Presentation tobudgetconference -tosend
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This document discusses Chatham County's capital improvements story and debt model. It summarizes that Chatham County adopted a debt model and capital improvements plan (CIP) that has allowed them to fund many projects despite economic downturns. The debt model projects revenues and debt payments to smooth out tax rates. It has held up well through changes and economic conditions. The CIP fully funds projects and identifies future needs.
Presentation tobudgetconference -tosend
- 1. OUR CAPITAL IMPROVEMENTS STORY: IT’S NOT A FAIRY TALE! 6 December NCLGBA Winter Conference
- 2. First, a little quiz Locate Chatham County on the map:
- 3. Once Upon a Time Cows, chickens and goats GO bonds and revenue sharing Retirees, employees of UNC and RTP The old woman and the shoe
- 4. Once Upon a Time GO or COPs? $113 million in debt! A 6-fold increase in debt per capita
- 5. Enter the Wizard Doug Carter and Associates (DEC) The debt model BOC unanimously adopts CIP Projects begin
- 6. And we all lived happily ever after… …for a couple of years
- 7. But is a success story 6 years later We have a lot to show for it In spite of (because of?) the recession
- 8. Before the Recession Set aside 4 cents on the tax rate to fund the debt model Set up the debt reserve Authorized DSS expansion, business park construction, and new elementary school These projects were nearly complete before recession began Funded through COPs Design work for community college buildings, middle school and library complete
- 9. During the Great Recession At first, no funds were available Financing was difficult to obtain, but we were able to obtain bank loans and, eventually, an ARRA loan Construction bids were significantly below budget: Library13% below bids received in August 2008 Community college building19% below budget School 13% below budget Justice center 17% below budget
- 10. Debt Model/Reserve The reserve has held up through 2 complete BOC changes Smoothes out contributions to the debt reserve Currently, 5.5 cents contribution to debt service fund (for example, in FY 13, 5.7 cents needed for debt service) High of 12.7 cents needed in 2019 Funds accumulated up front—favorable view from rating agencies No tax increase is needed to fund debt service for existing and future projects (does not include operating)
- 11. Debt Model Includes Projection of revenues (property tax, impact fees, lottery) Retired debt (must be put back into reserve) Debt service, plus projection of debt for new projects Fund balance in debt reserve Property tax equivalent of debt service
- 12. Debt Model
- 13. Debt Model DEC is happy to share a copy DEC Associates, Inc. Douglas Carter President & Managing Director 704.334.7478 dcarter@decassociatesinc.com
- 14. Debt Model Updated annually: To ensure projections are on target To include new projects or to give BOC options to delay projects We are on Version 32B of the model But it has held up remarkably well considering it was developed before the Great Recession. Tweaks include: Added lottery proceeds Lowered annual property tax growth to 2% (from 5%) Lowered projections for other revenues, impact fees dramatically affected
- 15. Our CIP is not a “Wish List” Every project scheduled in the CIP is funded (or a source of funding identified) Projects without a funding source are classified as “future projects” and are not scheduled This category has been useful: Alleviates need for “pie-in-the-sky” projects Alerts the board to needs on the horizon that may compete with scheduled project for funds Provides a mechanism for funding planning costs We spend much time on identifying operating costs—now used as basis for expansion
- 16. Funding Strategy Fund large, needed facilities through debt Fund smaller needs through fund balance Maximize grant opportunities (parks) Fund parks through grants, recreation fee, and parks capital reserve (have funded 3 parks through these sources) Fund other projects through capital reserves