DEBT SERVICE
REQUIREMENTS
BACKGROUND
In
The
Town has six outstanding series of general obligation bonds, excluding
refunding bonds. Principal and interest payments on general obligation bonds
are collateralized by the full faith, credit and taxing power of the Town. Five
of the six outstanding general obligations bonds bear interest, payable
semi-annually, at rates varying from 2.5 to 5.25 percent. The 2006 Public
Improvement bonds have a variable rate of interest with principal payments
commencing in FY 2009 and continuing through FY 2027. Interest payments for this issue are made on
a monthly basis. Thus far in FY 2008,
the interest rates, which are adjusted on a weekly basis, have been from a low
of 1.16 percent to a high of 4.0 percent. Principal and interest requirements
are provided by appropriation in the year in which they are due. The Town’s
general obligation bonds have been rated triple-A by Moody’s, Standard & Poor’s
and Fitch. These excellent bond ratings positively affect the Town’s interest
costs through lower interest rates.
The
Town has one general obligation refunding bond issue outstanding. Refunding
bonds are issued to retire bonds that are already outstanding in order to
achieve economic savings through lower interest rates. The refunding bonds bear
interest, payable semi-annually, at the rate of 4.2 percent. Principal and
interest requirements are provided by appropriation in the year in which they
are due and are collateralized by the full faith, credit and taxing power of
the Town.
The
Town has three revenue bond issues outstanding, with interest rates of 2.75 to
5.0 percent. These revenue bonds are long-term debt instruments that will be
repaid from the receipts of the utility system. Revenue bonds require a trust
agreement between the Town and a trustee for the benefit of the bondholders. In
this trust agreement, the Town made certain covenants, or promises, regarding
the setting of rates and the operation of the utility system.
The
Town has two series of certificates of participation outstanding, with interest
rates of 2.7 to 5.0 percent. Principal and interest requirements are provided
by appropriation in the year in which they are due, and are secured by the Town
Hall campus property.
The
Town has five outstanding installment purchase agreements with interest rates
ranging from 2.65 to 4.73 percent. The debt service on these obligations is
paid from the general revenues of the Town, and are collateralized by the
property that is financed.
The
Town has two State Revolving Loans with interest rates ranging from 2.205 to
2.42 percent. These loans are financing
improvements to the sewer system. These
loans are long-term debt instruments that will be repaid from the receipts of
the utility system.
HISTORICAL
OVERVIEW OF OUTSTANDING DEBT
1986
A
bond referendum of $27,000,000 was placed on the
1987 A total of $20,500,000 in general obligation bonds was sold in July 1987. This sale included a portion of the 1986 authority and $10,000,000 in previously authorized but unissued water bonds for the treatment plant. These bonds were refunded in 1992 and in 2001.
1988 The Town sold an additional $2,000,000 in authorized street improvement bonds and $5,000,000 in authorized sewer bonds in August 1988. These bonds were refunded in 1992 and 2001.
1991
A
bond sale was held in September 1991, at which time the remaining 1986
authority of $1,000,000 in street bonds and $8,500,000 in water bonds were
sold. This offering completed the sale of all authorized general obligation
bonds to date. These bonds were refunded in 1996.
1992 The Town refunded $20,125,000 in water, sewer, and street bonds in December 1992, at interest rates ranging from 5.5 to 5.6 percent. The original bonds issued in FY 1987 and FY 1988 were refunded to provide the Town approximately $726,000 in present value savings.
1994 In a March 1994
referendum, the
1996 A refunding transaction related to the 1991 general obligation issue occurred in April 1996. Interest rates ranged from 4.5 to 4.8 percent, and generated approximately $105,000 in savings to the Town. In April 1996, a total of $11,575,000 in general obligation bonds were sold with interest rates ranging from 5.1 to 5.25 percent. This sale included $9,075,000 of authorized sewer bonds and $2,500,000 of authorized parks and recreation bonds.
1997 In October 1997, the Town entered into an installment purchase agreement for $700,000 for the financing of two fire trucks. The debt will be repaid over a period of ten years and is budgeted in the General Fund. The first principal and interest payment was made in FY 1998. Principal and interest payments are made semi-annually based on a 4.83 percent annual interest rate. In November 1997, the Town entered into an installment purchase agreement for $6,920,000 to finance part of the $19,650,000 cost of the South Cary Water Reclamation Facility (SCWRF) expansion. The debt was to be repaid over a period of fifteen years and was budgeted in the Water/Sewer Operations Fund. The first principal and interest payment was made in FY 1998. Principal and interest payments were made semi-annually based on a 4.84 percent annual rate.
1998 In December 1998, $6,925,000 in general obligation bonds were sold with interest rates ranging from 4 to 4.2 percent. This sale was for the remaining parks and recreation authorization. In December 1998, the Town also entered into an installment purchase agreement for $2,200,000 for the financing of a water tank. The debt was to be repaid over a period of fifteen years and was budgeted in the Water/Sewer Operations Fund. The first principal and interest payment was made in FY 1999. Principal and interest payments were made semi-annually based on a 3.99 percent annual rate.
1999
In a
2001 In February 2001, $76,900,000 in general obligation bonds were sold with
interest rates ranging from 4.25 to 5.0 percent. This sale included $59,100,000 of authorized water bonds,
$10,600,000 of authorized street and sidewalk bonds, and $7,200,000 of
authorized park and recreational facility bonds. The Town also refunded
$12,330,000 of the 1992 refunding in February 2001, at rates ranging from 4.0
to 4.2 percent, for approximately $459,000 in present value savings. In November 2001, the Town issued
$19,135,000 of revenue bonds to finance the reclaimed water system, and to
refund the 1997 SCWRF expansion installment purchase agreement and the 1998
water tank installment purchase agreement. The installment purchase agreements
were refunded to remove the liens on the utility system. The revenue bonds will
be repaid over a period of 25 years, semi-annually, from receipts of the
utility system at interest rates ranging from 3.25 to 5.0 percent.
2002 In March
2002, the Town entered into an installment purchase agreement for $375,000 for
the financing of a fire pumper. The debt will be repaid over a period of ten
years and is budgeted in the General Fund. Principal and interest payments are
made semi-annually based on a 4.04 percent
annual interest rate with the first payment in FY 2003. In October 2002, the
Town issued $46,695,000 of certificates of participation to finance the town
hall expansion and to accelerate the widening of NC Highway 55. The
certificates of participation are secured by the town hall campus property and
will be repaid over a period of 20 years, semi-annually, at rates ranging from
2.5 to 5.0 percent. Debt service began in FY2003.
HISTORICAL
OVERVIEW (Continued)
2003
2004 In May 2004, the Town issued $25,605,000
of revenue bonds to finance certain water reclamation projects and to refund a
portion of the 1996 sewer bonds. The refunding generated approximately $179,000
in present value savings. The revenue bonds will be repaid over a period of 25
years, semi-annually, from receipts of the utility system with interest rates
ranging from 2.0 to 5.0 percent. Debt service began in FY 2005. The Town has
also entered into a State Revolving Loan in the amount of $10,223,222 to
finance the biosolids dryer project. Debt service commenced in FY 2006 and will
be paid over a period of 20 years at 2.42% interest. The Town entered into an
installment purchase contract in the amount of $780,000 during the fiscal year
to purchase a fire aerial ladder platform truck. Debt service on this contract
began in FY 2005.
2005 The Town
entered into a State Revolving Loan in the amount of $3,958,771 to finance the
planning, permitting, and a portion of the design for the Western Wake Regional
Wastewater Facilities. Debt service commenced in FY 2008 and will be paid over
a period of 20 years at 2.205% interest.
2006 There was no
additional debt issued in FY 2006.
2007 In July
2006, the Town issued $47,255,000 of general obligation bonds, comprised of
$45,255,000 of street bonds and $2,000,000 of park bonds with a variable rate
of interest. These bonds will be repaid
over a 20 year period, with the first principal payment to be made in FY
2009. Additionally, the Town has issued
$35,710,000 in revenue bonds, including $22,240,000 to finance certain water
reclamation projects and $13,470,000 to
refund a portion of the 2001 revenue bonds, that resulted in a net present
value savings in excess of $560,000. The
revenue bonds will be repaid over a period of 25 years, semi-annually, from
receipts of the utility system.
2008 There was no
additional debt issued in FY 2008.
FY 2009 DEBT
OUTLOOK
The
Town is planning to issue approximately $28,000,000 in general obligation bonds
during FY 2009 for streets, parks and open space projects. Of this amount,
$10,000,000 is related to the open space bond referendum approved by voters in
2005. The principal will be repaid over
20 years, beginning in FY 2010.
The
Town is planning to issue approximately $13,000,000 in general obligation bonds
to finance certain water and sewer projects in FY 2009. Of this amount, $7,410,000 is the last of the
water bond referendum approved by voters in 1999. The principal will be repaid over 25 years,
beginning in FY 2010.
The
Town is planning to issue approximately $20,000,000 in revenue bonds during FY
2009 for wastewater projects. The
principal for this issue will be repaid over 25 years, beginning in FY 2010.
The
Town plans to enter into three installment purchase contracts as follows: 1) approximately $1,315,000 to purchase both
a replacement fire truck and a service ladder fire truck upgrade, 2) approximately
$1,080,000 for a fire pumper replacement, and 3) approximately $1,428,000 to construct
a yard waster/transfer station/recycling facility.
Principal
payments related to the 2006 general obligation bonds will commence. For FY 2009, the principal payment amount
will be $1,800,000. These payments will
continue through FY 2027.
FY 2010 DEBT
OUTLOOK
The
Town is planning to issue approximately $37,000,000 in general obligation bonds
to finance certain streets and parks projects.
Repayment will be over a 20 year
period with repayment expected to commence in FY 2011. The Town is also planning to issue
approximately $7,800,000 in certificates of participation to finance a new
police radio system and $10,000,000 for the land banking program.
EFFECTS OF
DEBT
If
the Town issues the debt as planned in FY 2009, the general fund will have a
debt balance of $156 million and the utility fund will have a debt balance of $147
million at