Fort Walton Beach Council agenda — 09-05-12 special budget-first ph — reading text

excludingexcluding pension pension funds:funds: TheThe City'City' ss InvestmentInvestment Policy,Policy, adoptedadopted byby CityCity CouncilCouncil inin ResolutionResolution 0404- - 20,20, authorizesauthorizes investmentsinvestments inin accordanceaccordance withwith FloridaFlorida StateState StatuteStatute 218.218. 415.415. TheThe primaryprimary investmentinvestment objectives,objectives, inin orderorder ofof importance,importance, are:are: safetysafety ofof principal,principal, liquidity,liquidity, andand investmentinvestment income.income. CashCash balancesbalances fromfrom allall fundsfunds areare consolidatedconsolidated toto maximizemaximize investmentinvestment earnings.earnings. InvestmentInvestment incomeincome isis allocatedallocated toto eacheach fundfund basedbased onon thethe fund'fund' ss respectiverespective participationparticipation andand inin accordanceaccordance withwith generallygenerally acceptedaccepted accountingaccounting principles.principles. TheThe investmentinvestment portfolioportfolio shallshall bebe structured,structured, toto thethe extentextent possible,possible, toto matchmatch investmentinvestment maturities maturities withwith knownknown cashcash needsneeds andand anticipatedanticipated cashcash flowflow requirements.requirements. InvestmentsInvestments willwill bebe diversified,diversified, toto thethe extentextent practicable,practicable, toto controlcontrol thethe riskrisk ofof lossloss resultingresulting fromfrom overover - - concentrationconcentration ofof assetsassets inin aa specificspecific maturity,maturity, issuer,issuer, instrument,instrument, dealer,dealer, oror institution.institution. TheThe FinanceFinance DirectorDirector isis responsible responsible forfor thethe operationoperation ofof thethe investment investment program.program. TheThe FinanceFinance DirectorDirector oror designeedesignee ofof thethe FinanceFinance DirectorDirector and/and/ oror CityCity ManagerManager isis authorizedauthorized toto investinvest surplussurplus publicpublic fundsfunds ofof thethe CityCity inin accordanceaccordance withwith thethe adoptedadopted InvestmentInvestment Policy.Policy. DebtDebt Issuance Issuance DebtDebt LimitLimit — — TheThe StateState ofof FloridaFlorida doesdoes notnot placeplace aa legallegal limitlimit ofof debtdebt onon municipalities.municipalities. However,However, generalgeneral obligationobligation debtsdebts greatergreater thanthan oneone yearyear requirerequire votervoter referendumreferendum approval.approval. SpecialSpecial revenuerevenue debtdebt isis pledgedpledged byby aa specificspecific revenuerevenue sourcesource andand limitedlimited byby availableavailable revenue;revenue; thereforetherefore itit isis notnot subjectsubject toto votervoter referendum.referendum. AnyAny newnew debtdebt willwill bebe carefullycarefully evaluatedevaluated asas toto itsits impactimpact onon operations.operations. DebtDebt PhilosophyPhilosophy — — TheThe useuse ofof debtdebt financingfinancing forfor longlong - - termterm capitalcapital improvementimprovement programsprograms isis basedbased uponupon twotwo typestypes ofof debtdebt financing:financing: 1)1)" " paypay - - as-as- youyou - - go"go" andand 2)2)" " paypay - - asas- - you-you- useuse ". ". InIn practice,practice, thethe CityCity usesuses aa mixmix ofof thesethese twotwo basicbasic methodsmethods toto financefinance itsits CapitalCapital ImprovementsImprovements Program,Program, withwith paypay - - as-as- youyou - - gogo financingfinancing usedused forfor recurrentrecurrent capitalcapital expendituresexpenditures andand withwith paypay - - as-as- youyou - - useuse financingfinancing usedused forfor longlong - - term,term, nonnon - - recurrentrecurrent capitalcapital expenditures.expenditures. PayPay - - GoGo— — AA typetype ofof financing financing wherebywhereby currentcurrent revenues,revenues, taxes,taxes, and/and/ oror grantsgrants ratherrather - - As-As- YouYou Example:Example: annualannual streetstreet thanthan longlong termterm debtdebt areare usedused toto paypay forfor capitalcapital improvements.improvements. paving.paving. CityCity ofof FortFort WahonWahon Beach,Beach, FLFL 2424 Budget Overview Pay -As- You -Use — A type of financing whereby long term debt is used to pay for capital improvements. Example: debt financing for a new municipal facility. Debt Policy Statement —The following policy statements govern the City' s use of debt to finance long -term, non -recurring capital improvements: Recurrent capital expenditures for replacement, expansion and/ or acquisition of plant, equipment, and/ or motor vehicles will be financed on a pay -as- you -go basis from funds available and appropriated in the City' s annual operating budget. Only long -term, non -recurrent capital expenditures for public improvements having a relatively greater cost and longer useful life, and which require additional funding over and beyond the fiscal capacity of the City' s annual operating budget, will be financed through the issuance or creation of long -term debt. These expenditures will not be debt -financed for periods exceeding the projected useful life of the improvement. All capital improvements financed through the use of long -term debt will be consistent with the adopted Capital Improvements Program and the current fiscal year' s adopted Budget. Revenue sources that will be used to pay long -term debt will be conservatively projected to ensure that such debt is adequately and soundly financed. The The City' s total general obligation debt will not exceed 10% of its assessed valuation. City does not currently have any general obligation debt. The City will use special assessment revenue bonds or other self -supporting bonds where possible and appropriate to finance long -term, non -recurrent capital improvements, rather than general obligation bonds. The City will establish and maintain effective communications with bond rating agencies to keep them informed of its financial condition. Debt Capacity — The General Fund' s debt capacity is 20% of revenues, exclusive of appropriations from fund balance. The City is currently at 11% of its $ 3. 3M debt capacity, including Golf Fund debt for which non -ad valorem revenues are pledged. The Utilities Fund' s debt capacity is contingent upon available resources and existing debt. The current outstanding debt requires a coverage ratio of 1. 25 times earnings, and the City is currently at 2. 30. The Sanitation and Stormwater funds are debt -free. Debt Ratio — Indicates the percentage of assets financed via debt, and therefore the financial flexibility of the fund. Actual Estimate FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 General Fund 13. 2% 12. 9% 14. 0% 14. 4% 13. 9% Utilities Fund 33. 5% 32. 6% 33. 0% 32. 7% 31. 8% Golf Fund 80.7% 81. 4% 87. 3% 97.3% 97.5% Stormwater Fund 3. 9% 1. 4% 0. 0% 0.0% 0. 0% DebtDebt RatingRating — — ( ( A+A+ TheThe CityCity maintainsmaintains anan insuredinsured AAAAAA ratingrating withwith StandardStandard andand PoorsPoors underlyingunderlying rating)rating) andand anan insuredinsured AAAAAA ratingrating withwith FitchFitch ( ( AA-AA- underlyingunderlying rating).rating). CityCity ofof FortFort WaltonWalton Beach,Beach, FLFL 2525 Budget Overview DEBT SCHEDULES Vi1111 Bond Debt Service by Fiscal Year 2005 Bond Repay General Fund for Fiscal 2001 Bond Utility System 2010 Defeasing of Year Municipal Facilities Improvements 1999 Clubhouse Bond Grand Total 2012 -13 369, 405. 00 722, 558. 76 169, 216.40 1, 261, 180. 16 2013 -14 367, 805. 00 722, 758. 76 169, 216.40 1, 259, 780. 16 2014 -15 370,830.00