Title
Staff Report for Discussion on City Debt Obligations as of June 30, 2024
Staffreport
CITY COUNCIL PRIORITY
• Fiscal Sustainability and Transparency
SUMMARY
Discussion on City Debt Obligations as of June 30, 2024 is for information only.
RECOMMENDATION
Staff recommend the City Council Finance Committee review the Debt Description Summary and the Debt Summary Report.
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.
Local governments mainly 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.
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 2012 Pension Obligation Bonds, recently matured, were not related to City infrastructure improvements.
The original issuance total for all existing City debt amounts to $183,698,000. The outstanding principal amount for all debt as of June 30, 2024, is $99,272,000.
DISCUSSION
The Debt Description Summary 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 gives a summary of debt obligations by fund, including the following relevant information:
• Original issuance amount.
• Date of issuance.
• Date of maturity.
• Annual debt service payments (principal and interest).
• Principal balance as of June 30, 2024.
• Interest rate.
Annual debt service payments for Fiscal Year 2023-24 total $14,089,000. Of this amount, $6,715,000 was for General Fund debt. Of the $99,272,000 in total outstanding debt as of June 30, 2024, $32,866,000 was related to General Fund debt.
In Fiscal Year 2023-24, two General Fund debt obligations matured. Most significantly, the 2012 Pension Obligation Bonds matured with original issuance amount of $18,305,000 and final payment of $2,517,000.
ATTACHMENTS
• Attachment A: Debt Description Summary
• Attachment B: Debt Summary Report
• Attachment C: Presentation on Outstanding Debt
PREPARED BY
Felicia Silva, Assistant Finance Director