FY2019 TREASURERS REPORT TO COUNCIL Ta l i a L o m a x - O d n e a - - PowerPoint PPT Presentation

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FY2019 TREASURERS REPORT TO COUNCIL Ta l i a L o m a x - O d n e a - - PowerPoint PPT Presentation

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FY2019 TREASURERS REPORT TO COUNCIL Ta l i a L o m a x - O d n e a l To m E d d l e m o n F i n a n c e D i r e c t o r T r e a s u r e r Way n e P l a c i d e H e i d i G o u l d F i n a n c i a l A d v i s o r D e b t A d m i

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Ta l i a L o m a x - O ’d n e a l To m E d d l e m o n

F i n a n c e D i r e c t o r T r e a s u r e r

Way n e P l a c i d e H e i d i G o u l d

F i n a n c i a l A d v i s o r D e b t A d m i n i s t r a t o r H i l l t o p S e c u r i t i e s

FY2019 TREASURER’S REPORT TO COUNCIL

Metropolitan Government of Nashville and Davidson County Department of Finance

Mayor David Briley

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2 Metropolitan Government of Nashville and Davidson County Mayor David Briley

DEBT PRESENTATION

  • Annual Debt Report
  • Rating Agencies
  • Debt Management Policy
  • Capital Spending and Debt Capacity

2

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3 Metropolitan Government of Nashville and Davidson County Mayor David Briley

DEBT PRESENTATION

Annual Debt Report

3

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4 Metropolitan Government of Nashville and Davidson County Mayor David Briley

ANNUAL DEBT REPORT

  • General Obligation Debt
  • Water and Sewer Revenue Debt
  • Convention Center Authority Debt
  • Sports Authority Debt
  • Contingent Liability
  • Refunding Bonds
  • Commercial Paper
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5 Metropolitan Government of Nashville and Davidson County Mayor David Briley

OUTSTANDING GENERAL OBLIGATION DEBT

Principal Interest Total Bonded Debt

$2,550,045,000 $949,349,215 $3,499,394,215

State Loans for Schools

32,435,224 18,269,524 50,704,748

Commercial Paper (1) (2) 600,000,000

600,000,000

Total GO Debt $3,182,480,224 $967,618,739 $4,150,098,963

(1) Commercial paper interest is variable (2) Commercial paper outstanding as of 05/18/18

Source: Treasury Debt Schedules

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6 Metropolitan Government of Nashville and Davidson County Mayor David Briley

ANNUAL DEBT SERVICE BY BOND ISSUE

6

Bond Series 2010A Refunding Series 2010B BAB Series 2010D Refunding Series 2011 Refunding Series 2012 QECB Series 2012 Refunding Series 2012A DES Refunding Series 2012B Refunding Series 2013 Refunding Series 2013A Series 2015A Refunding Series 2015B Refunding Series 2015C Series 2016 Refunding Series 2017 Series Total All Bonds 2019 47,290,912 14,381,925 30,785,550 13,306,875 216,835 12,965,038 3,450,550 18,605,957 31,821,200 2,831,350 2,986,500 16,503,282 28,803,775 15,592,200 27,901,688 267,443,637 2020 34,704,500 14,381,925 27,998,450 13,557,750 216,835 42,945,338 3,439,950 9,764,001 9,924,450 11,356,350 2,986,500 16,486,508 28,800,050 15,591,000 35,286,988 267,440,594 2021 22,012,025 14,381,925 40,510,850 13,552,875 216,835 36,645,388 3,442,050 8,351,169 9,924,450 20,740,100 2,986,500 14,996,940 28,800,575 15,589,700 35,290,988 267,442,369 2022 11,269,025 14,381,925 41,360,850 13,554,375 216,835 36,815,794 3,435,800 8,348,500 9,924,450 15,730,350 13,306,875 14,993,814 28,803,325 15,590,100 35,287,113 263,019,130 2023 11,267,825 14,381,925 22,806,725 19,764,750 216,835 49,392,700 3,435,350 8,350,483 9,924,450 16,523,350 13,309,000 14,968,163 28,803,200 15,590,200 35,288,238 264,023,194 2024 11,269,450 14,381,925 21,468,100 4,955,875 216,835 29,928,575 3,035,525 22,347,311 38,040,600
  • 13,308,250
940,745 28,803,325 43,020,000 35,286,988 267,003,504 2025 11,267,400 14,381,925 7,495,300
  • 216,835
28,029,250 3,435,775 29,832,095 38,044,125
  • 13,313,125
940,745 28,801,300 47,351,000 35,285,988 258,394,862 2026 11,267,200 14,381,925
  • 216,835
4,814,400 3,430,775
  • 69,941,125
  • 10,601,625
7,678,384 28,803,200 44,616,000 35,287,613 231,039,082 2027 4,921,875 28,210,730
  • 216,835
  • 4,265,600
  • 52,894,750
  • 3,951,375
7,665,390 28,803,875 42,294,000 35,288,744 208,513,173 2028 38,813,052
  • 6,548,417
  • 3,427,400
  • 37,079,375
  • 7,650,303
28,803,250 40,606,000 35,287,300 198,215,097 2029 38,291,838
  • 3,416,700
  • 4,149,007
28,802,625 40,604,500 35,287,200 150,551,871 2030 37,748,127
  • 3,416,900
  • 4,141,083
28,804,375 40,601,750 35,286,900 149,999,134 2031 37,184,777
  • 3,412,700
  • 28,800,875
40,605,000 35,289,700 145,293,052 2032 36,599,506
  • 3,409,000
  • 28,804,250
40,600,750 35,288,900 144,702,406 2033 35,994,889
  • 3,399,625
  • 28,801,500
40,600,500 35,287,800 144,084,314 2034 35,363,500
  • 3,397,875
  • 28,803,575
  • 35,289,500
102,854,450 2035 34,707,914
  • 28,803,825
  • 35,287,100
98,798,839 2036 35,288,600 35,288,600 2037 35,286,906 35,286,906 Total 165,270,213 437,969,735 192,425,825 78,692,500 8,499,931 241,536,481 55,251,575 105,599,517 307,518,975 67,181,500 76,749,750 111,114,364 489,646,900 498,852,700 663,084,250 3,499,394,215

Source: Treasury Debt Schedules

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7 Metropolitan Government of Nashville and Davidson County Mayor David Briley

ANNUAL DEBT SERVICE BY BOND ISSUE

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  • 50,000,000.00

100,000,000.00 150,000,000.00 200,000,000.00 250,000,000.00 300,000,000.00 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2017 Series 2016 Refunding Series 2015C Series 2015B Refunding Series 2015A Refunding Series 2013A Series 2013 Refunding Series 2012B Refunding Series 2012A DES Refunding Series 2012 Refunding Series 2012 QECB Series 2011 Refunding Series 2010D Refunding Series 2010B BAB Series 2010A Refunding Series

Source: Treasury Debt Schedules

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8 Metropolitan Government of Nashville and Davidson County Mayor David Briley

OUTSTANDING WATER AND SEWER REVENUE DEBT

Principal Interest Total Bonded Debt

$892,365,000 $688,026,983 $1,580,391,983

Commercial Paper (1) (2) 125,000,000

125,000,000

Total W&S Debt

$1,017,365,000 $688,026,983 $1,705,391,983

(1) Commercial paper interest is variable (2) Commercial paper outstanding as of 05/18/18

Source: Treasury Debt Schedules

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9 Metropolitan Government of Nashville and Davidson County Mayor David Briley

WATER AND SEWER REVENUE BONDS SERIES 2017A (GREEN BONDS) AND 2017B

  • First Green Municipal Bond Issuer in the state
  • 2017A (Green Bonds) Par Amount $89,420,000
  • 2017B Par Amount $155,210,000
  • True Interest Cost 3.62%
  • 30 Year Maturity
  • Bonds were given the highest rating “GB1”
  • S&P rating upgrade from AA- to AA

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10 Metropolitan Government of Nashville and Davidson County Mayor David Briley

OTHER REVENUE DEBT

Principal Interest Total Convention Center

$601,815,000 $638,121,265 $1,239,936,265

Sports Authority $128,785,000 $69,626,314 $198,411,314

Source: Treasury Debt Schedules

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11 Metropolitan Government of Nashville and Davidson County Mayor David Briley

CONTINGENT LIABILITY

METRO’S BACKING OF CERTAIN DEBT OBLIGATIONS WITH NON-TAX REVENUE

Metro has pledged to back certain obligations if pledged revenues were not sufficient to meet annual debt service payments(1)(2)

  • GSD Non-Tax revenues are pledged against a total of $1,113,329,606 outstanding principal

and interest with FY18 debt service of $56,174,709

  • GSD non-tax revenue projected for FY18 is $178,161,600
  • USD Non-Tax revenues are pledged against a total of $186,462,675 outstanding principal

and interest with FY18 debt service of $7,157,547

  • USD non-tax revenue projected for FY18 is $20,476,400

(1) An example of contingent liability is the Convention Center Tourism Tax Revenue bonds backed by GSD Non-Tax Revenue (2) No draw against non-tax revenue has been required

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12 Metropolitan Government of Nashville and Davidson County Mayor David Briley

COMMERCIAL PAPER

  • Commercial paper is a form of bond anticipation notes
  • Notes are issued as needed not to exceed authorized limits
  • Funds can only be spent on projects previously approved in

capital spending plans

  • Provides lower cost interim financing until long-term bonds are

issued

  • Only a financing method – not additional spending authority

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13 Metropolitan Government of Nashville and Davidson County Mayor David Briley

COMMERCIAL PAPER (CONT.)

  • Interest rates on commercial paper notes ranged from .84% to

2.05% for new issues and rolls during the past year

  • Current outstanding GO CP is $600 million
  • Current outstanding W&S CP is $100 million
  • Projecting a GO Bond Issue in Fall of 2018 to take out commercial

paper

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14 Metropolitan Government of Nashville and Davidson County Mayor David Briley

DEBT PRESENTATION

Rating Agencies

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15 Metropolitan Government of Nashville and Davidson County Mayor David Briley

RATING AGENCIES

  • Current ratings
  • Strengths & weaknesses from latest reports
  • Agency’s municipal rating criteria
  • Comparative Ratings
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16 Metropolitan Government of Nashville and Davidson County Mayor David Briley

AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB- AAA AA+ AA AA- A+ A A- BBB+ BBB BBB- BB+ BB BB-

Long-Term

Higher quality credit Lower quality credit Moody’s

AAA Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3 Ba1 Ba2 Ba3

Ratings below the red line are speculative grade.

Short-Term Long-Term

S & P

Short-Term Long-Term

Fitch

Short-Term

P-1 P-2 P-3 Not Prime A-1+ A-1 A-2 A-3 Not Prime F1+ F1 F2 F3 Not Prime

RATING AGENCIES – RATING GRADES

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17 Metropolitan Government of Nashville and Davidson County Mayor David Briley

CURRENT RATINGS

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Moody's S&P Rating Outlook Rating Outlook Metropolitan Government of Nashville & Davidson County, TN General Obligation Aa2 Stable AA Stable Water and Sewer Aa3 Stable *AA Stable Convention Center Aa2 Stable A Stable Sports Authority Aa3 Stable AA- Stable Commercial Paper P-1 A-1+

Sources: Moody’s Investors Service and S&P Global Ratings as of May 23, 2017 *S&P upgraded Water and Sewer from AA- to AA during 2017 Bond Issue

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18 Metropolitan Government of Nashville and Davidson County Mayor David Briley

RATING’S REPORTS

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Moody’s – Aa2/Stable Strengths

  • Metro's role as state capital and regional economic center
  • Strong management

Challenges

  • Financial support of Metro General Hospital
  • Property tax referendum requiring public vote in order to raise property tax

rate above cap

  • Above-average debt burden

What Could Make the Rating Go Up

  • Increase in reserve levels
  • Sizeable growth in Metro's tax base
  • Elimination or a significant reduction in Metro's annual subsidy to Metro

General Hospital Authority What Could Make the Rating Go Down

  • Declines in Metro's current reserve or cash levels
  • Sizeable increase in debt burden

Sources: Moody’s Investors Service report dated January 5, 2017

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19 Metropolitan Government of Nashville and Davidson County Mayor David Briley

RATING’S REPORTS

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S&P – AA/Stable Rating Factors

  • Strong economy, with access to a broad and diverse metropolitan statistical

area (MSA)

  • Strong management, with "good" financial policies and practices under our

financial management assessment (FMA) methodology

  • Strong budgetary performance, with a slight operating surplus in the general

fund and an operating surplus at the total governmental fund level in fiscal 2016

  • Very strong liquidity, with total government available cash at 29.4% of total

governmental fund expenditures and 3.0x governmental debt service, and access to external liquidity we consider exceptional

  • Weak debt and contingent liability position, with debt service carrying

charges at 9.9% of expenditures and net direct debt that is 167.7% of total governmental fund revenue

  • Very strong institutional framework score

Upside Scenario Improvement in Metro's economic metrics, a sustained trend of very strong flexibility, and strong budgetary performance characteristics while the consolidated government effectively manages its capital needs could lead to a higher rating in the medium-to-long term. Downside Scenario We could lower the rating if Metro's growing budget were to result in significant deterioration in budgetary flexibility and performance. Sources: S&P Global Ratings report dated January 5, 2017

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20 Metropolitan Government of Nashville and Davidson County Mayor David Briley

RATINGS CRITERIA

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Moody’s Local Government GO Scorecard Rating Factor Weighting Economy 30% Tax Base Size: Full Value 10% Full Value Per Capita 10% Socioeconomic Indices: MFI 10% Finances 30% Fund Balance as a % of Revenues 10% 5-Year Change in Fund Balance as a % of Revenues 5% Cash Balance as a % of Revenues 10% 5-Year Change in Cash Balance as a % of Revenues 5% Management 20% Institutional Framework – Uniform score for all issuers of the same type in the same state 10% Operating History: 5-Year Average of Operating Revenues/ Operating Expenditures 10% Debt/Pensions 20% Direct Debt/Full Value 5% Direct Debt/Operating Revenues 5% 3-Year Average of Moody’s Adjusted Net Pension Liability/Full Value 5% 3-Year Average of Moody’s Adjusted Net Pension Liability/Operating Revenues 5% S&P Local Government GO Scorecard Rating Factor Weighting Institutional Framework 10% Uniform score for all issuers of the same type of in the same state Economy 30%

  • Total Market Value Per Capita
  • Projected Per Capita Effective Buying Income as a % of US Projected Per

Capita EBI Management 20% Issuer’s Financial Management Assessment Score considered with other certain qualitative factors Financial 30% Liquidity (10%)

  • Total Government Available Cash as % of Total Governmental Funds Debt

Service

  • Total Government Available Cash as % of Total Governmental Funds

Expenditures Budgetary Performance (10%)

  • Total Governmental Funds Net Result (%)
  • General Fund Net Result (%)

Budgetary Flexibility (10%)

  • Available Fund Balance as a % of Expenditures

Debt and Contingent Liabilities 10%

  • Net Direct Debt as a % of Governmental Funds Revenue
  • Total Governmental Funds Debt Service as a % of Total Governmental Funds

Expenditures

Sources: Moody’s Investors Service and S&P Global Ratings

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21 Metropolitan Government of Nashville and Davidson County Mayor David Briley

RATINGS COMPARISON

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Moody's S&P Rating Outlook Rating Outlook Metropolitan Government of Nashville & Davidson County, TN Aa2 Stable AA Stable City of Austin, TX Aaa Stable AAA Stable City of Charlotte, NC Aaa Stable AAA Stable City & County of Denver, CO Aaa Stable AAA Stable Louisville & Jefferson County Metropolitan Government, KY Aa1 Stable AA+ Stable City of Portland, OR Aaa Stable NR

  • NR – Not Rated

Sources: Moody’s Investors Service and S&P Global Ratings as of May 8, 2018 These are cities council member requested and not necessarily Metro’s Peers

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22 Metropolitan Government of Nashville and Davidson County Mayor David Briley

COMPARISON OF DEBT SERVICE AS % OF OPERATING EXPENDITURES WITH OTHER CITIES

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Criteria: 'Aa2' Rated Cities with a population between 500,000 and 1,400,000. Source: Moodys MFRA as of May 8, 2018 & Metro Nashville FYE 2017 CAFR Principal and Interest Only

0.0 5.0 10.0 15.0 20.0 25.0

Percent (%)

Albuquerque, NM Baltimore, MD Fort Worth, TX Jacksonville, FL Las Vegas, NV Memphis, TN Nashville-Davidson, TN San Diego, CA

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23 Metropolitan Government of Nashville and Davidson County Mayor David Briley

TOP 50 LARGEST U.S. CITIES

RANKED BY POPULATION

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Sources: Moody’s Investors Service MFRA and S&P Global Ratings as of May 8, 2018

Rank by Actual Population City Actual/Estimated Population, Annual Value Direct Net Debt Outstanding ($000) Direct Net Debt as % of Full Value Direct Net Debt Per Capita ($) Debt Burden (Overall Net Debt as % Full Value) Moody's Rating S&P's Rating Payout, 10 Years, General Obligation Debt (%), Current Value 1 New York City, NY 8,491,079 72,620,832 6.8 8,582 7.2 Aa2 AA 59.3 2 Los Angeles, CA 4,041,707 2,553,944 0.5 632 2.9 Aa2 AA 87.5 3 Chicago, IL 2,695,598 11,466,220 4.2 4,225 8.6 Ba1 BBB+ 34.9 4 Houston, TX 2,303,482 2,917,159 1.3 1,266 5.1 Aa3 AA 52.4 5 Phoenix, AZ 1,579,253 2,133,974 1.5 1,351 2.5 Aa1 AA+ 83.5 6 Philadelphia City, PA 1,567,872 3,651,600 2.7 2,329 4.9 A2 A 62.7 7 San Antonio, TX 1,469,824 2,430,657 2.4 1,654 8.6 Aaa AAA 61.7 8 San Diego, CA 1,406,318 744,515 0.3 529 3.4 Aa2 AA- N/A 9 Dallas, TX 1,257,730 1,916,500 1.7 1,509 5.2 A1 AA- 81.1 10 San Jose, CA 1,046,000 1,006,488 0.6 962 3.1 Aa1 AA+ 60.1 11 Honolulu City and County, HI 992,605 2,821,693 1.4 2,843 N/A Aa1 NR N/A 12 Austin, TX 946,080 1,419,238 1.1 1,500 3.3 Aaa AAA 68.1 13 Jacksonville, FL 923,647 2,100,050 2.6 2,452 3.1 Aa2 AA N/A 14 San Francisco, CA 879,862 2,836,248 1.3 3,224 2.0 Aaa AA+ 65.1 15 Columbus, OH 861,141 2,383,597 5.8 2,706 8.0 Aaa AAA 58.8 16 Indianapolis, IN 855,164 1,224,194 1.9 1,432 2.7 Aaa AA 100.0 17 Fort Worth, TX 833,319 1,209,105 2.4 1,383 7.2 Aa3 AA+ N/A 18 Charlotte, NC 827,097 1,377,007 1.5 1,665 2.5 Aaa AAA 87.9 19 Hempstead Town, NY 770,367 338,011 0.4 440 3.1 Aa3 A+ 93.6 20 Louisville-Jefferson Co. Metro Gvmt, KY 765,352 681,814 1.0 891 1.6 Aa1 AA+ 67.8 21 Detroit, MI 713,777 1,833,414 13.2 2,569 26.6 B1 NR 50.1 22 Denver, CO 693,060 1,522,908 1.5 2,197 5.6 Aaa AAA N/A 23 Seattle, WA 686,800 1,108,920 0.6 1,658 0.8 Aaa AAA 63.5 24 Nashville-Davidson, TN 684,410 3,061,410 3.9 4,473 3.9 Aa2 AA 66.3 25 El Paso, TX 683,080 1,310,940 3.9 1,919 10.1 N/A AA 46

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24 Metropolitan Government of Nashville and Davidson County Mayor David Briley

TOP 50 LARGEST U.S. CITIES

RANKED BY POPULATION (CONT.)

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Sources: Moody’s Investors Service MFRA and S&P Global Ratings as of May 8, 2018

Rank by Actual Population City Actual/Estimated Population, Annual Value Direct Net Debt Outstanding ($000) Direct Net Debt as % of Full Value Direct Net Debt Per Capita ($) Debt Burden (Overall Net Debt as % Full Value) Moody's Rating S&P's Rating Payout, 10 Years, General Obligation Debt (%), Current Value 26 Boston, MA 672,840 1,421,746 1.0 2,113 1.0 Aaa AAA 78.3 Median 666,723 1,114,357 1.5 1,511.50 3.4 Aa2 AA 68.6 27 Memphis, TN 666,723 1,419,294 3.9 2,129 5.7 Aa2 AA 69.1 28 Washington, DC 658,893 9,537,740 4,731.7 14,475 6.4 Aa1 AA 44.4 29 Oklahoma City, OK 653,000 853,051 1.7 1306 2.6 Aaa AAA 67.8 30 Portland, OR 639,863 566,800 0.5 886 1.5 Aaa NR 74.0 31 Las Vegas, NV 629,649 632,154 1.3 1,004 4.6 Aa2 AA 48.6 32 Baltimore, MD 614,664 1,254,352 3.2 2,041 3.3 Aa2 AA N/A 33 Milwaukee, WI 594,667 1,119,794 4.3 1,870 7.0 A1 AA 88.6 34 Albuquerque, NM 559,277 663,604 1.7 1187 3.7 Aa2 AAA 90.9 35 Tucson, AZ 530,706 484,153 1.8 918 3.3 Aa3 AA- 100 36 Fresno, CA 520,453 277,732 0.9 534 3.9 A3 A+ N/A 37 Mesa, AZ 493,089 480,262 1.5 974 2.6 Aa2 AA- 63.4 38 Sacramento, CA 493,025 590,255 1.3 1,197 5.5 Aa2 AA- N/A 39 Brookhaven Town, NY 486,599 581,292 1.2 1191 2.6 Aa1 AAA 86.1 40 Kansas City, MO 481,420 1,553,051 5.0 3226 7.6 Aa2 AA- 91.7 41 Long Beach, CA 474,140 144,908 0.3 302 3.5 Aa2 AA N/A 42 Atlanta, GA 472,522 888,321 1.4 1,946 1.9 Aa1 AA+ 49.9 43 Raleigh, NC 458,880 613,758 1.0 1338 2.3 Aaa AAA 94.8 44 Colorado Springs, CO 456,626 176,206 0.4 393 1.4 Aa2 AA 39.7 45 Miami, FL 456,089 727,151 1.1 1,554 1.8 Aa2 AA- 85.0 46 Virginia Beach, VA 455,856 924,395 1.6 2,028 1.7 Aaa AA+ 89.8 47 Omaha, NE 443,887 872,875 2.7 1970 4.7 Aa2 AA+ 79.7 48 Oakland, CA 423,191 401,768 0.7 949 3.6 Aa2 AA 44.7 49 Minneapolis, MN 413,651 591,598 1.3 1,462 2.5 Aa1 AAA 83.4 50 Tulsa, OK 403,890 611,651 2.0 1,514 2.9 Aa1 AA N/A

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25 Metropolitan Government of Nashville and Davidson County Mayor David Briley

DEBT PRESENTATION

Debt Management Policy

25

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26 Metropolitan Government of Nashville and Davidson County Mayor David Briley

DEBT MANAGEMENT POLICY

  • State Requirements
  • Metro’s Policy
  • Policy Highlights

26

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27 Metropolitan Government of Nashville and Davidson County Mayor David Briley

STATE REQUIREMENTS

The State Funding Board adopted a statement on debt management that reflects four principles for strong financial management in the public sector:

  • Understand the transaction
  • Explain to citizens what is being considered
  • Avoid conflicts of interest
  • Disclose costs and risks

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28 Metropolitan Government of Nashville and Davidson County Mayor David Briley

STATE REQUIREMENTS (CONT.)

The State also requires:

  • Local governments adopt a policy
  • The policy include the minimum requirements provided in the

State’s model debt policy

  • The policy be filed with the State Comptroller
  • For each debt issuance local governments report to the State

that the debt complies with the policy and is clearly authorized by the policy.

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29 Metropolitan Government of Nashville and Davidson County Mayor David Briley

METRO’S DEBT MANAGEMENT POLICY

  • Metro Council updated Debt Management Policy requirements

in BL2017-949

  • The revised Debt Management Policy was adopted by Metro

Council on December 6, 2017

  • Every Report on Debt Obligation to the State since 2012 includes

a statement of compliance with written debt management policy

  • Each report is provided to Council prior to submission to the State

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30 Metropolitan Government of Nashville and Davidson County Mayor David Briley

POLICY GOALS

In managing its debt, it is the Metropolitan Government’s policy to:

  • To document responsibility for the oversight and management of debt related

transactions;

  • To define the criteria for the issuance of debt
  • To define the types of debt approved for use within constraints established by

applicable State law and the Charter of the Metropolitan Government (the “Charter”);

  • To define the appropriate uses of debt
  • To define the criteria for evaluating refunding candidates or alternative debt

structures; and

  • To minimize the cost of debt

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31 Metropolitan Government of Nashville and Davidson County Mayor David Briley

POLICY HIGHLIGHTS

  • All debt issuance will conform to requirements of Metro Charter,

Tennessee Code Annotated and Federal Tax Code

  • Competitive sale is preferred method of debt issuance
  • Debt financing term will not exceed the average useful life of

assets, generally 20 year bonds

  • Long term debt will not be used to finance current operations or

normal maintenance

  • Refunding for savings is considered when in the best interest and

minimum savings are generated (generally 3.5%)

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32 Metropolitan Government of Nashville and Davidson County Mayor David Briley

POLICY HIGHLIGHTS (CONT.)

  • Periodically review basic measures of debt affordability in conjunction

with capital spending plan

  • Debt service as percentage of annual general expenses
  • Debt as percentage of actual value of taxable property
  • Debt per capita
  • Debt per capita personal income
  • Annual comparison of general fund balance
  • Annual comparison of revenues
  • Annual comparison of expenses
  • Review of pension funded status and OPEB obligations

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33 Metropolitan Government of Nashville and Davidson County Mayor David Briley

DEBT SERVICE AS PERCENTAGE OF ANNUAL GENERAL EXPENSES

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0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Debt Service to Total General Expenditures Source: 2017 CAFR

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34 Metropolitan Government of Nashville and Davidson County Mayor David Briley

DEBT AS PERCENTAGE OF ACTUAL VALUE OF TAXABLE PROPERTY

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0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 2009 2010 2011 2012 2013 2014 2015 2016 2017 Net Debt/ Actual Assessed Value

Source: 2017 CAFR

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35 Metropolitan Government of Nashville and Davidson County Mayor David Briley

DEBT PER CAPITA

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  • 500.00

1,000.00 1,500.00 2,000.00 2,500.00 3,000.00 3,500.00 4,000.00 4,500.00 5,000.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Net Debt Per Capita

Source: 2017 CAFR

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36 Metropolitan Government of Nashville and Davidson County Mayor David Briley

DEBT PER CAPITA PERSONAL INCOME

36

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Debt Per Capita Personal Income

Source: 2017 CAFR

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37 Metropolitan Government of Nashville and Davidson County Mayor David Briley

5 YEAR HISTORY OF UNASSIGNED GENERAL FUND BALANCE

37

  • 10,000,000

20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 80,000,000 90,000,000 2014 2015 2016 2017 2018 GSD General Service Fund Schools Fund Balance USD General Fund Balance 4% Fund

FY18 is estimated balance prior to FY19 budget appropriation Source: 2017 CAFR and 2019 Budget Ordinance

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38 Metropolitan Government of Nashville and Davidson County Mayor David Briley

5 YEAR HISTORY OF GENERAL FUND REVENUES

38

800,000,000.00 820,000,000.00 840,000,000.00 860,000,000.00 880,000,000.00 900,000,000.00 920,000,000.00 940,000,000.00 960,000,000.00 980,000,000.00 1,000,000,000.00 1,020,000,000.00 2013 2014 2015 2016 2017 General Fund Revenues

Source: 2017 CAFR

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39 Metropolitan Government of Nashville and Davidson County Mayor David Briley

5 YEAR HISTORY OF GENERAL FUND EXPENSES

39

  • 200,000,000.00

400,000,000.00 600,000,000.00 800,000,000.00 1,000,000,000.00 1,200,000,000.00 2013 2014 2015 2016 2017 General Fund Expenses

Source: 2017 CAFR

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40 Metropolitan Government of Nashville and Davidson County Mayor David Briley

40

FUNDED STATUS COMPARISON

Metro Pension Plan Median of Largest 100 Public Sector Plans* 7.25% 7.50%

Discount Rate

Funded Status – Actuarial Value Basis (2016 For Comparison)

Metro Pension Plan Median of Largest 100 Public Sector Plans* 96.0% 70.7%

  • Milliman – 2017 Public Sector Funding Study
  • Source: Findley (formerly BPSM) Metro’s Actuary

Metro’s Pension Plan has a higher funding ratio than 96% of the largest 100 Public Pension Plans

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41 Metropolitan Government of Nashville and Davidson County Mayor David Briley

PENSION FUNDED STATUS

41

Source - BPS&M, LLC report to Metro Employee Benefit Board, February 20, 2018

0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

(Assets as a Percentage of Accrued Liability)

Funded Ratio (Actuarial Value) Funded Ratio (Market Value)

Current Funded Ratio (Market Value) 96.1% Current Funded Ratio (Actuarial Value) 95.5%

Net unfunded pension liability at 06/30/17 is $40.8 million Source: Findley (formerly BPSM) Metro’s Actuary

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42 Metropolitan Government of Nashville and Davidson County Mayor David Briley

ACTUARIAL ACCRUED OTHER POST EMPLOYMENT BENEFIT (OPEB) LIABILITY

42

  • 500,000,000

1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 2013 2014 2015 2016 2017 OPEB

Source: 2017 CAFR

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43 Metropolitan Government of Nashville and Davidson County Mayor David Briley

OTHER ECONOMIC FACTORS

  • Population change
  • Unemployment
  • Personal Income Change
  • New business creation and relocations
  • Volume and amount of building permits

43

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44 Metropolitan Government of Nashville and Davidson County Mayor David Briley

DAVIDSON COUNTY POPULATION GROWTH

44

590,000 600,000 610,000 620,000 630,000 640,000 650,000 660,000 670,000 680,000 690,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 Population Growth

Source: United States Census Bureau (census.gov)

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45 Metropolitan Government of Nashville and Davidson County Mayor David Briley

DAVIDSON COUNTY UNEMPLOYMENT

45

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Unemployment

2017 is preliminary – 2.8% Source – Bureau of Labor Statistics (bls.gov)

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46 Metropolitan Government of Nashville and Davidson County Mayor David Briley

DAVIDSON COUNTY PERSONAL INCOME CHANGE

46

  • 5,000,000

10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 Personal Income Change In Thousands Source: Bureau of Economic Analysis (bea.gov)

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47 Metropolitan Government of Nashville and Davidson County Mayor David Briley

NEW BUSINESS AND RELOCATIONS

Nashville MSA Region Numbers: Since July 1, 2017 the Nashville Area Chamber of Commerce announced business relocations or expansions into the Nashville MSA, corresponding to 4,167 new jobs. Davidson County Numbers: Since July 1, 2017 the Nashville Area Chamber of Commerce announced 24 business relocations or expansion into Davidson County collectively bringing 2,890 new jobs into Metro Davidson County.

47

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48 Metropolitan Government of Nashville and Davidson County Mayor David Briley

BUILDING PERMIT TRENDS

48

  • 500,000,000.00

1,000,000,000.00 1,500,000,000.00 2,000,000,000.00 2,500,000,000.00 3,000,000,000.00 3,500,000,000.00 4,000,000,000.00 4,500,000,000.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Building Permit Trends

11,641 Permits 9,305 Permits 7,287 Permits 10,980 Permits 7,613 Permits 10,288 Permits 9,708 Permits 11,041 Permits 12,386 Permits 12,425 Permits 11,717 Permits Source: Codes Administration

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49 Metropolitan Government of Nashville and Davidson County Mayor David Briley

DEBT PRESENTATION

Debt Service History

49

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50 Metropolitan Government of Nashville and Davidson County Mayor David Briley

TOTAL DEBT SERVICE AS A PERCENTAGE OF OPERATING BUDGET

50

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 % of Operating Budget

Source: Treasury Debt Schedules

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51 Metropolitan Government of Nashville and Davidson County Mayor David Briley

PERCENTAGE OF GO BOND PRINCIPAL PAID IN 10 YEARS

51

500,000,000 1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000 0.00% 20.00% 40.00% 60.00% 80.00% 100.00% 120.00% 2019202020212022202320242025202620272028202920302031203220332034203520362037 percentage Principal

66.49 % Paid in 10 Years

Source: Treasury Debt Schedules

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52 Metropolitan Government of Nashville and Davidson County Mayor David Briley

10 YEAR HISTORY OF GENERAL OBLIGATION PRINCIPAL BALANCE

52

  • 500,000,000

1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000 3,500,000,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 GO Outstanding Bond and Commercial Paper Principal Balance

Source: Treasury Debt Schedules

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53 Metropolitan Government of Nashville and Davidson County Mayor David Briley

10 YEAR HISTORY OF WATER AND SEWER PRINCIPAL BALANCE

53

  • 200,000,000

400,000,000 600,000,000 800,000,000 1,000,000,000 1,200,000,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Water and Sewer Outstanding Bond and Commercial Paper Principal

Source: Treasury Debt Schedules

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54 Metropolitan Government of Nashville and Davidson County Mayor David Briley

8 YEAR HISTORY OF CONVENTION CENTER PRINCIPAL BALANCE

54

100,000,000 200,000,000 300,000,000 400,000,000 500,000,000 600,000,000 2011 2012 2013 2014 2015 2016 2017 2018

Outstanding Principal Balance

Outstanding Principal Balance

Source: Treasury Debt Schedules

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55 Metropolitan Government of Nashville and Davidson County Mayor David Briley

10 YEAR HISTORY OF SPORTS AUTHORITY PRINCIPAL BALANCE

55

  • 20,000,000

40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000 160,000,000 180,000,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sports Authority Principal Balance

Source: Treasury Debt Schedules

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56 Metropolitan Government of Nashville and Davidson County Mayor David Briley

5 YEAR HISTORY OF UNASSIGNED DEBT SERVICE FUND BALANCE

56

  • 2,000,000

4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 2014 2015 2016 2017 2018 GSD Debt Service Schools Debt Service USD Debt Service

Source: 2017 CAFR and 2019 Budget Ordinance

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57 Metropolitan Government of Nashville and Davidson County Mayor David Briley

DEBT PRESENTATION

Capital Spending & Debt Capacity

57

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58 Metropolitan Government of Nashville and Davidson County Mayor David Briley

CAPITAL SPENDING & CAPACITY

Capital spending plans are authorized by Council resolution becoming the “Initial resolution determining to issue general obligation bonds” that is required by State law

  • Prior Council approved capital spending plans

$3,316,178,000

  • Bonds issued to finance approved capital spending

$1,641,110,000

  • Authorized capital spending less bonded

$1,675,068,000 This amount represents currently authorized spending, and bonding, from previous Council resolutions

58

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59 Metropolitan Government of Nashville and Davidson County Mayor David Briley

CAPITAL SPENDING & CAPACITY (CONT.)

  • Commercial paper is used to finance capital spending expenses

until bonds are issued

  • In FY18, capital spending is averaging $39.4 million per month
  • Based on this spending level we expect to issue bonds of $775

million in the Fall of 2018, $650 million in 2020 and $250 million in 2023 to fund the current level of authorized bonds

  • Future capital spending plans or change in spending patterns

could change these projections

59

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60 Metropolitan Government of Nashville and Davidson County Mayor David Briley

FUTURE DEBT SERVICE TO FUND EXISTING AUTHORIZATIONS

Period Ending Existing Debt Service Proposed Series 2018 Proposed Series 2020 Proposed Series 2023 Aggregate Debt Service Change in Annual Debt Service from Prior Year 6/30/2019 $ 267,443,637 $ 11,734,250 $ - $ - $ 279,177,887 $ 24,369,786 6/30/2020 267,440,594 55,677,750

  • 323,118,344

43,940,457 6/30/2021 267,442,369 55,685,625 19,840,365

  • 342,968,359

19,850,014 6/30/2022 263,019,130 55,683,125 48,075,375

  • 366,777,630

23,809,271 6/30/2023 264,023,194 55,682,625 48,075,375

  • 367,781,194

1,003,564 6/30/2024 267,003,504 55,686,000 48,077,625 7,632,441 378,399,570 10,618,376 6/30/2025 258,394,862 55,685,125 48,074,750 18,492,875 380,647,612 2,248,042 6/30/2026 231,039,082 55,681,875 48,074,250 18,495,125 353,290,332 (27,357,280) 6/30/2027 208,513,173 55,682,750 48,078,250 18,494,000 330,768,173 (22,522,159) 6/30/2028 198,215,097 55,684,000 48,074,000 18,493,625 320,466,722 (10,301,451) 6/30/2029 150,551,871 55,681,875 48,078,500 18,493,000 272,805,246 (47,661,477) 6/30/2030 149,999,134 55,682,375 48,078,500 18,496,000 272,256,009 (549,236) 6/30/2031 145,293,052 55,686,125 48,075,875 18,496,500 267,551,552 (4,704,457) 6/30/2032 144,702,406 55,683,750 48,077,125 18,493,500 266,956,781 (594,771) 6/30/2033 144,084,314 55,685,625 48,078,500 18,495,750 266,344,189 (612,592) 6/30/2034 102,854,450 55,681,875 48,076,250 18,496,875 225,109,450 (41,234,739) 6/30/2035 98,798,839 55,682,375 48,076,375 18,495,625 221,053,214 (4,056,236) 6/30/2036 35,288,600 55,681,625 48,074,625 18,495,625 157,540,475 (63,512,739) 6/30/2037 35,286,900 55,683,875 48,076,500 18,495,375 157,542,650 2,175 6/30/2038

  • 55,683,125

48,077,250 18,493,375 122,253,750 (35,288,900) 6/30/2039

  • 55,683,125

48,077,000 18,493,000 122,253,125 (625) 6/30/2040

  • 48,075,625

18,492,500 66,568,125 (55,685,000) 6/30/2041

  • 48,077,625

18,495,000 66,572,625 4,500 6/30/2042

  • 18,493,625

18,493,625 (48,079,000) 6/30/2043

  • 18,496,375

18,496,375 2,750 6/30/2044

  • 18,496,125

18,496,125 (250) $ 3,499,394,209 $ 1,125,398,875 $ 981,369,740 $ 377,526,316 $ 5,983,689,140 $ (236,311,976)

60

Source: Hilltop Securities

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61 Metropolitan Government of Nashville and Davidson County Mayor David Briley

FUTURE DEBT SERVICE TO FUND EXISTING AUTHORIZATIONS (CONT.)

61

$- $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 $400,000,000 Existing… Proposed… Proposed… Proposed…

Source: Hilltop Securities

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62 Metropolitan Government of Nashville and Davidson County Mayor David Briley

CAPITAL SPENDING & CAPACITY (CONT.)

  • Debt capacity is the ability to fund future principal and interest

(debt service) of debt

  • Any new initial bond authorization is a commitment to fund the

resulting debt service

  • Bonds and commercial paper (bond anticipation notes) issued

from prior initial bond authorizations are legal obligations that must be paid

62

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63 Metropolitan Government of Nashville and Davidson County Mayor David Briley

CAPITAL SPENDING & CAPACITY (CONT.)

  • Future revenue growth does not increase debt capacity
  • Annual budgets must, by State law, fund the government’s debt
  • bligations
  • Metro’s obligation to bondholders as summarized from bond

documents

  • The Metropolitan Government of Nashville and Davidson County promises

to pay the principal amount on the maturity date and interest on the principal amount until maturity or redemption date

63

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64 Metropolitan Government of Nashville and Davidson County Mayor David Briley

QUESTIONS?

?

64