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City of Raleigh

Financial Section

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: 

Fiscal Year

Ending June 30

Principal

Interest

2017

22,860,000

$         

27,655,315

$               

2018

23,130,000

26,783,173

2019

24,070,000

25,833,525

2020

25,195,000

24,784,513

2021

26,300,000

23,654,865

2022‐2026

136,780,000

99,812,948

2027‐2031

157,530,000

66,615,243

2032‐2036

151,065,000

29,688,350

2037‐2041

42,645,000

7,690,431

2042‐2043

7,800,000

589,750

617,375,000

$       

333,108,113

$             

Business‐type Activities

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.    

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