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Home My WebLink AboutIR 7460 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7460 N,pT[Mf0 �top . To the Mayor and Members of the City Council may 1, 7990 u s * ExA Subject: FISCAL IMPACT STATE MEN - WILL ROGERS AUDITORIUM PROPOSED ••aa S20,000,000 GENERAL OBLIGATION BOND.. PROGRAM At the Pre-Council meeting of April 10, 1990, Mr. John M. Stevenson, Cultural District Committee Chairman, briefed City Council members concerning the Cul- tural District's Improvement Plan. Based on Mr. Stevenson's presentation, it was requested that a financial impact statement be submitted to Council on the proposed $20,000,000 General Obligation Bond Program. It was also suggested that the bond program election be held in July, 1990. The estimated $95,000 cost for this single issue bond program would be paid by private funds. To meet minimum code requirements for the Will Rogers Auditorium, at least $4.000,000 will be needed. The proposed $20,000,000 bond sale needs to be measured against the total improvements needed in the Cultural District at this time, rather than a piecemeal program spread over many years. Needed facility improvements in the Cultural District approximate $50,000,000, of which $30,000,000 would be funded through private sources. This City-Private Enterprise partnership would result in substantial savings to the City by helping to keep the debt service requirements at a minimum, yet improving the City's infrastructure and enhancing the City's tax base and other revenues through increased usage of " Cultural District activities/facilities. The cost to the City for the pro- posed $20,000,000 bond program and the cost savings to the City through the City-Private Enterprise partnership are illustrated in the attachments, the highlights of which are contained in the following paragraphs. The financial impact on the citizens of Fort Worth from a $20,000,000 bond program and a $50,000,000 bond program was examined by comparing current debt service requirements and future debt service requirements after the sales for two such bond programs. The impact on the debt service requirements of the City resulting from the $20,000,000 bond sales is contained in the Attachment A table and the impact from the $50,000,000 bond sales is contained in Attach- ment B. The assumptions associated with the tables are that: 1. There would be three separate bond sales for each program: $20,000,000 S50,000,000 Sale Sale a. The first bond sale in 1991 for $ 4,000,000 $10,000,000 b. A second bond sale in 1992 for S 5,000,000 520,000,000 C. A third bond sale in 1993 for $ 8,000,000 $20,000,000 520,000,000 $50,000,000 ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS — INFORMAL REPORT TO CITY COUNCIL MEMBERS No. -7460 Page of 3 mot 40R>�Q To the Mayor and Members of the City Council }} �rrxA . Subject: FISCAL IMPACT STATEMENT - WILL ROGERS AUDITORIUM PROPOSED 473 $20,000,000 GENERAL OBLIGATION BOND PROGRAM 2. The interest rate would average 7.5%, per sale; 3. The principal and interest payments would be structured as shown in the attachments and 4. This would be the only bond sales considered (necessary to isolate the impact of the $20,000,000 and $50,000,000 sales). The financial impact on a citizen with the average homestead value of $64,368, less a 20% homestead exemption ($51,495 taxable property), and based on the above assumptions, would be to increase taxes as follows: $20,000,000 $50,000,000 Sale Sale 1. The lowest tax increase .20 cents (1992) .50 cents (1992) 2. The highest tax increase 1 .63 cents (1995) 3.44 cents (1995); 3. The average tax increase per year for the twenty-two year period 1.13 cents 2.96 cents and 4. The average dollar tax increase per year $5.82 $15.24 The above narrative isolated effects of the two bond programs. At least two addi- tional issues need to be considered by Council , however, before an informed decision can be made. They are: 1. Currently there are authorized but unissued general obligation bonds of $44,523,000. The impact on a citizen with an average homestead would be more than twice the impact of the proposed $20,000,000 Cultural District Bond program. These bonds will need to be sold at some future date. 2. A new general obligation bond program election is tentatively scheduled for early 1991. If a bond program election is held in 1991, it would be almost five years between elections. A reasonable assumption is that bonds will probably need to be sold each year to maintain/improve the City's infrastructure. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS --- INFORMAL REPORT T4 CITY COUNCIL MEMBERS No. 7460 Pa—lie- 3 of 3 �4fsoRr,�o To the Mayor and Members of the City Council u = ;rexPy. Subject: FISCAL IMPACT STATEMENT — WILL ROGERS AUDITORIUM PROPOSED as $20,000,000 GENERAL OBLIGATION BOND PROGRAM Assuming the current policy that the amount of bond sales will not exceed the prin- cipal retirement for that year, the financial impact appears to be favorable. Following the policy over the next eighteen years, with some basic assumptions, the total debt service requirements (principal and interest) would decrease from approx- imately $660,000,000 to just under $500,000,000. The assumptions used were: 1. Bonds sold each year were just less than the principal being, retired and 2. The interest rate for each sale was 7.5%. avid . Ivory City Manager Attachments: Attachment A: FISCAL IMPACT OF A $20,000,000 GENERAL OBLIGATION BOND SALE Attachment B: FISCAL IMPACT OF A $50,000,000 GENERAL OBLIGATION BOND SALE Attachment C: AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS AS OF APRIL, 1990 00 Attachment D: DEBT SERVICE REQUIREMENT FOR $20 MILLION AND $50 MILLION ISSUE 000, Attachment E: DEBT SERVICE COMPARISON ASSUMING $30 MILLION PRIVATE PARTICIPATION ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS -- ATTACffXENT A FISCAL IMPACT OF A $20,000,000 GENERAL OBLIGATION BOND SALE YEAR PRINCIPAL INTEREST CURRENT TOTAL FUTURE TOTAL DIFFERENCE 1990 25,736,048.39 30,848,531.64 56,584,580.03 56,584,580.03 .00 1991 27,938,521.88 28,462,717.88 56,401,239.76 56,401,239.76 .00 1992 29,237,435.08 26,315,625.20 55,553,060.28 55,853,060.28 300,000.00 1993 30,291,802.06 24,039,066.25 54,330,868.31 55,430,868.31 1,100,000.00 1994 30,241,122.79 21,683,421.77 51,924,544.56 54,009,544.56 2,085,000.00 1995 29,920,192.55 19,311,168.95 49,231,361.50 51,671,361.50 2,440,000.00 1996 29,959,188.51 16,923,005.36 46,882,193.87 49,247,193.87 2,365,000.00 1997 29,979,163.30 14,510,677.31 44,489,840.61 46,779,840.61 2,290,000.00 1998 29,113,676.10 12,138,992.10 41,252,668.20 43,467,668.20 2,215,000.00 1999 28, 657,222.21 10,046,817.48 38,704,039.69 40,844,039.69 2,140,000.00 2000 28,720,964.75 8,187,024.14 36,907,988.89 38,972,988.89 2,065,000.00 2001 27,355,103.88 6,332,433.23 33,687,537.11 35,677,537.11 1,990,000.00 2002 26,144,213.19 4,541,112.22 30,685,325.41 32,600,325.41 1,915,000.00 2003 16,123,573.23 3,151,639.95 19,275,213.18 21,115,213.18 1,840,000.00 2004 12,262,709.95 2,232,385.74 14,495,095.69 16,260,095.69 1,765,000.00 2005 8,299,809.76 1,568,753.37 9,868,563.13 11,558,563.13 1,690,000.00 2006 8,399,809.76 1,032,964.79 9,432,774.55 11,047,774.55 1,615,000.00 2007 8,604,508.30 488,885.25 9,093,393.55 10,633,393.55 1,540,000.00 2008 2,400,000.00 136,500.00 2,536,500.00 4,001,500.00 1,465,000.00 2009 900,000.00 29,250.00 929,250.00 2,419,250.00 1,490,000.00 2010 1,607,000.00 1,607,000.00 2011 1,510,000.00 11510,000.00 2012 1,112,500.00 1,112,500.00 2013 537,500.00 537,500.00 •. 430,285,065.69 231,980,972.63 662,266,038.32 699,343,038.32 37,077,000.00 Principal , Interest and Current Total columns reflect the current principal and interest debt service requirements for General Obligation Bonds, as of April, 1990. the Future Total column reflects the current debt service plus debt service from the $20,000,000 proposed Culural District sale. The following assumptions are made: 1. That $ 4,000,000 will be sold in FY 1991-92; 2. That $ 8,000,000 will be sold in FY 1992-93; 3. That $ 8,000,000 will be sold in FY 1993-94 and 4. That all sales will average an interest rate of 7.5%. The Difference column reflects the difference between the current debt service and the debt service after the three sales totaling $20,000,000. The annual debt service increases, range from a low of $300,000 in 1992 to a high of $2,440,000 in 1995. The average annual increase over the twenty-two year pay-back period is $1,685,341. At a tax rate of .899, it will require an expenditure of $1,493,127 to raise taxes one cent. The lowest tax increase would be .02 cents, in 1991, the highest tax increase would be 1.63 cents, in 1995 and the average tax increase would be 1.13 cents for the ent twenty-two year pay-back period. The average homestead is estimated at $64,368.00, less a 20% homestead exemption, makes the taxable value $51,495.00. Based on the increased costs of the $20,000,000 sale, the average owner's tax rate would increase by 1.13 cents, or an average increase of $5.82 per year for twenty-two years. ATTACHMENT B FISCAL IMPACT OF A $50,000,000 GENERAL OBLIGATION BOND SALE YEAR PRINCIPAL INTEREST CURRENT TOTAL FUTURE TOTAL DIFFERENCE 1990 25,736,048.39 30,848,531 .64 56,584,580.03 56,584,580.03 .00 1991 27,938,521 .88 28,462,717.88 56,401 ,239.76 56,401 ,239.76 .00 1992 29,237,435.08 26,315,625.20 55,553,060.28 56,303,060.28 750,000.00 1993 30,291 ,802.06 24,039,066.25 54,330,868.31 57,080,868.31 2,750,000.00 1994 30,241 ,122.79 21 ,683,421 .77 51 ,924,544.56 56,637,044.56 4,712,500.00 1995 29,920,192.55 19,311 ,168.95 49,231 ,361 .50 54,368,861 .50 5,137,500.00 1996 29,959,188.51 16,923,005.36 46,882,193.87 52,007,193.87 5,125,000.00 1997 29,979,163.30 14,510,677.31 44,489,840.61 49,594,840.61 5,105,000.00 1998 29,113,676.10 12,138,992.10 41 ,252,668.20 46,330,168.20 5,077,500.00 1999 28,657,222.21 10,046,817.48 38,704,039.69 43,746,539.69 5,042,500.00 2000 28,720,964.75 8,187,024.14 36,907,988.89 41 ,907,988.89 5,000,000.00 2001 27,355,103.88 6,332,433.23 33,687,537.11 38,737,537.11 5,050,000.00 2002 26,144,213.19 4,541 ,112.22 30,685,325.41 35,770,325.41 5,085,000.00 2003 16,123,573.23 3,151 ,639.95 19,275,213.18 24,280,213.18 5,005,000.00 2004 12,262,709.95 2,232,385.74 14,495,095.69 19,512,595.69 5,017,500.00 2005 8,299,809.76 1 ,568,753.37 9,868,563.13 14,883,563.13 5,015,000.00 2006 8,399,809.76 1 ,032,964.79 9,432,774.55 14,430,274.55 4,997,500.00 2007 8,604,508.30 488,885.25 9,093,393.55 14,058,393.55 4,965,000.00 2008 2,400,000.00 136,500.00 2,536,500.00 7,354,000.00 4,817,500.00 2009 900,000.00 29,250.00 929,250.00 5,591 ,750.00 4,662,500.00 2010 4,650,000.00 4,650,000.00 2011 4,368,750.00 4,368,750.00-wA 2012 3,337,500.00 3,337,500.00 1 ,612,500.00 1 ,612,500.00 430,285,065.69 231 ,980,972.63 662,266,038.32 759,549,788.32 97,283,750.00 Principal , Interest and Current Total columns reflect the current principal and interest debt service requirements for General Obligation Bonds, as of April , 1990. the Future Total column reflects the current debt service from the $50,000,000 bond sale. The following assumptions are made: 1 . That $ 10,000,000 will be sold in FY 1990-91 ; 2. That $ 20,000,000 will be sold in FY 1991-92; 3. That $ 20,000,000 will be sold i FY 1992-93 and 4. That all sales will average an interest rate of 7.54. The Difference column reflects the difference between the current debt service and the debt service after the three sales totaling $50,000,000. The annual debt service increases, range from a low of $750,000 in 1992 to a high of $5,137,500 in 1995. At a tax rate of .899, it will require an expenditure of $1 ,493,127 to raise taxes one cent. The lowest tax increase would be .5 cents in 1991 , the highest tax increase * would be 3.44 cents in 1994 and the average tax increase would be 2.96 cents for the entice twenty-two year pay-back period. The average homestead is estimated at $64,368.00, less a 20% homestead exemption, which makes the taxable value $51 ,495.00. Based on the increased costs of the $50,000,000 sale, the average owner's tax rate would increase by 3.0 cents, or an average increase of $15.24 per year for twenty-two years. • ATTACHMENT C AUTHORIZED BUT UNISSUED GENERAL OBLIGATION BONDS AS OF APRIL, 1990 (000'S) DATE AMOUNT AMOUNT UNISSUED PROPOSITION AUTHORIZED AUTHORIZED ISSUED BALANCE ----------- ---------- -___---_ STREET IMPROVEMENTS 5-22-82 $ 77,285 $ 69,029 $ 8,256 STREET IMPROVEMENTS 3-22-86 115,600 90,656.5 24,943.5 LIBRARY IMPROVEMENTS 3-22-86 10,000 2,245 7,755 PUBLIC SAFETY 3-22-86 5,750 5,110 640 PARK AND RECREATION IMPROVEMENTS 3-22-86 16,650 13,721.5 2,928.5 TOTALS $225,285 $180,762.0 $44,523.0 ATTACHMENT D DEBT SERVICE REQUIREMENT FOR $20 MILLION AND $50 MILLION ISSUE Current Debt Service If City Debt Service Amt. Avoided Debt Service Requirements Issues $20m Requirements By Private Requirements $20m Issue $50m Issue Contribution 1990 56,584,580 56,584,580 0 56,584,580 0 1991 56,401,240 56,401,240 0 56,401,240 0 1992 55,553,060 55,853,060 300,000 56,303,060 450,000 1993 54,330,868 55,430,868 1,100,000 57,080,868 1,650,000 1994 51,924,545 54,009,545 2,085,000 56,637,045 2,627,500 1995 49,231,362 51,671,362 2,440,000 54,368,862 2,697,500 1996 46,882,194 49,247,194 2,365,000 52,007,194 2,760,000 1997 44,489,841 46,77 9,841 2,290,000 49,594,841 2,815,000 1998 41,252,668 43,467,668 2,215,000 46,330,168 2,862,500 1999 38,704,040 40,844,040 2,140,000 43,746,540 2,902,500 2000 36,907,989 38,972,989 2,065,000 41,907,989 2,935,000 2001 33,687,537 35,677,537 1,990,000 38,737,537 3,060,000 2002 30,685,325 32,600,325 1,915,000 35,770,325 3,170,000 2003 19,275,213 21,115,213 1,840,000 24,280,213 3,165,000 2004 14,495,096 16,260,096 1,765,000 19,512,596 3,252,500 2005 9,868,563 11,558,563 1,690,000 14,883,563 3,325,000 2006 9,432,775 11,047,775 1,615,000 14,430,275 3,382,500 2007 9,093,394 10,633,394 1,540,000 14,058,394 3,425,000 2008 2,536,500 4,001,500 1,465,000 7,354,000 3,352,500 2009 929,250 2,419,250 1,490,000 5,591,750 3,172,500 2010 0 1,607,000 1,607,000 4,650,000 3,043,000 2011 0 1,510,000 1,510,000 4,368,750 2,858,750 2012 0 1,112,500 1,112,500 3,337,500 2,225,000 2013 0 537,500 537,500 1,612,500 1,075,000 662,266,038 699,343,038 37,077,000 759,549,788 60,206,750 ATTACHMENT E DEBT SERVICE COMPARISON ASSUMING $30 MILLION PRIVATE PARTICIPATION DOW Service Avoided by P&Ift Participation of$Wm In a$60m Project Total Debt Swviw: $97,283,760 37,077,000 38.1% 001*1 F, city pays 0 City Avoids 80,206,760 61.9%