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, 2021.

The Combined Schedule of Long-Term Debt Payable and the current debt schedules by fund for 2021-2027 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 12/31/2021, has an outstanding debt service amount of $8.48 million at an interest rate between 2.00% and 3.00%.

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 refunding bonds issued to achieve savings, City voters must approve dedicated tax revenue bonds prior to issuance.

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 12/31/2021, has an outstanding debt service amount of $44.98 million at an interest rate between 3.00% and 3.375%.

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 12/31/2021, has an outstanding debt service amount of $20.67 million at an interest rate between 2.00% and 3.50%.

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 12/31/2021, has an outstanding debt service amount of $2.34 million at an interest rate between 2.00% and 3.00%.

Notes Payable

Notes payable are short-term debt obligations which typically mature within a year or less but may mature within ten years.

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 12/31/2021, has an outstanding debt service amount of $28.4 million at an interest rate of 1.55%.

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 which was subject to redemption in October 2020. The purpose of the Series 2010 Taxable Pension Obligation Bonds was to establish a more predictable pension obligation payment schedule with the proceeds deposited into money market mutual funds for the ‘Old Hire Police’ and ‘Old Hire Fire’ pension fund accounts. 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 12/31/2021, has an outstanding debt service amount of $5.36 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 $3,515,000 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 12/31/2021, has an outstanding debt service amount of $3.12 million at an interest rate of 2.01%.

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 12/31/2021, has an outstanding debt service amount of $0.96 million 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 with 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 12/31/2021, has an outstanding debt service amount of $316 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 12/31/2021, has an outstanding debt service amount of $4.59 million an interest rate of 2.65%.