2011 CAFR Executive Summary - Laserfiche WebLink

Home Browse Search

Management Discussion & Analysis The new revenue bond issued in fiscal 2011 was the 2011 Sewage Works Revenue Bond in the amount of$21,500,000 for the purpose of funding improvements for the combined sewer overflow ("CSO") initiative. The 2011 Sewage Works Bond is a twenty (20) year issue with maturity in 2031 with debt service coverage from the Sewage Works Bond Sinking fund. The bond issue will finance capital improvements addressing combined sewer overflow issues improving sewage discharge into the St. Joseph River, in compliance with the Environmental Protection Agency ("EPA") consent decree. It is a part of a twenty year long-term control plan which will require additional bonding and sewer rate increases. During 2011 the City entered into capital lease agreements in the amount of $4,057,635 to purchase certain vehicles, copiers, telephones and equipment. The lease terms are typically for five years with quarterly or semi-annual debt service paid from the operating budgets of the user departments. The 2011 capital leases were for solid waste ($529,285), building department ($39,600), parks & recreation department ($948,067), police department ($1,081,066), information technology ($1,444,996)and other($14,621). The 2011 additions in notes & loans is for Water and Wastewater Utility borrowing in 2011 against the State Revolving Loan (SRF) program in the amount of$648,505 for water and sewer improvements. During 2011 the City refunded four bond issuances in order to take advantage of a more favorable interest rate environment. In August, the City refunded the 2000 Hall of Fame and 2001 Century Center bonds and realized present value interest savings of approximately $1,036,701 over the remaining life of the bonds. In December, the City refunded the 2003 Airport TIF and 2003 SBCDA (Downtown) TIF bonds with the Indiana Bond Bank and received an up-front cash payment of$1,914,501 which was deposited into the respective TIF funds. Under the Indiana Constitution and State statute, the City's general obligation bonded debt and certain other debt is subject to a legal limitation based upon 2% of total assessed value of real and personal property. The City had no general obligation bonded debt outstanding at December 31, 2011 and none of the above debt issuance amounts are subject to this debt limitation. In 2012, the City anticipates issuing additional debt including a 2012 Water Revenue bond in the amount of$8,300,000 and a 2012 Sewage Works Revenue bond in the amount of$21,200,000. New capital leases will also be needed for the customary replacement of police department, public works and other city vehicles and equipment. Additional information on debt can be found in the notes to the financial statements in statement note I.D.8, long-term obligation accounting, statement note III.F.2, capital lease obligations, statement note III.G, long-term liabilities, and statement note IV.D, conduit debt. A calculation of the City's legal debt limitation can be found in the statistical debt capacity section of this document. Economic Factor; and 2013 Budget Economic Factors Property tax revenue, historically and at present, is the principal source of revenue for funding of governmental activities within the City of South Bend. The State of Indiana General Assembly enacted property tax reform legislation in March of 2008. House Enrolled Act 1001 (HEA 1001) which limits property taxes paid to 1% of gross assessed 33