Strategic Plan Discussion, Capital Funding and Debt Policy, November 5, 2013

1. Strategic Plan Discussion
Capital Funding and Debt Policy
November 5, 2013
Martin Lyons Asst. City Manager
www.cityofevanston.org

2. Current City Financial Policies
• Fund Reserve Policies
– General
– Water
– Sewer
– Parking
• Budget Policies
– Pages 35-44 of 2013 Budget
– Covers Timetable, Processes, etc
• Debt Policy
– Covers Debt Limit
– Provides definitions of debt

3. City Debt Background
• City has historically been Aa1 or Aaa rated
– Solid Property Tax Base
– Home Rule
– Consistent Payment Record and Management
• City has used alternative debt forms
– General Obligation Bonds
– Revenue Bonds
– Variable Bonds
– IEPA Loans
– Lines of Credit
• PENSION DEBT

4. Five Year History of Debt
• Why Five Years?
– Everything changed in 2008 in Debt World
– City adopted new approach to Pension Funding
– Does not include other debt (e.g. IEPA Loans)
Fiscal Year Total Bond Debt Total Pension Debt
Total Bond and
Pension Debt
FY 2003-04 $ 190,740,000 $ 78,939,178 $ 269,679,178
FY 2008-09 $ 174,110,000 $ 187,712,291 $ 361,822,291
FY 2009-10 $ 151,470,000 $ 203,246,731 $ 354,716,731
FY 2010-11 $ 153,535,000 $ 168,243,070 $ 321,778,070
FY 2011 $ 157,695,000 $ 173,913,528 $ 331,608,528
FY 2012 $ 154,159,999 $ 177,493,388 $ 331,653,387

5. City Debt Comparison Detail - 2013
GO Other Total
G.O. Debt to
EAV
Total Debt to EAV
Municipality EAV Debt Debt Debt Ratio Ratio
ARLINGTON
HEIGHTS
3,399,641,981 $59,185,000 0 $59,185,000.00 1.74% 1.74%
AURORA 3,598,534,505 $147,040,000 $69,378,000.00 $216,418,000.00 4.09% 6.01%
DES PLAINES* 2,184,333,304 $64,365,000 $7,649,272.00 $72,014,272.00 2.95% 3.30%
ELGIN 2,356,508,821 $106,322,872 $106,322,872.00 4.51% 4.51%
HOFFMAN
ESTATES
1,878,266,056 $105,020,000 $73,353,944.00 $178,373,944.00 5.59% 9.50%
JOLIET 2,676,345,255 $8,500,000 $57,417,998.00 $65,917,998.00 0.32% 2.46%
NAPERVILLE 6,072,976,994 $164,580,000 $164,580,000.00 2.71% 2.71%
PALATINE 1,987,066,782 $109,495,809 $116,859,000.00 $226,354,809.00 5.51% 11.39%
SCHAUMBURG 4,049,712,606 $289,575,000 $289,575,000.00 7.15% 7.15%
SKOKIE 2,561,731,480 $40,549,983 $16,449,476.00 $56,999,459.00 1.58% 2.23%
WAUKEGAN 1,442,086,224 $92,479,003 $10,045,000.00 $102,524,003.00 6.41% 7.11%
WILMETTE 1,869,928,027 $71,095,000 $2,712,695.00 $73,807,695.00 3.80% 3.95%
EVANSTON 2,727,367,573 $152,644,999 $72,485,368.00 $225,130,367.00 5.60% 8.25%
AVERAGE 3.86% 5.41%

6. City Debt Comparison 2010-13
GO Other Total
G.O. Debt to
EAV
Total Debt to
EAV
EAV Debt Debt Debt Ratio Ratio
2013 Average $2,839,761,003 $104,850,639 $39,318,376 $134,339,421 3.86% 5.41%
2013 Evanston $2,727,367,573 $152,644,999 $72,485,368 $225,130,367 5.60% 8.25%
GO Other Total
G.O. Debt to
EAV
Total Debt to
EAV
EAV Debt Debt Debt Ratio Ratio
2010 Average $3,677,127,906 $106,603,916 $22,752,571 $121,772,296 2.90% 4.15%
2010 Evanston $2,938,397,892 $174,110,001 $104,020,223 $278,130,224 5.93% 9.47%

7. Current Govt and Business Bonds

8. Future Considerations/Strategy
• City Pension Funding will require continued
high funding levels.
• City Infrastructure (roads, water mains, sewer
lines, etc) are on minimum replacement
schedules currently – difficult to stretch any
further.
• City Facilities in need of repair and/or
replacement which will increase debt or current
revenues to fund.
• To address both Capital needs, debt will still be
needed.

9. Basic Capital Funding Strategy
• Split capital funding into two categories
• Infrastructure systems moved gradually to
current revenue or “pay as you go” funding.
• Facilities maintenance/ongoing upkeep also
covered through current revenues.
• Facilities renovation/replacement funded
through long-term debt issuance.
• Grants, and all other revenue will be
aggressively pursued.

10. Current Debt Plus Capital
Improvements “Pay as You Go”
--
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Fiscal and Calendar Year Ending December 31st
Capital
Improvements
2013A (Abated)
Abated Debt
Service
2013A (Levy)

11. Sources of “Pay as You Go”
• Gradual reduction of bond issuance, with difference in
Debt Levy becoming a new Capital Levy.
• One-time Revenues.
– Used as reserve set aside for future facilities
replacement
– Used to “catch up” on infrastructure replacement
– Not used as a replacement for other revenue
sources.
• Increasing ratio of Capital expenses compared to
Operating expenses without increasing revenues.
• New Revenues or increases in the rates of current
revenues, dedicated to Capital Funds only.

12. Implementation
• Gradual reduction of bond issuance, with
difference in Debt Levy becoming a new
Capital Levy.
• Gradual Increase in new capital revenue
sources.
• Mix of Debt and “Pay as you Go” funding.

13. Projected Debt Service Debt and
Capital Levy
--
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Fiscal and Calendar Year Ending December 31st
Levy Suported Debt Service 2013A (Levy)
Abated Debt Service 2013A (Abated)
Pay as You Go Debt ServiceLevel New Capital Levy-No Debt

14. Projected Debt Service Debt Only
Funding for Capital
--
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
Fiscal and Calendar Year Ending December 31st
Levy Suported Debt Service 2013A (Levy)
Abated Debt Service 2013A (Abated)
Debt only

15. 15
Comparison of Debt Service vs. Debt
Service and Capital Levy

16. Next Steps
• Update Inventory of Facilities/Needs
– Current Facilities Status Report
– Utilization by Facilities
• Prioritization
• Determine if alternatives exisit
• Update Infrastructure Replacement Schedules
– Roadway/Sidewalk/Alley
– Trees
– Water/Sewer/Parking

17. Next Steps
• Reconcile Funding and Replacement
Schedules
– Compare City’s resources with Industry Best
Practices
– Integrate results with Operating/staffing
needs
• Engage Evanston – Prior to 2015 Budget
Process, provide findings.
• Create Policy and Procedures to Guide future
Budget and Long Term Financial Plans.

18. QUESTIONS?