City of Boulder Annual Budget

CITY OF BOULDER ANNUAL BUDGET

FISCAL YEAR 2024

DEBT SERVICE

DEBT POLICY

As stated in the Financial and Management Policies, debt shall be considered only for capital purchases/projects and the term of the debt shall not exceed the useful life of the financed asset. Municipal bonds, notes, direct purchase notes, interfund loans, equipment leases (with the exception of vehicles), certificates of participation, and sale/leaseback agreements are approved methods for financing capital projects



DEBT ADMINISTRATION

The following table shows the city’s outstanding debt issuance as of December 31, 2022.

The Combined Schedule of Long-Term Debt Payable and the current debt schedules by fund for 2023-2029 present more detailed information about the debt position of the city.


The city’s general obligation and revenue bond credit rating has been established as Aa1 by Moody’s Investors Service and AAA by Standard & Poor’s. The primary reasons for these high rating levels are the general strength and diversity of the Boulder economy anchored by a major university, above average income indicators, strong financial performance and reserve policies, and affordable debt levels.


Under the City Charter, the city’s general obligation bonded debt issuances are subject to a legal limitation based on 3% of total assessed value of real and personal property. None of the city’s outstanding debt is supported by property taxes. As a result, all bonded debt is considered to be self-supporting and the ratio of net bonded debt to assessed valuation is zero. The actual calculation of the debt margin is presented in the Computation of Legal Debt Margin schedule.




GENERAL OBLIGATION BONDS

General Obligation Bonds are direct obligations of that pledge the full faith and credit of the City from ad valorem taxes and other general revenues. Except for refunding bonds issued to achieve savings, City voters must approve general obligation debt prior to issuance. The City’s total general obligation debt limit per the City Charter is 3% of the total assessed value of real and personal property. The City’s current general obligation debt is issued as sales tax revenue bonds enhanced by a general obligation pledge of the full faith and credit of the City.



SERIES 2014 OPEN SPACE ACQUISITION BONDS


In October 2014, the City issued $10 million of Open Space Acquisition Bonds Series 2014 to finance open space acquisitions. Funding for the bond is payable from the Open Space Fund sales tax revenues and are also backed by the full faith and credit of the City. The bonds will mature in 2034 and, as of 12/31/2022, has a total liability of $7.81 million at an interest rate between 2.00% and 3.00%. This does not include any premiums.



SERIES 2012 CENTRAL AREA GENERAL IMPROVEMENT DISTRICT GENERAL OBLIGATION REFUNDING BONDS


In November 2012, the City issued $7.28 million in General Obligation Refunding Bonds to advance refund the Series 2003 City of Boulder Central Area General Improvement District General (CAGID) Obligation Bonds. The purpose of the 2003 Series General Obligation Bonds is to construct an underground parking structure within the Central Area General Improvement District. The bonds will be repaid through pledged revenues derived from the operation and use of the parking garage, certain incremental property, sales and accommodations taxes, other CAGID revenues, and by the full faith and credit of the CAGID. The bonds will mature in 2023 and, as of 12/31/2022, has a total liability of $844.60 thousand at an interest rate between 2.00% and 3.00%. This does not include any premiums.




REVENUE BONDS

Revenue Bonds are payable from specific, dedicated source of revenues which does not pledge the full faith and credit of the City. Except for enterprise funds and refunding bonds issued to achieve savings, City voters must approve dedicated tax revenue bonds prior to issuance.

SERIES 2012 WATER AND SEWER REVENUE REFUNDING BONDS


In October 2012, the City issued $32 million in Water and Sewer Revenue Refunding Bonds to provide funds to advance refund a portion of certain previously issued bonds of the city, purchase a surety bond for deposit in the reserve fund, and pay expenses relating to the 2012 Bonds. The Refunding Notes will mature in 2025 and, as of 12/31/2022, have a total liability of $9.33 million at an interest rate between 4.00% and 5.00%. This does not include any premiums.



SERIES 2015 WATER AND SEWER REVENUE BONDS


In September 2015, the City issued $10.21 million in revenue bonds from the Water and Sewer Fee billed to customers of the City’s water and sewer systems to provide funds to water and sewer improvements by the Utility and pay the costs of issuance of the Series 2015 Bonds. The revenue bonds are paid through the Water Utility Fund and Wastewater Utility Fund. The bonds will mature in 2035 and, as of 12/31/2022, has a total liability of $8.81 million at an interest rate between 2.00% and 3.25%. This does not include any premiums.



SERIES 2016 WATER AND SEWER REVENUE BONDS


In June 2016, the City issued $34.145 million in revenue bonds from the Water and Sewer Fee billed to customers of the City’s water and sewer systems to provide funds to water and sewer improvements by the Utility and pay the costs of issuance of the Series 2016 Bonds. The revenue bonds are paid through the Water Utility Fund and Wastewater Utility Fund. The bonds will mature in 2035 and, as of 12/31/2022, has a total liability of $29.35 million at an interest rate between 2.00% and 3.13%. This does not include any premiums.



SERIES 2022 WATER AND SEWER REVENUE BONDS


In April 2022, the City issued $48 million in revenue bonds from the Water and Sewer Fee billed to customers of the City’s water and sewer systems to fund capital improvements to the City’s Water System and Wastewater System. The revenue bonds are paid through the Water Utility Fund and Wastewater Utility Fund. The bonds will mature in 2042 and, as of 12/31/2022, has a total liability of $64.10 million at an interest rate between 3.88% and 5.00%. This does not include any premiums.



SERIES 2018 WATER UTILITY FUND AND WASTEWATER UTILITY FUND REVENUE BONDS


In June 2018, the City issued $38.26 million in revenue bonds from the Water and Sewer funds to construct and improve the City’s water treatment plant, a solar photovoltaic project to provide power to the plant, and replacement of sewer lines. The revenue bonds are paid through the Water Utility Fund and Wastewater Utility Fund. The bonds will mature in 2038 and, as of 12/31/2022, has a total liability of $42.33 million at an interest rate between 3.00% and 3.38%. This does not include any premiums.



SERIES 2015 STORMWATER/FLOOD MANAGEMENT UTILITY FUND REVENUE BONDS


In July 2015, the City issued $22.85 million in revenue bonds from the Stormwater/Flood Management Utility Fund to finance storm water and flood management improvements. The revenue bonds are paid through the Storm Water/Flood Management Utility Fund. The bonds will mature in 2035 and, as of 12/31/2022, has a total liability of $19.07 million at an interest rate between 2.00% and 3.50%. This does not include any premiums.




DIRECT PURCHASE NOTES

Direct purchase notes are long-term debt obligations which typically mature within 15 years or less but may mature within a longer period of time.



SERIES 2021 CAPITAL IMPROVEMENT PROJECTS GENERAL FUND – REFUNDING NOTE


In March 2012, the City issued $49 million in General Fund Capital Improvements to finance over 89 individual capital improvement projects including: Boulder Reservoir infrastructure improvements, park shelter replacements, main library renovations, and road reconstruction. The City has pledged all legally available funding and revenues of their General Fund for repayment. In January 2021, the City issued a General Fund Refunding Note in the amount of $26.8 million to advance refund the outstanding Series 2012 General Fund Capital Improvements. The Refunding Note will mature in 2031 and, as of 12/31/2022, has a total liability of $27.66 million at an interest rate of 1.25%.



SERIES 2020 - TAXABLE PENSION OBLIGATION REFUNDING NOTES


In September 2020, the City issued $5.45 million in Taxable Pension Obligation Refunding Notes to refund the Series 2010 Taxable Pension Obligation Bonds. The purpose of the Series 2010 Taxable Pension Obligation Bonds was to establish a more predictable pension obligation payment schedule with the proceeds that were invested. The City has pledged all legally available funding and revenues of their General Fund to repay the Note. The Refunding Notes will mature in 2030 and, as of 12/31/2022, has a total liability of $4.77 million at an interest rate of 1.66%.



SERIES 2020 - GENERAL OBLIGATION WASTE REDUCTION REFUNDING NOTES


In November 2009, the City issued $6 million in General Obligation Waste Reduction Bonds to finance the City’s acquisition of a parcel of land at 6400 Arapahoe Road and to construct and improve recycling and waste reduction facilities on the property. On January 16, 2020, these bonds were refunded and replaced with $3.515 million of Series 2020 GO Waste Reduction Refunding Notes which are payable from the City’s trash tax revenues and additionally secured by the full faith and credit of the City. The Refunding Notes will mature in 2029 and, as of 12/31/2022, has a total liability of $2.73 million at an interest rate of 2.01%.



SERIES 2020 - WATER AND SEWER REVENUE REFUNDING NOTES


In July 2020, the City issued $6.4 million in Water and Sewer Refunding Notes to refund the City’s Water and Sewer Bonds at a lower interest rate. The purpose of the Notes are to refund the Series 2010 Bonds and pay necessary issuance costs related to the Note. The Refunding Notes will mature in 2030 and, as of 12/31/2022, have a total liability of $4.42 million at an interest rate of 1.40%.


NOTES PAYABLE

A Note Payable is a shorter-term financial agreement to acquire a property. At the end of the agreement, the City will acquire the property in question.



SERIES 2018 HOGAN-PANCOST LAND ACQUISITION NOTE


In April 2018, the City issued $2.75 million in Notes to finance the purchase of the Hogan-Pancost Property located in the City of Boulder. The Note Payable is for a five-year term that will mature in 2023 and, as of 12/31/2022, has an outstanding amount of $160.18 thousand at an interest rate of 6.00%.




CAPITAL LEASE PURCHASE AGREEMENTS

A Capital Lease Purchase Agreement is a lease agreement in which the lessor agrees to transfer the ownership rights to the lessee after the completion of the lease period. The leases are subject to annual appropriation and do not constitute a general obligation or other indebtedness of the City. The City’s obligation to make payments relating to its leases is contingent upon the City appropriating the rental payments for the then-current fiscal year. In the event of non-appropriation, the lease terminates, and the pledged assets are liquidated to the benefits of the lease holders.



ENERGY EFFICIENCY IMPROVEMENT PROJECT – PHASE I OF BANC OF AMERICA


In September 2010, the City entered into a $1.5 million Capital Lease Purchase Agreement with Banc of America Leasing & Capital, LLC, the proceeds of which were used for capital lease improvements including the installation of a solar photovoltaic system. The Capital Lease Purchase Agreement will mature in 2023 and, as of 12/31/2022, has a total liability of $158.24 thousand at an interest rate of 4.93%.



ENERGY EFFICIENCY IMPROVEMENT PROJECT – PHASES II AND III WITH SUNTRUST EQUIPMENT FINANCE & LEASING CORP.


In October 2010, the City entered into a $6.5 million Capital Lease Agreement with All American Investment Group, LLC to fund the second phase of energy efficiency improvements to help the City meet its environmental sustainability goals. In January 2012, the City refinanced this lease with SunTrust Equipment Finance and Leasing Corporation and borrowed an additional $3.24 million for the third phase of the energy efficiency improvements to several different city buildings. The refinancing extended the term of the lease agreement expiration to 2027 and, as of 12/31/2022, has a total liability of $3.69 million an interest rate of 2.67%.


lease purchase REVENUE NOTES

A Lease Purchase Revenue Note is a lease agreement in which the lessor agrees to transfer the ownership rights to the lessee after the completion of the lease period. The leases are subject to annual appropriation and do not constitute a general obligation or other indebtedness of the City. The City’s obligation to make payments relating to its leases is contingent upon the City appropriating the rental payments for the then-current fiscal year.



SERIES 2018 - LIPPENCOTT PROPERTY


In November 2018, the City issued a $6.975 million Boulder Municipal Property Authority Lease Purchase Revenue Note for the purchase of the Lippincott Ranch property and relevant water and mineral rights for open space purposes. Open Space and Mountain Parks (OSMP) real estate staff and the Lippencotts have negotiated a transaction including earnest funds and down payment of $775 thousand and using a 20-year BMPA note with 3.5% interest for the $6.975 million principal amount. The Revenue Note is set to mature in 2039 and, as of 12/31/2022, has a total liability of $7.85 million at an interest rate of 3.50%.




CERTIFICATES OF PARTICIPATION

A Certificate of Participation is a long-term obligations that allow investors to participate in a pro/rata share of a lease-financing agreement. A lease-financing agreement is used by a municipality or local government to acquire real property.



SERIES 2015 - TAXABLE CERTIFICATES OF PARTICIPATION


In September 2015, the City issued $41 million in certificates in order to provide funds to acquire the Boulder Community Hospital Broadway Campus. In order to facilitate this transaction, the City's East Boulder Community Center, Public Safety Building, and Park Central were used as collateral for the Certificates and transferred to The Boulder Municipal Property Authority (BMPA). BMPA then leases the property back to the City and the City's annual lease payments are used by BMPA to make the certificate payments. The Certificates will mature in 2036 and, as of 12/31/2022, have a total liability of $39.52 million at an interest rate between 3.00% and 4.00%. This does not include any premiums.



SERIES 2019 - BROADBAND- TAXABLE CERTIFICIATES OF PARTICIPATION


In August 2019, the City issued $20 million in certificates in order to finance Phase I of the Fiber/Broadband initiative, an approximate 65-mile new dark fiber backbone infrastructure. In order to facilitate this transaction, the City's Municipal and Atrium buildings were used as collateral for the Certificates and transferred to The Boulder Municipal Property Authority (BMPA). BMPA then leases the property back to the City and the City's annual lease payments are used by BMPA to make the certificate payments. The Certificates will mature in 2039 and, as of 12/31/2022, have a total liability of $22.25 million at an interest rate between 2.25% and 2.90%. This does not include any premiums.




COMPENSATED ABSENCES

As part of the City's liability to current employees, the following items are used to calculate the total compensated absences: accrued vacations, accrued sick pay, accrued appreciation bonus, and accrued compensation time.




ESTIMATED CLAIMS PAYABLE

The total estimated claims payable includes property and casualty claims, workers compensation insurance claims, as well as dental and medical self-insurance claims.