Debt

Fiscal Year 2022 Operating and Capital Budget

Overview

The City of Tampa issues revenue bonds for the purpose of acquiring, improving, or constructing capital assets or to refund previously issued bonds. The City does not issue bonds for the purpose of funding daily operations.


Summary of City-issued Debt

As of September 30, 2021, the City has approximately $848,784,317 in outstanding principal of which $391,650,778 is governmental fund debt and $457,133,539 is enterprise fund debt. Also included in governmental debt is $4,200,000 for the Tampa Sports Authority (TSA) Special Purpose Bonds, Series 1995 for which certain funds have been pledged for the payment of debt service. The City’s full faith, credit and taxing power have not been pledged to secure the currently outstanding debt. The City has no general obligation debt.



Primary Types of Debt

General Obligation Debt
General obligation debt is supported by property tax revenues and utilized as authorized by voters. The City shall not issue general obligation debt without a successful vote by referendum. Currently, the City does not have any general obligation debt.

Revenue-Backed Debt
Revenue backed debt is supported by dedicated revenue sources including proprietary service revenues, fees, and user charges as well as non-ad valorem tax revenues utilities services taxes, sales taxes, state revenue sources, excise taxes, etc. Revenue-backed debt may be issued in the form of bonds, notes, or short-term debt for both general governmental and enterprise uses.

Non-Ad Valorem Debt
The City may covenant to appropriate in its annual budget non-ad valorem revenues sufficient to service the debt in the manner and to the extent, and subject to certain conditions, as provided by the bond resolution. Such bonds are not secured by a specific lien or pledge of specific non-ad valorem revenues. Such covenant is subject to the requirement that the City pay for all essential governmental services.

Capital Leases

Capital leases are often used to obtain long-term assets in lieu of purchasing the assets outright. Capital leases are initially reported as long-term liabilities on the balance sheet and exhibit one or more of the following qualities:

  • Transfer of ownership at lease termination;
  • Bargain purchase option (to lessee) at lease termination;
  • Lease term equal to more than 75% of the asset’s useful life; and
  • The present value of the minimum lease payments is equal to more than 90% of the fair market value of the asset.


Over the lifetime of a lease, the total cost to the City may be higher than the outright purchase cost of the asset. However, in exceptional circumstances, leases may be suitable for financing capital expenditures including acquisition of land and equipment and construction of facilities. Capital lease financing shall be utilized on a case-by-case basis and must be approved by the Chief Financial Officer prior to entering into any such agreement.


State Revolving Loan Funds and Pools

The federal government provides states with funding to create low interest loan programs to fund water, sewer, and flood control infrastructure projects. When in its best interest, the City may apply to Florida’s State Revolving Fund Programs for low interest loans to fund qualified projects. In addition, various governmental agencies may provide low-cost funding through pooled loan programs.


Housing and Urban Development (HUD) Section 108 Loan Guarantees

HUD Section 108 is the loan guarantee provision of the Community Development Block Grant (CDBG) program that provides communities with a source of financing for economic development, housing rehabilitation, public facilities, and large-scale physical development projects. The City abides by guidelines established by HUD when pursuing these loans. Currently, the City of Tampa has no outstanding HUD Section 108 Loans.


Short-Term Debt

Short-term variable rate debt and commercial paper programs are cash management tools that provide funding for capital expenditures that may be refunded from other sources, including grants or long-term debt.



Bond Covenants

The official statements and City Council resolutions authorizing the issuance of bonds contain certain restrictive covenants. The City has covenanted that specified amounts derived from specific revenue sources will be deposited into accounts and funds established by the corresponding authorizing bond resolutions. The deposits into these accounts and funds are used to pay principal and interest coming due on the bonds. The City is in compliance with all bond covenants.


The City has no debt constraints or limits beyond those required under the bond covenants.



Continuing Disclosure

Pursuant to the City’s Disclosure Policies and Procedures, the City has covenanted to provide certain annual financial information and operating data related to the City and to provide notices of the occurrence of certain enumerated material events. The City has agreed to file annual financial information and operating data and the audited financial statements with each entity authorized and approved by the Securities and Exchange Commission (the ‘SEC”) to act as a repository (each a “Repository”) for the purpose of complying with Rule 15c2-12 adopted by the SEC under the Securities Exchange Act of 1934 (the “Rule”). Effective July 1, 2009, the sole Repository is the Municipal Securities Rulemaking Board (“MSRB”). The City has agreed to file notices of certain enumerated material events, when and if they occur, with the Repository.



Credit Ratings

There are three nationally recognized rating agencies: Moody’s Investors Services, Inc. (Moody’s), Standard & Poor’s Financial Services LLC. (Standard & Poor’s), and Fitch Ratings, Inc. (Fitch). Rating agencies provide an independent assessment of the relative credit worthiness of governmental entities. A credit rating is an independent evaluation of risk. It is an assessment of a governmental entity’s ability to pay its debts and/or likelihood of default. Ratings are an extremely important factor in determining the bond’s marketability and interest rate. Ratings are relied upon by investors in making investment decisions and by the underwriters in determining whether to underwrite a particular bond issue.


For a bond to be rated, the issuer must contract with a rating agency and pay a fee. The issuer provides the rating agency with operational and financial information. These agencies provide a letter grade that conveys their assessment of the ability of the borrower to pay debt service.


Primary factors rating agencies consider when evaluating a proposed debt offering include economic environment, debt history, administration, financial performance, and debt management. A key component in the rating agencies’ analysis is the evidence of sound management practices. Developing and adhering to long-term financial and capital improvement plans, keeping expense growth in-line with revenues, and maintaining an adequate level of operating reserves are important. Preparation of annual financial reports in accordance with Generally Accepted Accounting Principles, receipt of the Government Finance Officers Association’s Certificate of Achievement for Excellence in Financial Reporting, and receipt of the Distinguished Budget Presentation Award are further evidence of quality financial management.


To communicate an opinion for creditworthiness, rating agencies use a combination of symbols including letters, numbers, plus sign and minus sign.



City of Tampa’s Credit Ratings

Even though the City has no GO debt, Moody’s, Standard & Poor’s, and Fitch have assigned issuer credit ratings of Aa1, AAA, and AA+, respectively. These issuer credit ratings serve as a benchmark for comparing the City’s overall credit profile to other governmental entities throughout the country. These upgrades reflect the strong economy, liquidity, and management practices of the City of Tampa.


In the City of Tampa, water, wastewater, solid waste, community investment tax, stormwater improvement assessment and non-ad valorem revenues have been pledged as a method of repayment of the outstanding revenue bonds. Since April 2011, Moody’s, Standard & Poor’s, and Fitch have upgraded the City’s various credit ratings 14 times, from which twelve upgrades were assigned to its outstanding bonds and two upgrades to the City’s issuer credit rating. These upgrades are the result of a strong economy, liquidity, financial performance, moderate debt position and management practices.