WS Materials 09-04-2012 - Laserfiche WebLink

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MEMO To: Dean Lotter, City Manager From: Dan Maiers,Finance Director Date: August 30, 2012 Re: 2013 Budget—Debt Service Section of Budget Book The 2013 Budget book includes a new section this year—Debt Service. This section is informational only. The section contains schedules and graphs depicting various debt service matters. The debt service for the City's general obligation bonds is financed by a number of different sources. Street reconstruction improvement projects are primarily paid for by special assessments and City-wide tax levies. Since special assessments and tax levies are collected over a ten-year time period,bonds are issued to address the difference in timing of cash outflows and inflows. Approval of street reconstruction improvement bonds includes the necessary tax levies for the life of the bonds. These debt service tax levies are certified to Ramsey County. As one of the many securities to bondholders,the County will then levy them on City properties if the City fails to levy them. Upon adoption of the final tax levy, the City must address its changes to the amounts of those certified tax levies. Each outstanding bond has a cashflows model prepared to project its appropriate sources and uses of cash. This model incorporates the principal, interest and paying agent fees from the bond's payment/amortization schedule. These models also identify potential changes to the annual debt service tax levies. The City's general obligation bonds are subject to an annual debt study performed early in the annual budgeting process. The debt study includes a review of the previous year's models of the debt and updating them with the most current information and transactions. A "Financing Matrix"is prepared, for internal purposes,to identify and/or verify the amounts of the various fmancing sources to be utilized during the next budget year. The Financing Matrix for the 2013 Budget is attached. The Financing Matrix for the 2013 Budget indicates that the total City-wide debt service tax levy should be $795,500. The debt service tax levies for the City's general obligation bonds are included in the"Transfers Out"page of the General Fund Budget(page 16). Debt service for tax increment bonds are not part of the annual budget for the City's operations. These bond issues are included in an entirely different model. The Management Review&Analysis Tax Increment Financing Districts as prepared by our financial advisors is that model.