Recreation/Senior Center and Aquatic Center Expansion Task Force Agenda and Packet 2015 12 16

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SUBJECT: RETIREMENT OF GENERAL OBLIGATION LIBRARY BONDS AND OTHER FINANCING OPPORTUNITIES DATE: DECEMBER 16, 2015 PAGE 2 OF 4 Lower the debt service mill levy so revenue and expenditures are roughly equivalent and reserves are maintained at approximately one year's annual debt service. 2. Maintain the 1.526 mill levy but, beginning with the 2013 call date, start making advanced calls on the remaining bonds. In other words, on an annual basis, pay down as much principal as possible and pay off the bonds as early as possible without increasing the levy beyond 1.526 mills. 3. Maintain the total 1.526 mill levy and current maturity schedule, but ask the voters to split the levy between debt service (around 1.200 mills) and library operations (the remaining 0.326 mills). The Finance Committee reached consensus in 2012, when the Committee instructed staff to implement Option #2 above and to begin the advanced calls on December 1, 2013. On December 1, 2013, in addition to the normally scheduled principal and interest payments, the City redeemed an additional $520,000 of the 4.25% bonds maturing on December 1, 2023 and $5,000 of the 4.20% bonds maturing on December 1, 2022. On December 1, 2014, the City redeemed an additional $215,000 of the 4.20% bonds and on December 1, 2015 the City redeemed an additional $215,000 of the 4.20% bonds. Staff now projects the 2004 General Obligation Library Bonds will be completely paid on December 1, 2018, five years ahead of the original December 1, 2023 maturity date. In addition, the 2018 mill levy is expected to fall to 0.976 mills. These projections are based on staff's current growth assumptions of the City's assessed valuation. The chart below is from the City's Long -Term Financial Model. It shows a financial history (2004 through 2014) and a financial projection (2015 through 2018) for the Debt Service Fund. The green line represents the fund's revenue, made up of property tax revenue and interest earnings. The red line represents the fund's expenditures, which are principal and interest on the bonds and a small amount of miscellaneous fees. The yellow line represents the fund's reserves, which are the excess of revenue over expenditures on a cumulative basis. RECREATION CENTER TASK FORCE COMMUNICATION 5