Funding options for the City’s Capital Needs Debt Service Deep Dive Funding options for the City’s Capital Needs June 3, 2019

Debt Service Coverage* Unfavorable Rate Environment, Maximum Borrow Loan amount $8,400,000 Annual payment $596,001 Annual interest rate 5.00% Total interest $6,500,016 Loan period in years 25 Governmental Stormwater Share of debt service (85%) 506,601 Available cash 723,521 Coverage ratio 1.42 Share of debt service (15%) 89,400 Available cash 113,765 Coverage ratio 1.27 * A ratio of 1.25 cash/debt service is commonly used as a benchmark for adequate coverage.

Available Cash for capital Projects Governmental Funds 2015 2016 2017 2018 Average Revenues and Net Transfers 3,517,126 3,842,677 4,352,496 4,544,592 4,064,223 Expenditures 3,555,770 3,891,996 4,333,134 3,744,889 3,881,447 Fund Balance Increase (Decrease) (38,644) (49,319) 19,362 799,703 182,776 Plus Cash Capital Expenditures 595,189 283,280 29,810 271,927 295,052 Plus Debt Service 172,200 172,147 172,187 Plus DDA Appropriation - 36,000 180,000 78,030 73,508 Available for Capital Projects 728,745 442,161 401,372 1,321,807 723,521

Increase in Net Position* Stormwater Fund 2015 2016 2017 2018 Average Revenue 137,708 139,392 135,216 135,353 136,917 Expense 49,210 26,336 15,665 1,398 23,152 Increase in Net Position 88,498 113,056 119,551 133,955 113,765 *Since no capital investment has been made from the Stormwater Fund, the Increase in Net Position is also the total amount available for capital projects.

Cash Available for Capital Projects Governmental + Stormwater 2015 2016 2017 2018 Average Governmental 728,745 442,161 401,372 1,321,807 723,521 Stormwater 88,498 113,056 119,551 133,955 113,765 Total 817,243 555,217 520,923 1,455,762 837,286

Restricted FUNDS (SPLOST/HOST/LMIG) Projects Monthly projections for April 2019 - December 2021 2020 Dec 2019 Apr 2019 A: 278 initial design D: 278 final design B: Police Vehicles E: Laredo redesign C: 278 ROW acquisition F: 278 and/or other road construction

Stormwater Projects Monthly projections for July 2019 - December 2021

Hypothetical B.A.N. Timeline: Oct 2019 – Dec 2021 Total Debt and Interest Expense at Three Different Rates

Interest Rate Scenarios Unfavorable environment Favorable environment Loan amount $7,000,000.00 Annual interest rate 5.00% Loan period in years 30 Annual payment $455,360.05 Total interest $6,660,801.37 Loan amount $7,000,000.00 Annual interest rate 3.50% Loan period in years 25 Annual payment $424,718.25 Total interest $3,617,956.20

Debt Service Coverage Unfavorable Environment Governmental Stormwater Share of debt service (83.57%) 380,550 Available cash 723,521 Coverage ratio 1.90 Share of debt service (16.43%) 74,810 Available cash 113,765 Coverage ratio 1.52

Save versus Borrow comparison Favorable and Unfavorable interest rates, 30-yr. average inflation* In the “Unfavorable environment” scenario, debt service payments would be about $377,000 annually; but inflation would increase the price tag to nearly $16 million by 2051, so the City would have to save about $150,000 more than that each year in order to pay cash. Unfavorable loan environment Favorable loan environment Loan amount $5,850,000 Annual interest rate 5.00% Loan period in years 30 Total interest $5,455,463 Financed total cost $11,305,463 Cash total cost in 2051 assuming 3.37% inflation $15,799,035 Annual benefit of financing $149,786 Loan amount $5,850,000 Annual interest rate 3.50% Loan period in years 25 Total interest $2,935,944 Financed total cost $8,785,944 Cash total cost in 2046 assuming 3.37% inflation $13,388,075 Annual benefit of financing $184,085 * Source: Average CPI-All Urban Consumers 1990-2019, U.S. Bureau of Labor Statistics https://beta.bls.gov/dataViewer/view/timeseries/CUUR0000SA0

Unfavorable loan environment Favorable loan environment Save versus Borrow comparison Favorable and Unfavorable interest rates, 4.56% Construction inflation* The previous slide assumed the price of a park would increase at the same rate that consumer prices have over the past 30 years. If historical construction inflation rates are a better estimator, the future cost would be still higher. Unfavorable loan environment Favorable loan environment Loan amount $5,850,000 Annual interest rate 5.00% Loan period in years 30 Total interest $5,455,463 Financed total cost $11,305,463 Cash total cost in 2051 assuming 4.56% inflation $22,290,669 Annual benefit of financing $366,174 Loan amount $5,850,000 Annual interest rate 3.50% Loan period in years 25 Total interest $2,935,944 Financed total cost $8,785,944 Cash total cost in 2046 assuming 4.56% inflation $17,835,908 Annual benefit of financing $361,999 * Source: U.S. Census Bureau, 30-year average new construction inflation through April 2019 census.gov/construction/cpi/