Title
Staff Report for Discussion on City Debt Obligations as of June 30, 2023
Staffreport
SUMMARY AND RECOMMENDATION
Staff recommends that the City Council Finance Committee review the Debt Summary Report and the Debt Description Summary. This staff report is for information only.
BACKGROUND
The City utilizes debt financing to accelerate and complete significant portions of the annual Capital Improvement Project Program. Proceeds available from financing infrastructure projects primarily affect the General Fund, the Water Pollution Control Plant Fund, the Shoreline Enterprise Fund, and the Successor Agency to the Redevelopment Agency.
In general, local governments rely on two methods of financing capital improvement projects: pay-as-you-go or pay-as-you-use. Pay-as-you-go capital financing refers to using cash or other assets rather than debt issuances for funding capital projects. It is most often used in cases when capital projects are small, and every capital improvement budget is at least partially funded by transfers of existing funds. Pay-as-you-use capital financing means issuing long-term debt in the form of general obligation bonds or revenue bonds to fund significant, extraordinary capital projects.
The original issuance total for all existing City debt amounted to $186,314,000. The outstanding principal amount for all debt as of June 30, 2023, is $109,318,000. Only the 2012 Pension Obligation Bonds with an original issuance amount of $18,305,000 is not related to City infrastructure improvements.
DISCUSSION
This report provides the Committee with a comprehensive overview of the City’s existing debt profile. The report includes financing in the form of bonds, certificates of participation, loans from the state and between City funds, debt obligations for special assessment districts, and long-term equipment leases.
The Debt Summary Report provides a summary of debt obligations by fund, including the following relevant information:
• Original issuance amount.
• Date of issuance.
• Date of maturity.
• 2-22-23 debt service payments (principal and interest).
• Principal balance as of June 30, 2023.
• Interest rate.
Annual debt service payments for 2022-2023 total $14,055,000. Of this amount, $6,628,000 is for General Fund debt. Of the total outstanding principal amount for all debt as of June 30, 2023 of $109,318,000, $37,991,000 is related to General Fund debt. The 2012 Pension Obligation Bonds require a final debt service payment of $2,433,000 prior to maturity this fiscal year.
ATTACHMENTS
• Attachment A: Debt Summary Report
• Attachment B: Debt Description Summary
• Attachment C: Presentation on Outstanding Debt
PREPARED BY
T. Michael Yuen, Finance Director