09-11-18 Personnel and Finance (#7)

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CITY OF SOUTH BEND I OFFICE OF THE CLERK Councilmember Scott stated, that is a good question. I asked this to the Mayor too. What is that debt number. Households and businesses have workable debt and that is what we look at for the City as well. We must look at the return investment. We know CSO would bankrupt the City probably three (3) times over. I think we need to set some examples down the road so that people can understand the budget and bonds. I know at one (1) point Dr. Varner put together how much it's costing each individual for CSO, which as least defines where we stand per person and where we stand as the City. Councilmember Teshka stated, especially with this debt conversation, I think the focus is how much is too much? Councilmember Scott stated, it really starts with the Mayor to say this is what we need to tag on to do whatever we want to do to in our City and it's up to us to agree to go with that, we are all accountable. Are we going too high or too low? Mr. Frierson stated, Thanks for your question, the one (1) thing from a commentary standpoint, someone might say one (1) thing is higher than the other. One (1) of the good reasons why you have a credit rating is to get an outside perspective on a global basis on where the City stands. Individuals like myself as a municipal advisor, I have a judicial duty to make sure the City has the capacity to issue debt. I have a duty to make sure the bonds that were put into place make sense. Before we even come to you, we are working on this months before hand, we're going through analyzing what is the revenue capacity of the City. What does this potential debt look like, what does the debt service look like, and what is the coverage—we do a lot of what are called stress tests.These tell us what happens if the revenues fall behind fifteen percent(15%),is the City going to be struggling, or if a certain tax payer leaves, what does this do to the City. We work with the Deputy Controller to work out the pros and cons and what is your capacity. We put this side up, from a GO standpoint (this is very key) because you are at a Double A (AA) rating and what that says globally is that you can meet your financial capacity commitment. So, we go through our process, then go through the rating agency and the process to give their rating. Councilmember Davis asked, Is the reason why Indianapolis has a Double A(AA) rating because it's their size or is it more than that?Is it worth it for us in South Bend to do this process to get the Triple A(AAA)rating? Mr. Frierson answered,There are various reasons and I don't want to get into that. There are some in your control and there are some that are not. There are only two (2) cities in Indiana that are at a Triple A(AAA) status(Fishers and Cannel). What I will say is that we always like to go through the write up after the rating to see what other opportunities are within the City. Councilmember Jo Broden stated, I think the Council would be interested in a follow up of this conversation. Mr. Frierson answered, When the Zoo Bond passes, we will be going through that process of the rating and I encourage everyone to read that report because the report really details what the City is doing, and what are some of the potential growth areas in the City. Councilmember Davis asked, Can we get a copy of this on the website and have it emailed to me? EXCELLENCE I ACCOUNTABILITY I INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 1227 W Jefferson Bvld I South Bend,Indiana 466011p 574.235.92211f574.235.91731TTD574.235.55671www.southbendin.gov 13