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

2. 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.

3. 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

4. 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.

5. 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

6. 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

7. Stormwater Projects Monthly projections for July 2019 - December 2021

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

9. 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

10. 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

11. 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 , U.S. Bureau of Labor Statistics

12. 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/