrastructure and assets
• Investment throughout the Community
• Efforts to continue strengthening the City’s tax base (both income tax base and property tax base) through development and

redevelopment Debt plan proposed as part of the 2017-2021 CIP

• Is a fluid process in which the timing of projects and overall project costs change over time as more refined details are obtained
• Utilizes conservative revenue estimates
• Adheres to City’s Debt Policy
• While aggressive, leaves additional capacity
• Is affordable based on revenue estimates

Future financings

• Continually analyze the use of cash on hand to finance projects versus issuing long-term debt
• Will be in compliance with restrictions imposed by State law
• Will look at all options available, including utilizing non-GO debt where appropriate to preserve GO capacity

18

19

DEPARTMENT OF FI NANCE

CAPI TAL FI NANCI NG APRI L 24, 20 17

The following is a narrative of the PowerPoint presentation regarding Capital Financing presented to the Dublin City Council Finance Committee on Monday, April 24, 2017. Slide # 3 – Presentation Purpose/ Desired Outcomes

The purpose of this presentation is to provide City Council with an overview of the City’s debt. There are four

• utcomes that are desired as part of this presentation:
• 1. An understanding of the various types of debt that are issued by municipalities in Ohio, and the

limitations that exist according to state and local policies;

• 2. An understanding of the City’s current debt profile;
• 3. An understanding of the City’s plan of finance for 2017; and
• 4. An understanding of the factors that are analyzed by Moody’s Investor Services as part of the rating

process and the estimated impact of future financings on the City’s rating. To summarize, we are in a transformational period of time, where it is necessary to re-invest in the community to ensure that the financial successes Dublin has achieved in the past will continue for generation to come. The most recent Capital Improvement Program (CIP) covering the five-year period 2017 – 2021 reflects an aggressive plan that supports this investment. We hope that through this presentation, City Council will understand how this important financing tool fits in with our planned investment. Furthermore, we hope that Council understands that the capital budgets recommended by the Administration reflect a level of investment that is affordable given our conservative revenue estimates and within the confines of state restrictions and Dublin’s own policies.

Slide # 4 – Outstanding Debt Summary (as of April 24, 2017) The City’s outstanding bonds, by credit type, are reflected on slide #4. The table reflects the series name, the

date the bonds were issued (or refunded), the final maturity date, the call date (if applicable), the original par amount, the outstanding par amount as of April 24, 2017, and the callable par amount on the call date (if applicable). In order to better understand this slide, it is important to have a general understanding about the two primary categories of debt that municipalities issue: General Obligation Bonds (GO Bonds) and Revenue Bonds. Each are described as follows: GO Bonds GO Bonds are a type of municipal bond that are secured by the City’s pledge to use all legally available resources, including tax revenues, to repay bond-holders. There are two subcategories of GO Bonds:

• Limited Tax (Unvoted GO Bond) (LTGO)
• Pledges the full faith and credit of the City subject to the maximum rate at which taxes

may be levied without voter approval.

• Does not require voter approval to be issued.
• Subject to state statutory and constitutional debt limitations.
• Special Assessment – A type of Limited Tax GO Bond in which bond proceeds are repaid

by a special assessment tax levied on a specific parcel of land that directly benefits from the financed improvements.

All of the City’s LTGO Bonds pledge income tax revenues as an additional source of repayment.

• Unlimited Tax (Voted GO Bond) (ULTGO)
• Pledges the full faith and credit of the City and obligates the City to raise property tax

revenues in order to satisfy debt service requirements.

• Requires voter approval.
• Not subject to state constitutional debt limitations.

GO debt is traditionally rated higher by the rating agencies than any other debt given the backing of the City to pledge the full faith and credit (utilizing all available resources) to repay bond-holders.

Slide # 4 – Outstanding Debt Summary (as of April 24, 2017) (continued)

Revenue Bonds Revenue bonds are a type of municipal bond that are secured by a specific revenue of the City. Examples include Water, Sewer, Income Tax and Nontax Revenue Bonds.

• Debt of the City payable solely from the revenue pledged.
• Not backed by the full faith and credit of the City.
• Does not count towards the City’s GO debt limit.
• Do not require voter authorization.

The City has chosen to use the GO pledge on most of the City’s outstanding debt, even the debt which is

funded by water, sewer and income tax revenues. This was done to obtain the highest bond rating to lower the interest costs on the bonds.

Slide # 5 – Outstanding Debt Summary (as of April 24, 2017) In addition to the City’s traditional debt issued, as reflected in slide #4, there are three other forms of debt

that the City has issued in order to finance capital projects:

• The Upper Scioto West Branch Interceptor – funded through the Ohio Water Development

Authority Loan program

• The I270/US 33 Interchange construction – funded through the State of Ohio State Infrastructure

Bank (SIB) loan program

• The Dublin Road/Glick Road Improvements – funded through the Ohio Public Works Commission

loan program

Slide # 6 – General Obligation Debt Capacity Limitations – Statutory Debt Limit

There are three different constraints on the City’s overall ability to issue debt: the Statutory Debt Limit, the

Constitutional Debt Limit and the City’s own Debt Policy limitations. Each are discussed in slides # 6 through

10: Statutory Debt Limit

• Based on the City’s Assessed Valuation
• 2016 assessed value for Dublin is $2,039,280,850
• All GO debt that pledges income tax revenue is considered exempt
• Issuing exempt LTGO debt is common practice among Ohio issuers
• For total GO Debt (unvoted + voted), the limitation is based on 10.5% of assessed value
• Taking into consideration exempt debt, the City’s debt capacity within the 10.5% limitation

is $210,832,489

• For unvoted GO Debt, the limitation is based on 5.5% of assessed value
• Taking into consideration exempt debt, the City’s debt capacity within the 5.5% limitation is

$112,160,447

• 10.5% and 5.5% limitation applies to GO debt solely supported by ad valorem property taxes

*The State’s statutory limits likely pose no issue for the City now or for the foreseeable future as it

relates to borrowing capacity.

Slide # 7 – General Obligation Debt Capacity Limitations – Constitutional Debt Limit

Constitutional Debt Limit

This limitation is frequently referred to as the “ten-mill” limitation and through the Constitution of Ohio,

stipulates that the maximum combined unvoted ad valorem property taxes that all overlapping subdivisions may impose on a taxpayer is one percent of assessed valuation (which equals 10 mills). Applied on a county-wide basis, this analysis takes into consideration any overlapping subdivision that may levy ad valorem property taxes within the ten-mill limitation. Subdivisions impacting Dublin’s ten- mill limitation include:

• The City
• County
• School Districts
• Townships
• Joint Vocational and Technical Career Centers
• SWACO

Of the three counties in which Dublin is located, Union County and the overlapping taxing districts have the highest amount of overlapping debt on a millage basis. Total millage used in the ten-mill calculation in Union County is 7.1145 mills (for the year of the highest potential debt due), leaving 2.885 mills remaining available within the ten-mill limitation. Based on 2.885 mills remaining, the City and overlapping subdivisions within Union County have approximately $73.3 million in par value available (assuming all debt is issued immediately and based

• n a 5% interest rate over 20 years). As debt is paid down in each related subdivision over time, the

ten-mill limit increases accordingly. Conversely, as new debt is issued, the remaining available millage

• decreases. No subdivision may issue debt that increases the total over ten mills.

Slide # 8 – General Obligation Debt Capacity Limitations – Constitutional Debt Limit (continued)

Constitutional Debt Limit Based on the 10-mill limitation and the highest amount of overlapping debt on a millage basis which exists within Union County, the pie chart on slide # 8 shows the how much millage is utilized by each of the taxing entities. For comparison, Staff has also shown the remaining millage available in a number of other Ohio

• municipalities. This demonstrates that while there are some entities that have a substantial amount of

millage available to issue GO debt, the level available to the City is not inconsistent with other Central Ohio suburbs.

Slide # 9 – Debt Capacity Limitations – City of Dublin Debt Policy Limitations

City of Dublin Debt Policy Limitations In 2016, City Council adopted a formal Debt Policy. The policy stipulated that of the 25% of income tax revenue that is dedicated to capital improvements (through the Capital Improvement Tax Fund), 60% is reserved to pay debt service while the remaining 40% is used to cash fund projects. Furthermore, the maximum amount of debt (existing and proposed new debt) shall not exceed 90% of the allocation of income tax revenue allocated to pay debt service. For Debt Policy purposes, income tax revenue is the primary factor that determines how much debt can be issued and retired. Additional revenue into the Capital Improvement Tax Fund (such as the transfer

• f funds from the General Fund, as part of the City’s General Fund Balance Policy) is not taken into

consideration.

As part of the annual update to the City’s five-year CIP, income tax revenues are estimated for the

upcoming five-year period. Based on those estimates, the amount of funding available to retire debt service is calculated. As projects are evaluated and funding is determined, existing debt service as well as projected debt service is considered. The Administration’s proposed CIP ensures that any debt service anticipated to be undertaken by the City is within the funding constraints provided for in the Debt Policy. Based on the income tax revenue estimates provided for in the 2017-2021 CIP as well as the City’s existing debt service payments, the City could issue an average of $111.1 million in income tax supported debt over the same five-year time period.

Slide # 10 – Sources of payment for Debt Service

The City utilizes many different revenue sources beyond the income tax revenue to fund the semi-annual debt service payments. Water and sewer revenues are used to fund improvements to the water and sewer systems; TIF revenues are used to fund the public improvements that are outlined in the TIF legislation as eligible expenditures. And in some cases, revenues from other sources such as the bed tax revenue, property taxes, and special assessments are utilized. The following is a comprehensive listing, by funding source, of the City’s outstanding debt, including the principal balance as of January 1, 2017 and the final maturity date. Where applicable, the specific TIF(s) that fund the debt service are noted. Income Tax Revenue

• Avery-Muirfield Interchange
• Outstanding Principal $1,675,000
• Retired in 2019
• Service Center
• Outstanding Principal $1,159,937
• Retired in 2021
• South Pool
• Outstanding Principal $1,548,000
• Retired in 2025
• LED Street Lights
• Outstanding Principal $1,450,000
• Retired in 2022
• Rec Center Expansion
• Outstanding Principal $437,000
• Retired in 2018
• Emerald Parkway Bridge
• Outstanding Principal $513,000
• Retired in 2017
• Emerald Parkway Overpass – Phase 7
• Outstanding Principal $1,495,000
• Retired 2019
• Justice Center Improvements
• Outstanding Principal $10,290,000
• Retired 2035
• Riverside Drive/SR 161/Park Improvements
• Outstanding Principal $24,275,000
• Retired 2035

Slide # 10 – Sources of payment for Debt Service (continued)

TIF Revenues

• Rings Road
• Outstanding Principal $1,014,957
• Retired in 2020
• Rings Road TIF
• Perimeter Drive Extension
• Outstanding Principal $1,132,693
• Retired in 2020
• Perimeter West TIF
• Emerald Parkway Phase 7A
• Outstanding Principal $576,495
• Retired in 2020
• Thomas Kohler TIF
• Industrial Parkway/SR 161 Improvements
• Outstanding Principal $6,870,000
• Retired in 2029
• Perimeter West TIF
• Emerald Parkway Phase 8
• Outstanding Principal $6,175,000
• Retired in 2033
• Emerald 8 TIF, McKitrick TIF, Kroger TIF
• BSD Land Acquisition (Riverside Drive Realignment)
• Outstanding Principal $5,030,000
• Retired in 2033
• River Ridge TIF, McKitrick TIF
• 270/33 Interchange
• Outstanding Principal (Design) $6,475,000
• Retired in 2023
• Outstanding Principal (Construction) $9,812,642
• Retired in 2035
• Ruscilli TIF, Upper Metro TIF, Dublin Methodist TIF
• Woerner-Temple Road
• Outstanding Principal $1,258,000
• Retired in 2019
• Woerner-Temple TIF

Slide # 10 – Sources of payment for Debt Service (continued)

TIF Revenues (continued)

• BSD Roadways (John Shields Parkway II)
• Outstanding Principal $9,325,000
• Retired in 2036
• Tuller TIF
• MSP guarantee begins in 2019 and will cover all annual debt service
• BSD Roadways & Parking Structures (Blocks B & C – Development Agreement with Crawford

Hoying)

• Outstanding Principal $11,100,000 (Roadways)
• Retired in 2035
• Outstanding Principal $32,000,000 (Garages)
• Retired in 2044
• MSP guarantee begins in 2018

Property Taxes

• Coffman Park Expansion
• Outstanding Principal $847,000
• Retired in 2020
• Retired in 2018

Special Assessment

• Ballantrae
• Outstanding Principal $540,063
• Retired in 2021

Water Revenue

• Darree Fields Water Tower
• Outstanding Principal $1,430,000
• Retired in 2029
• Dublin Road Water Tower
• Outstanding Principal $1,985,000
• Retired in 2032

Sewer Revenue

• Upper Scioto West Branch Interceptor
• Outstanding Principal $1,942,035
• Retired in 2018

Slide # 10 – Sources of payment for Debt Service (continued)

Sewer Revenue (continued)

• Sanitary Sewer Lining & Repairs
• Outstanding Principal $1,575,000
• Retired in 2029
• Outstanding Principal $2,135,000
• Retired in 2032
• Outstanding Principal $2,425,000
• Retired in 2035

Hotel/Motel Tax Revenue

• Arts Facility Acquisition
• Outstanding Principal $385,684
• Retired in 2020
• Arts Facility Renovation
• Outstanding Principal $215,171
• Retired in 2020

State Highway Funds

• Dublin Road/Glick Road
• Outstanding Principal $237,500
• Retired in 2026

Slide # 11 – Future Financing Plan

As part of the 2017-2021 CIP (Ordinance No. 26-16, approved September 12, 2016), the Administration discussed the capital projects programmed for the five-year period along with the source of funding for each

• f the projects. There were $119.2 million in projects in which the funding was expected to come from the

issuance of long-term bonds. The chart on slide # 11 breaks down each year of the CIP along with the amount planned on being financed and a general characterization of the projects financed. A comprehensive listing of the specific projects are reflected in the chart below. 2017 2018 2019 2020 2021 City Facilities $4,445,000 $- $- $- $-

5800 Building Renovations 3,480,000

• Salt Barns

465,000

• Other

500,000

• Transportation

$39,850,000 $3,930,000 $6,530,000 $9,500,000 $13,660,000

Pedestrian Bridge 22,750,000

• Historic Dublin CML Street

Network 4,600,000

• Historic Dublin High Street

2,500,000

• CML Parking Deck

10,000,000

• Post Preserve Access

Modification

• 1,430,000
• Emerald Parkway Deck Overlay
• 2,500,000
• Shawan Falls Extension Phase I
• 5,000,000
• Hyland Croy/Post Preserve

Roundabout

• 1,530,000
• Post Rd. Realignment/Kilgour

Place

• 8,000,000
• US33/161/Frantz Rd.

Intersection Acquisition

• 1,500,000
• Avery Road Widening
• 7,560,000

Reserve for US33/Post Rd. Interchange

• 6,100,000

Parks & Recreation $9,400,000 $1,000,000 $7,000,000 $6,900,000 $-

Riverside Park 9,400,000 1,000,000 7,000,000 1,900,000

• Dublin Community Pool North
• 5,000,000
• Sewer

I mprovements/ Extensions $1,140,000 $3,610,000 $2,065,000 $7,000,000 $3,205,000 TOTAL $54,835,000 $8,540,000 $15,595,000 $23,400,000 $16,865,000

Slide # 11 – Future Financing Plan (continued)

It is important to remember that the cost estimates provided in the CIP are estimates based on the best information available at the time the document is presented to Council for consideration. The timing of projects can shift from one year to the next based on several factors. Additionally, as design for projects is more refined (as construction nears), the cost estimates become more accurate. However, until projects are actually bid are the costs certain. The CIP projects are fluid and oftentimes span more years that the year(s) indicated in the CIP document.

Slide # 12 – 2017 Plan of Finance

As reflected in the previous slide, the estimate for financing in 2017 was $54.8 million. However, after analyzing the projects status, Staff has determined that it is in the best interest of the City to move forward with a bond package that totals $35.425 million. The amount of bonds will be broken down as follows:

• City Facilities - $6,750,000
• Service Center Expansion - $3,300,000
• Resolution No. 29-16 approved May 23, 2016
• 5800 Building Renovations - $3,450,000
• Bid in summer 2017

Amount is higher than programmed in CI P due to delaying the Service Center Expansion financing until 2017 when it was originally programmed for 2016. However, the funding for the replacement of the salt barns will not be needed in

• 2017. As such, it was removed.
• Transportation - $27,200,000
• North High Street Widening - $4,900,000
• Resolution No. 01-17 approved January 10, 2017
• Scioto River Pedestrian Bridge - $22,300,000
• GMP with Kokosing for western bridge abutment $152,343



Resolution No. 06-17 approved January 23, 2017

• GMP with Kokosing for construction of the bridge $22,126,570



Resolution No. 22-17 approved April 10,

Amount is lower than programmed in CI P due to delaying the CML Parking Deck and Roadway network financing until 2018 based on the current project status.

• Sanitary Sewer Improvements - $1,475,000
• Deer Run Sanitary Sewer - $550,000
• Resolution No. 55-16 approved November 7, 2016
• Deer Run Sewer Upsizing - $95,000
• Manhole Rehab - $275,000
• Work to begin after Memorial Tournament
• Sewer Extensions to Areas 11A, 11B, and 13 - $555,000
• Bid in fall 2017

Amount is higher than programmed in CI P due to delaying the Deer Run Sanitary Sewer financing until 2017 when it was originally programmed for 2016.

• Parks & Recreation – No funding is being requested at this time. The amount needed for the

Riverside Crossing Park (in conjunction with the pedestrian bridge), has already been accounted for and financed through cash.

Slide # 13 – 2017 Plan of Finance Timeline

This slide reflects the timeline of the 2017 financing, including upcoming decisions that will be requested of City Council (approval of bond legislation).

Slide # 14 – Debt Service Analysis

As identified on Slide # 11, there are several sources of revenue used to pay debt service. However, the primary source is the income tax revenue. Slide # 14 shows the City’s annual debt service measured against income tax revenues for the years 2000-

• 2030. Please keep in mind the following:
• The total debt service, shown as the blue line, reflects the actual debt outstanding in each year, as

well as the debt that was anticipated to be issued as part of the 2017-2021 CIP.

• The green bars represent the income tax revenue that is dedicated to pay debt service pursuant to

the City’s Debt Policy. That is, 90% of the income tax revenue dedicated to the Capital

Improvement Tax Fund reserved to pay debt service (60% of the 25% dedicated to capital).

• The income tax revenue estimates for 2017-2021 are consistent with the amounts programmed as

part of the 2017-2021 CIP. Beyond 2021, income tax growth is conservatively estimated at 1.5% annually. From this slide, it is easy to conclude that there are other revenue sources to pay debt service as the income tax revenue alone is insufficient. While comparing these two data sets (total debt service versus income tax revenue dedicated to pay debt service) may not prove to be useful, Staff felt it was important to show the

• verall debt of the City compared to the primary source of revenue.

Slide # 15 – Debt Service Analysis – Total Debt Service versus I ncome Tax Revenue A more appropriate comparison when analyzing the City’s debt is between Debt Service (excluding those

amounts paid by water, sewer, or special assessment revenues) and the revenues used to pay the debt service (excluding the revenue from water, sewer, or special assessments). Slide # 15 provides this comparison. Revenue

• The blue bars represent the income tax revenue that is dedicated to pay debt service pursuant to

the City’s Debt Policy. That is, 90% of the income tax revenue dedicated to the Capital

Improvement Tax Fund reserved to pay debt service (60% of the 25% dedicated to capital).

• The red bars represent other revenue used to pay debt service. Included are revenues from

property taxes, TIFs, hotel/motel taxes and state highway funds. Excluded from these amounts are water, sewer and special assessment revenues. Expenses

• The green line represents the total debt service for the City excluding water, sewer and special

assessment debt.

• The blue line represents the total debt service for the City that is paid from income tax revenue.

This slide provides a better “apples to apples” comparison between revenue used to pay debt service and the City’s actual and projected debt service. There are two important conclusions that can be drawn from this slide:

• 1. There are sufficient resources from the income tax to support the income tax debt through

2030 (blue bar compared to blue line). The proposed financing plan is compliant within the City’s approved Debt Policy.

• 2. There are sufficient resources between the income tax and other sources of revenue to

support the total debt service of the City (excluding water, sewer, special assessment as they each have a dedicated revenue stream to pay the debt service) (red bar + blue bar compared to green line).

Slide # 16 – Rating Analysis

This slide depicts the four categories that Moody’s uses in evaluating the credit quality of US local government GO debt. It is referred to as the Moody’s scorecard. Each of the categories is weighted, as are the

‘subcategories’ within each category.

Based on the rating and weight of each of the subcategories, Moody’s calculates a score, whereby the higher the number, the lower the rating. The minimum, unadjusted score for a Aaa rating is 1.50. However, the

scorecard may be adjusted up or down based on additional “below-the-line” factors that the rating agency believes impact a particular local government’s credit quality in ways not captured by the statistical portion of

the scorecard. Examples of these factors include: Institutional presence, regional economic center, economic concentration, unusually strong or weak budget management and planning, to name a few. To articulate this point, the following is taken directly from Moody’s rating methodology on US Local Government General Obligation Debt:

This methodology explains how Moody’s evaluates the credit quality of US local government General

Obligation (GO) debt. This document is intended to provide general guidance that helps local governments, investors, and other interested market participants understand how key quantitative and qualitative risk factors are likely to affect rating outcomes for local governments that issue GO bonds. This document does not include an exhaustive treatment of all factors that are reflected in our ratings but should enable the reader to understand the qualitative considerations, financial information, and ratios that are usually most important for ratings in this sector. The purpose of the scorecard is to provide a reference tool that market participants can use to approximate most credit profiles within the local government sector. The scorecard provides summarized guidance for the factors that we generally consider most important in assigning ratings to these issuers. However, the scorecard is a summary that does not include every rating consideration. The weights the scorecard shows for each factor represent an approximation of their importance for rating decisions. In addition, the scorecard was built based on historical results while our ratings are based on our forward-looking expectations. As a result, we would not expect the scorecard outcome to match the actual rating in every case. The City’s rating in each of the subcategories as part of the November 2016 issuance of $9.3 million in bonds is reflected on this slide. You will note that on a purely numerical basis (no other factors are taken into consideration), the City’s estimated score was a 1.50.

Slide # 16 – Rating I mpact of Future Debt

Taking the financing plan that was presented as part of the 2017- 2021 CIP, the City’s Municipal Advisor analyzed the impact of future debt on the Debt and Pension section of the scorecard (focusing on the Debt portion only). Each year is benchmarked against the rating that was assigned in November 2016. While it is not expected that the rating assigned to the Net Direct Debt/Full Value and Net Direct Debt/Operating Revenues to change from our existing rating of A, the numerical score is expected to increase from 1.50 to 1.56, based on the issuance of additional debt alone, over the next five years. This increase in score, not considering any ‘below the line factors’, moves the City’s rating from a Aaa to Aa1. However,

please note that full value and operating revenues are a factor that the net direct debt is measured against. This analysis does not consider growth in either category. This is the most conservative approach as based on history, we would expect an increase in our assessed valuation as well as our operating revenues.