SCBAC 2019 Bond Program Financial Presentation David Gaines - PowerPoint PPT Presentation

SCBAC 2019 Bond Program Financial Presentation David Gaines Finance Director June 27, 2019 1

Objectives • Overview of Denton’s Debt Structure • Review Outstanding Debt Service and Issuance History • Bond Ratings • Financial Forecast Assumptions • 2019 Bond Financial Scenarios 2

Current Tax Rate Breakdown What does this mean? Maintenance & Operations $0.405432 • Maintenance & Operations • Personnel Interest and Sinking (Debt • Supplies Service) $0.215045 • Repairs and Maintenance • Contractual Services Total Tax Rate $0.620477 • Interest and Sinking (I&S) – Debt service payments • Tax Supported Payments • Tax rate has declined $.06 over the past three years by staying near the effective tax rate 3

Debt Overview • Outstanding Debt • General Obligation Bonds • Certificates of Obligation • Revenue Bonds • Debt Service Fund • Pays for Debt Service Requirements • Property Tax is principal revenue sources • Transfers from other funds, interest income, and delinquent tax revenue are other revenue sources • Maturity Schedule • 20 Year Bonds Planned for 2019 Bond Program • Debt corresponds to useful life • 9 Year Call Option • Level Debt Service Payments • Similar to mortgage with higher interest payments in the initial years 4

Debt Overview • General Obligations • Pledge of property taxes • Lower interest rates than Certificates of Obligations or other Bonds • Requires election on uniform election date (November or May) with simple majority of voters to approve bond sale • Certifications of Obligation • Pledge of property taxes and City utility system revenues • Lower interest rates than revenue bonds due to property tax pledge (difference to street maintenance fund) • Requires publication of a notice of intent to issue CO’s with the first publication at least 45 days prior to the sale. (New Legislation Effective September 2019) • CO’s subject to referendum by a petition signed by 5% or more of registered voters 5

Bond Program Language • Updated Requirements following the 2019 Legislative Session • Language must include: • Principal and interest of outstanding debt obligations • Estimated interest rate used for Bond Program • Debt tax rate associated with Bond Program • Impact of debt tax rate on a $100K appraised residential homestead 6

General Government Issuance History FY 2019-20 PROGRAM DESCRIPTION FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 Proposed Total PROP 1 - 2012 BOND ELECTION $ 4,000,000 $ 4,000,000 $ 4,000,000 $ 4,400,000 $ 4,000,000 $ 20,400,000 PROP 1 - 2014 BOND ELECTION $ - $ - $ 9,140,000 $ 4,200,000 $ 4,950,000 $ 15,650,000 $ 14,580,000 $ 13,190,000 $ 61,710,000 PROP 2 - 2014 BOND ELECTION $ - $ - $ 2,880,000 $ 5,475,000 $ 8,210,000 $ 16,565,000 PROP 3 - 2014 BOND ELECTION $ - $ - $ 4,655,000 $ 600,000 $ - $ 2,585,000 $ 705,000 $ 8,545,000 PROP 4 - 2014 BOND ELECTION $ - $ - $ 2,175,000 $ 2,105,000 $ - $ 1,515,000 $ 4,085,000 $ 1,475,000 $ 11,355,000 SUBTOTAL - 2014 BOND ELECTION $ - $ - $ 18,850,000 $ 12,380,000 $ 13,160,000 $ 19,750,000 $ 19,370,000 $ 14,665,000 $ 98,175,000 TOTALS - 2012 AND 2014 BOND ELECTIONS $ 4,000,000 $ 4,000,000 $ 22,850,000 $ 16,780,000 $ 17,160,000 $ 19,750,000 $ 19,370,000 $ 14,665,000 $ 118,575,000 CO Funded Projects $ 13,455,000 $ 10,850,000 $ 8,100,000 $ 8,125,000 $ 18,830,000 $ 41,590,000 $ 8,400,000 $ 5,000,000 $ 110,350,000 Grand Total $ 17,455,000 $ 14,850,000 $ 30,950,000 $ 24,905,000 $ 35,990,000 $ 61,340,000 $ 27,770,000 $ 19,665,000 $ 228,925,000 7

Debt Service Outstanding General Government Debt Service As of 10/1/2018 30,000,000.00 25,000,000.00 20,000,000.00 15,000,000.00 10,000,000.00 5,000,000.00 0.00 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 PRINCIPAL INTEREST Fiscal Year 8

Bond Ratings Denton’s Bond Ratings • AA+ Fitch Ratings (May 2019) • AA+ S&P Global (May 2019) • Aa1 Moody’s (June 2019) 9

Bond Ratings Moody’s Upgrade From Aa2 to Aa1 Factors in Upgrade • Expanding tax base • Healthy and stable financial profile • Other strengths • Universities • Population growth • Low unemployment • Maintenance of Fund Balance • Strong Financial and Capital Planning 10

Assessed Value History Millions 10-Year History: Property Value Growth (Annual Percentage Change) 16% $14,000 13.32% 14% $12,000 11.48% 12% $10,000 9.53% 10% 8.76% 8.54% 8.23% $8,000 8% 6% $6,000 4.59% 3.81% 4% 2.93% $4,000 2% $2,000 0% -2% $0 -1.55% 2010 2011 2012 2013 2014 2015 2016 2017 2018* Preliminary 2019* * Includes Frozen Values 8% Decrease in Non-Frozen Values Tax Year 2019 Estimate Based on Preliminary AV 11

Financial Assumptions • Debt Issuances in FY 2019-20: • Remaining $14.66M GO debt to be issued for 2014 Bond Program • Additional $5M in COs for Vehicle Replacement and Facility Improvements • $5 M in COs will be issued each additional year (FY21 – FY26) $3.5 M for Vehicle Replacement (5 Year Debt) • $1.5 M for Facility Improvements (10 Year Debt) • • Approx. $3.6M Use of Fund Balance in FY2020-FY2023 • Assumes G.O. debt is amortized over 20 years at a rate of 3.75% in FY2020 • Assumes G.O. debt is amortized over 20 years at a rate of 4.50% in FY21 – FY26 12

Current Project Costs Current Staff Total project Cost Updated Options Option Proposition 1: Public Safety Facilities PD CHE Project $ 28,180,000 $ 24,180,000 $ 24,180,000 PD Substation Project $ 11,420,000 $ 11,420,000 $ 11,420,000 PD Firing Range $ 5,000,000 $ 5,000,000 $ 5,000,000 Fire Station 8 $ 5,400,000 $ 4,900,000 $ 4,900,000 Proposition 2: Roadways and Infrastructure Bonnie Brae (V, VI, VII) $ 111,500,000 $ 27,000,000 $ 27,000,000 Hickory Creek $ 160,000,000 $ 34,000,000 $ 34,000,000 Street Rehab Program $ 70,000,000 $ 70,000,000 $ 70,000,000 Sidewalks $ 12,000,000 $ 12,000,000 $ 12,000,000 Robinson Road $ 12,300,000 $ 12,300,000 $ 12,300,000 Ryan Road $10M - $25M $4M-19M $ 8,690,000 Jim Christal $ 16,800,000 $ 1,680,000 $ - FM 428 $ 44,000,000 - $ - Other Proposition Requests Street Lighting $5M - $15M $5M - $15M $ - Open Space $5M - $15M $5M - $15M $ - Total $482M - $517M $206M - 221M $ 209,490,000 13

Potential Bond Sale Schedule Estimates for Planning Purposes Only Project FY 2020 FY 2021 FY 2022 FY 2023 FY2024 FY2025 TOTAL Proposition 1: Public Safety Facilities $450,000 $23,730,000 PD CHE Project $24,180,000 PD Substation $510,000 $10,910,000 $11,420,000 Project PD Firing Range $1,500,000 $3,500,000 $5,000,000 Fire Station 8 $4,900,000 $4,900,000 Proposition 2: Roadways and Infrastructure Bonnie Brae (V, $7,090,000 $2,950,000 $1,550,000 $7,870,000 $5,280,000 $2,260,000 $27,000,000 VI, VII) Hickory Creek $11,200,000 $14,440,000 $8,360,000 $34,000,000 Street Rehab $1,000,000 $8,000,000 $11,000,000 $18,000,000 $18,000,000 $14,000,000 $70,000,000 Program Sidewalks $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 $12,000,000 Robinson Road $7,440,000 $3,130,000 $1,730,000 $12,300,000 Ryan Road $8,080,000 $610,000 $8,690,000 Total $27,150,000 $62,030,000 $22,910,000 $44,890,000 $32,520,000 $19,990,000 $209,490,000 14

Scenarios Total Assessed Value Max Debt Service Tax Title Program Cost Assumptions Rate Increase $210 Million Bond Program Base Case $ 209,450 4% $0.056 Moderate Growth $ 209,450 6% $0.033 Forecast Aggressive Growth $ 209,450 8% $0.019 Mixed Growth $ 209,450 Variable $0.059 Scenarios $150 Million Bond Program Base Case $ 150,000 4% $0.024 Moderate Growth $ 150,000 6% $0.015 Aggressive Growth $ 150,000 8% $0.007 Mixed Growth $ 150,000 Variable $0.026 $100 Million Bond Program Base Case $ 100,000 4% $0.006 Moderate Growth $ 100,000 6% No Debt Rate Increase Aggressive Growth $ 100,000 8% No Debt Rate Increase Mixed Growth $ 100,000 Variable No Debt Rate Increase 15