Debt Service

City of Somerville FY21 Budget

This allotment is to finance the debt service on all City bonds with the exception of Water, Sewer, and Ice

Rink Enterprise debt issues. Funds to cover Enterprise debt service are included in the respective Enterprise

Fund Budgets. Funds budgeted in the cost codes below cover debt on a wide variety of projects, including

Schools, equipment, street improvements, renovations to public buildings, and improvements to the City’s

many recreational facilities.


PRINCIPAL ON LONG TERM DEBT

This allotment covers the cost of principal payments on the City’s existing bonded debt with the exception

of Enterprise debt service, which is included in their respective budgets.


PRINCIPAL ON NOTES

This allotment covers the cost of interest-only payments on the City’s new Bond Anticipation Notes (BANs)

with the exception of Enterprise fund BAN interest.


INTEREST

The interest the City pays on Bond Anticipation Notes and bond issues is determined primarily by market

conditions, the City’s credit rating, the maturity schedule of the issue, and the supply of bonds at the time

of the issue. The overall market interest rates have remained near historic lows for some time and coupled

with the City’s strong credit rating have benefited the City with very favorable rates.


DEBT EXCLUSION

The FY21 budget proposal excludes BAN interest for the Somerville High School reconstruction project from the Proposition 2 1/2 limit. This amount is $2,387,709 and is included in the budget below.

FY21 Budget Proposal