Debt Management
ADMINISTRATION OF LONG TERM DEBT PROGRAM
The City has the following types of long term debt:
General Obligation Bonds
General obligation debt is the most common type of debt incurred by the City and is comprised of both general and utility debt obligations. All general obligation debt is secured by the full faith and credit of the taxing power of the City. Over the last ten years, the following general obligation bonds have been authorized:
- 1990 - $20M Housing Bonds - low/moderate income housing
- 1995 - $27.8M Parks Bonds
- $18M Water/Sewer Bonds
- $2.145M Fire Station Bonds
- 1997 - $8.670M Parking Facility Bonds
- 1998 - $50M Streets
Revenue Bonds
The City issued its first water and sewer revenue bonds in fiscal year 1996-97 with the issuance of $37,700,000 Combined Enterprise System Revenue Bonds authorized by the City Council in 1994. The bonds were issued under a master trust agreement and are secured by a pledge of the net revenues of the combined utility enterprise system. The City is bound by a rate covenant to set rates such that the income that is available to pay the debt service requirements on the revenue bonds will not be less than a certain percentage of the debt service requirements. There are also certain limitations on the amount of additional revenue debt that can be issued in future years.
Installment Financing
In addition to general obligation and revenue bonds, the City has entered into various installment financings including, certificates of participation, and State bond and revolving loan obligations. These have funded various projects such as a 20,000 seat amphitheater/softball complex, a parking deck, and utility capital projects.
Equipment Financing
The City has entered into various equipment installment purchase agreements for the purchase of heavy vehicles, computer systems and other equipment. Beginning with fiscal year 1999, the City will expand its equipment financing to include all rolling stock.
Debt Service Payments
Debt service funding resources for the general debt of the City are the general revenues of the City, including property taxes, while the utility debt is funded totally from water and sewer service revenues.
Annual Debt Service Budget
The City develops and maintains a funding plan for all debt service requirements well in advance of funding needs. Specific revenue sources are identified for the debt retirement program including new property taxes as appropriate.
Arbitrage Compliance
With the issuance of any tax exempt debt, the City covenants that it will not take any action which would cause the debt to be "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986. As part of that covenant, the City certifies that it will follow the procedures and guidelines set forth in the Code regarding the expenditure of proceeds, the investment of proceeds and applicable arbitrage rebate requirements.
Debt Related Reporting
The City is required to include in its comprehensive annual financial report certain schedules and related information on long-term obligation maturities and debt service requirements.
Credit Ratings
The City has maintained a credit rating of AAA by Moody's and Standard & Poor since 1974.
Debt Projections
The City projects its debt program along with its ten-year Capital Improvement Program in order to have the opportunity to structure debt events well in advance of specific needs.
Debt Limits
The legal debt limit imposed by state statute is 8% of assessed value. However, as a matter of internal policy, the City has maintained a debt position far below its legal limit and would consider the range of 2.5% - 3.0% as an appropriate, self-imposed maximum debt range. Over the last ten years, the City's ratio of net bonded debt to assessed value has not exceeded 1.5%.
For More Information Contact:
Fred Blackwood
Debt Manager
Finance Department
222 W. Hargett St., Room 106
Raleigh, NC 27601
919-996-4939
Mary Waller
Finance Web Page Coordinator
PO Box 590
Raleigh, NC 27602-0590
919-996-3558
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