2004 Performance Based Budget - Laserfiche WebLink

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LONG-TERM DEBT SUMMARY INTRODUCTION During 1996, the City's bond rating was upgraded from "A" to "AA" by two of the three national municipal bond rating agencies. As mentioned earlier in this document, this rating improvement was a significant accomplishment for the City. It meant the credit worthiness of the City increased dramatically. As a result of the lower borrowing costs afforded by this bond rating, the City of South Bend has been provided some choices as it attempts to meet the long list of needs outlined in its Capital Improvement Plan. The only new debt issued during 2003 involves the construction and equipping of a new central fire station as well as renovating and expanding of the police station. It includes and is not limited to cost of property acquisition, demolition and removal of existing buildings, environmental remediation, redevelopment and economic development activities. The bond size is $21,335,000 and will be repaid over atwenty-year period using County Option Income Tax and Emergency Medical Fund revenues. ?-lso, in 2003, the City refunded $34,215,000 of Redevelopment Authority Revenue Bonds. This included Downtown TIF bonds that were originally issued in 1998 and 1992 and Airport TIF bonds that were originally in 1993 and 1997. All of these bonds were refunded to take advantage of lower interest rates. As of December 31, 2003, the City had a number of debt issues outstanding. These issues included $1,525,000 of general obligation lbonds, $48,446,711 of revenue bonds payable from Enterprise Funds, $111,590,000 of revenue; bonds payable from Governmental Funds and $1,097,607 of first mortgage bonds. General obligation bonds are direct obligations of the City and are payable out of ad valorem taxes levied and collected on all of the taxable property in the City. Revenue bonds generally are obligations payable from the revenues of a particular project, First mortgage bonds are generally issued to finance costs associated with building structures and are secured by a mortgage against specified properties owned by the City. A listing of all outstanding debt as of year-end, along with pertinent information for each issue, follows this introduction. Also included in this section is a debt service schedule which identifies principal and interest payments (in some cases lease payments for debt issued by the South Bend Redevelopment Authority) due during each of the next five years and beyond and the funding source for each debt service payment. The decision to issue bonds or to obtain financing from financial institutions is based upon which alternative would provide the City with the lower overall costs. This is decided on a case- by-case basis. For bond issues, the City generally uses competitive sales for all issues unless circumstances dictate otherwise. Negotiated sales are considered if the bond issue involves a complex financing structure (certain revem.~e issues, a combination of taxable/nontaxable issues, etc.) or if other factors involved would malce a competitive sale less cost effective. If a negotiated sale is anticipated, the City Controller and City Bond Counsel establishes a list of pre- qualified underwriters. D-55