City of Raleigh
During fiscal year 2015‐16, the City issued $19,240,000 of Series 2016 limited obligation refunding bonds to generate
resources for future debt service payments on $2,355,000 of series 2005C parks certificates of participation and
$19,210,000 series 2007A downtown improvement certificates of participation. The reacquisition price exceeded the
net carrying amount of the old debt by $1,019,600. This amount is being netted against the new debt and
amortized over the remaining life of the refunded debt. The partial advance refunding was undertaken to reduce
total debt service payments over the next 15 years by $3,837,542 and resulted in an economic gain of $3,269,924.
In prior years, the City has defeased various other bond issues by creating separate irrevocable trust funds. New
debt has been issued and the proceeds have been used to purchase U.S. government securities that were placed in
the trust funds. The investments and fixed earnings from the investments are sufficient to fully service the
defeased debt until the debt is called or matures. For financial reporting purposes, the debt has been considered
defeased and therefore removed as a liability from the City’s government‐wide financial statements. As of June 30,
2016, the amount of defeased debt outstanding was $79,105,000 for non‐general obligation.
3. Revenue bonds
The City also issues revenue bonds to fund various water and sewer utility capital projects. The bonds are payable
serially over the next 30 years and have stated interest rates between 0.65% and 5.0% and one variable rate issue at
4.163% at June 30, 2016.
The City has pledged water and sewer customer revenues, net of specified operating expenses, to repay
$617,375,000 in water and sewer system revenue bonds. This pledge relates to all water and sewer revenue bonds
outstanding, issued for the purpose of making water and sewer system improvements. The bonds are payable
solely from water and sewer customer net revenues and are payable through 2043. Annual debt service
requirements for 2015‐16 were 23.1% of gross utility revenue and are expected to remain in this range.
Annual debt service requirements to maturity are as follows:
Ending June 30
A trust agreement, dated December 1, 1996 and amended by the First Amendatory Trust Agreement, dated as of
April 15, 2004, authorizes and secures all outstanding revenue bonds. Certain financial covenants are contained in
the trust agreement, controlled by the trustee, including the requirement that the City maintain a long‐term debt
service coverage ratio on all utility debt of not less than 1.00. The City was in compliance with all such covenants
during the fiscal year ended June 30, 2016.