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CITY OF SOUTH BEND OFFICE OF THE CLERK
<br /> we can defer doing so that we can use the revenue that we were going to use for that other project
<br /> and move it over to the project that has the overrun? That's one (1) option. The other option is to
<br /> change the scope. Change what we're doing to kind of fit within the confines of the revenue that
<br /> we have. That's kind of it. Do you find new revenue sources and change the prioritization of what
<br /> you were going to spend money on, so you can move money over to the projects that are over? Or,
<br /> do you change the project to fit within the amount of money that you have? I say hypothetical
<br /> because those are extremely active conversations,always,on how we reprioritize and move money
<br /> around to make sure that everything that needs to get done can get done.
<br /> Mr. Banicki-Critchlow interjected, What was it between 2009 and 2011 that caused that debt limit
<br /> to drop so much in that period?
<br /> Mr. Parker replied, So the only thing that would cause the debt limit to drop like that would be a
<br /> reduction in the net assessed value. And remember, from what we talked about with property
<br /> values, it is a year after. So, 2017 pay 2018. So, it's a year and every year is essential. So, it took a
<br /> little while for the property values to catch up with the economy.
<br /> Mr. Dunn interjected, So,basically, you're saying that our debt limit, which is a percentage of our
<br /> assessed value, is essentially flat?
<br /> Mr. Parker replied, Correct. It is going to vary with the net assessed value. Net assessed value
<br /> doesn't change a whole lot year to year. But yeah, it's essentially flat as net assessed value goes
<br /> down. And again, this is net, so this takes into account credits, it takes into account new net
<br /> reductions, all of those things.
<br /> Mr. Dunn followed up, And the three(3) other debt lines, they're not added, are they?
<br /> Mr. Parker replied, They are not, no. Each one (1) has a separate limit.
<br /> He continued, The last thing I want to talk about here, and then definitely open it up for any other
<br /> questions,is our debt service payments,our sort of ongoing debt service payments. So,if we issued
<br /> no new debt over the next four(4) years,here is how much we would pay out in debt service each
<br /> year. So, in 2019 we are budgeted for about $32.6 million. It's actually a little bit higher than that
<br /> now because we had a debt issuance in 2019, but right around $33 million in 2019. And then as
<br /> we pay debt off, over the next several years it goes down. And again, this is if no new debt is
<br /> issued. It's not anticipated because we will issue new debt as new projects come up. What that
<br /> essentially amounts to is,this(referencing a slide in the presentation)is,again,it should look fairly
<br /> standard by now or should look fairly familiar, debt service payments as a percentage of total
<br /> annual expenditures compared to other cities in Indiana. So, our current expenditures, our debt
<br /> service expenditures of$32.5 million out of our annual budget of$368 million, we're spending
<br /> about eight to nine percent(8%- 9%)of our total expenditures that are spent on debt service. That
<br /> puts us, again, in a fairly good position relative to other cities. The larger percentage of your total
<br /> expenditures spent on debt service, the less flexibility you have in what you can spend money on.
<br /> So, if we were up at around twenty to twenty-five percent (20% - 25%) of our expenditures, we
<br /> wouldn't be able to allocate as much money to new projects because a significant portion of our
<br /> money was already spoken for in debt service. So, again,just sort of,just like with cash, in our
<br /> overall debt position, this is roughly right where I want us to be, in the middle of the pack. Maybe
<br /> slightly towards the bottom, so that we can continue to sustain that debt service going forward.
<br /> EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT
<br /> 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TTD 574.235.5567 www.southbendin.gov
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