Debt Service Funds. Debt Service Funds 323

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1 Debt Service Funds Debt Service Funds 323

2 DEBT SERVICE FUNDS The city utilizes three funds to record the receipt and disbursement of monies used to repay principal and interest charges on city issued debt. The following are the three funds used to record this activity: General Obligation Bonds, Northeast Tax Increment Financing (TIF) District Infrastructure Improvement Bonds, and Park Certificate of Participation (COP) Debt Fund. The General Obligation Debt Service Fund is used to account for the annual retirement of bonds issued from 1996 through Expenditures from this fund include the payment of interest and fiscal agent charges plus the scheduled repayment of the principal balance. The ad valorem tax on real and personal property provides the primary source of revenue to make these semi annual payments. Interest income on investments of the reserve amounts provides the remainder of revenue. The Park COP Debt Service Fund was established to account for the issuance of COPs related to Legacy Park, the Greenway Project, and the Senior Center. This fund receives the revenues generated by the one-fourth cent "Parks & Soils" sales tax. The Northeast Tax Increment Financing District Fund is where incremental property taxes (related to the improvements made on the property after the TIF district was formed) received on the designated parcels within the TIF district are used to make principal and interest payments on the city s debt issued to construct streets and sanitary sewers in the district. The basis of accounting is the same for both budgeting and GAAP reporting purposes. This requires that the modified accrual method bases, with the revenues being recorded when measurable and available, and expenditures being recorded when the liability is incurred. Revenues susceptible to accrual are sales taxes, economic activity taxes, property taxes and interest revenue. Debt Service Funds 324

3 GENERAL OBLIGATION DEBT SERVICE FUND YEAR BEGINNING JULY 1, ACTUAL BUDGET ESTIMATED BUDGET Revenues: Taxes (Net Bad Debt) 6,624,409 7,117,710 7,058,021 7,292,472 Interest 262, , , ,557 Penalty/Interest 55,455 41,500 41,500 47,791 Refunds & Reimbursements 338, Total Revenues 7,280,427 7,323,511 7,263,822 7,581,820 Expenditures: County Collection Fees 113, , , ,351 Debt Service: Principal Retirement 7,790,000 4,380,000 4,380,000 5,415,000 Interest & Fiscal Charges 1,428,258 1,550,510 1,595,810 1,376,520 Other Expenditures Transfer Out Total Expenditures 9,331,658 6,040,146 6,081,680 6,902,420 ` Excess of Revenues Over (Under) Expenditures (2,051,231) 1,283,365 1,182, ,400 Fund Balances, Beginning of Year 5,700,223 3,648,992 3,648,992 4,831,134 Fund Balances, End of Year 3,648,992 4,932,357 4,831,134 5,510,534 DEBT SERVICE LEVY Budget Estimated Budget Per $100 Assessed Valuation $ 0.48 $ 0.48 $ 0.48 $ 0.48 Assessed Valuation $ 1,414,260,161 $ 1,482,856,250 $ 1,500,429,614 $ 1,550,270,480 $ Growth $ 131,008,714 $ 68,596,089 $ 86,169,453 $ 49,840,866 % Growth 10.21% 4.85% 6.09% 3.32% Allowance for Uncollectables 2.0% 2.0% 2.0% 2.0% The General Obligation Debt Service Fund is used to account for the annual debt service on general obligation bonds issued by the City. Expenditures from the fund include the payment of interest and fiscal agent charges plus the scheduled repayment of the principal balance. The ad valorem tax on Real and Personal Property provides the primary source of revenue to make these annual payments. Interest income on the reserve amounts provides the remainder of revenue. The Principal Retirement for Fiscal Year includes $3,615,000 principal paid on April 1, 2006, when the 1996 and 1997 General Obligation bond issues were redeemed in whole, making the total Principal Retirement $7,790,000. Also, the Debt Service for Fiscal Year , , and include the debt service for the City's 2006 General Obligaton bonds ($11,475,000) issued as of February 1, For Fiscal Year , it is anticipated the remaining principal balance of $365,000 will be paid on the 1999 GO Bond issue. This redemption is shown in Principal Retirement for Requested. Note: The "Refund & Reimbursements" amounts are "transferred proceeds" of the 1989 Bond series, which were utilized to pay principal on bonds that were subsequently refunded in Interest Revenue has been calculated at an annual rate of 5.00% during FY and REVENUES, EXPENDITURES, & FUND BALANCE 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 ACTUAL BUDGET ESTIMATED BUDGET Revenues Expenditures Fund Balance Debt Service Funds 325

4 DEBT SERVICE REQUIREMENTS TO MATURITY GENERAL OBLIGATION BONDS THOROUGHFARE IMPROVEMENT PAYMENTS DATED DATED DURING FY 12/1/99 2/1/ ,000 1,795, ,000 1,550, ,300, ,345,000 TOTAL $ 715,000 $ 5,990,000 Interest Rates 4.40%-4.80% 3.50%-3.75% FIRE STATION STREETS/ CITY HALL STREETSCAPE STORM SIRENS FIRE TRUCK CVM FACILITY DATED DATED DATED DATED DATED 2/1/06 2/1/02 9/1/03 9/1/03 2/1/ ,015, , , , , , , , , , , , , , , , , , , , ,035, , ,090, , ,130, , ,170, , ,230, , ,285, , ,325, , ,405, , ,453, ,000 TOTAL $3,300,000 $1,820,000 $17,288,000 $4,887,000 $0 Interest Rates 3.50% %-4.00% 2.00%-4.75% 2.00%-4.75% 3.50% PAYMENTS FOR ALL GENERAL OBLIGATION BONDS DURING FY PRINCIPAL INTEREST TOTAL ,000, ,050,000 1,376,520 6,426,520 28,950, ,715,000 1,198,345 5,913,345 24,235, ,130,000 1,020,375 4,150,375 21,105, ,130, ,750 4,035,750 17,975, ,200, ,375 1,988,375 16,775, ,225, ,375 1,965,375 15,550, ,275, ,375 1,966,375 14,275, ,325, ,375 1,965,375 12,950, ,400, ,375 1,987,375 11,550, ,450, ,625 1,979,625 10,100, ,500, ,275 1,967,275 8,600, ,575, ,650 1,976,650 7,025, ,650, ,775 1,980,775 5,375, ,700, ,463 1,954,463 3,675, ,800, ,563 1,974,563 1,875, ,875,000 89,063 1,964,063 0 TOTAL $34,000,000 $10,196,278 $44,196,278 Debt Service Funds 326

5 General Obligation Debt By Type Thouroghfare Improvements 18% Downtown Streetscape 15% Street/CVM Facility 5% Fire Station & Equipment 10% City Hall 52% Street/CVM Facility $ 1,820,000 City Hall $ 17,288,000 Fire Station & Equipment $ 3,300,000 Thouroghfare Improvements $ 5,990,000 Downtown Streetscape $ 4,887,000 Total $ 33,285,000 Debt Service Funds 327

6 City of Lee's Summit, Missouri Computation of Legal Debt Margin June 30, 2007 General Obligation Bonds Ordinary Additional Total (1) (2) Assessed Valuation (January 1, 2006) $1,486,912,095 Constitutional debt limit $ 148,691, ,691, ,382,420 General Obligation bonds payable includes authorized but unissued 22,483,000 11,592,000 34,075,000 Less: Cash and Securities Available for Retirement 3,491,884 1,800,379 5,292,263 Bonds Payable less Available Funds 18,991,116 9,791,621 28,782,737 LEGAL DEBT MARGIN $ 129,700, ,899, ,599,683 Ordinary 6% Legal Debt Margin June 30, 2007 Additional 3% Debt Margin 91% NOTES: (1) Article VI, Sections 26 (b) and (c) of the State Constitution permits the City, by vote of two-thirds of the voting electorate, to incur an indebtedness for City purposes not to exceed 10% of the taxable tangible property therein as shown by the last completed assessment. (2) Article IV, Sections 26(d) and (e) of the State Constitution provides that the City may become indebted not exceeding in the aggregate an additional 10% for the purpose of acquiring rights-of-way, constructing, extending and improving streets and avenues and/or sanitary or storm systems, and purchasing or constructing waterworks, electric or other light plants, provided that the total general obligation indebtedness of the City does not exceed 20% of the assessed valuation. (3) The total assessed valuation shown above does not include state assessed railroad and utility properties. Debt Service Funds 328

7 PARK CERTIFICATE OF PARTICIPATION DEBT SERVICE FUND YEAR BEGINNING JULY 1, ACTUAL ACTUAL BUDGET ESTIMATED BUDGET Revenues: Taxes 3,631,123 4,301,455 4,456,529 4,400,955 4,521,981 EATS (451,583) (547,130) (499,779) (510,984) Interest 51,211 68, ,740 54,000 23,789 Transfers In 148,500 2,227,549 2,438,313 1,876, ,633 Total Revenues 3,830,834 6,146,236 6,750,452 5,831,676 4,909,420 Expenditures: Transfers Out 1,201,545 2,208, , ,378 Debt Service: Principal Retirement 1,875,000 3,735,000 3,795,000 3,795,000 4,715,000 Interest & Fiscal Charges 641, ,903 1,134,394 1,134, ,106 Total Expenditures 3,718,449 6,509,903 5,736,189 4,929,394 6,287,484 Excess of Revenues Over (Under) Expenditures 112,385 (363,667) 1,014, ,282 (1,378,065) Fund Balances, Beginning of Year 727, , , ,783 1,378,065 Fund Balances, End of Year 839, ,783 1,490,046 1,378,065 0 Unreserved Fund Balances, End of Year 839, ,783 1,490,046 1,378,065 0 The Park Certificate of Participation (COP) Debt Service Fund was established to account for the issuance of debt related to the acquisition of land and development of Legacy Park and Greenway Projects. This fund receives the revenues generated by the threeeighths cent "Parks & Soils" sales tax. In April 2005, voters approved a reduction and extension of th "Parks & Soils" sales tax from 3/8 cent to 1/4 cent, effective April 1, The reduction and extenstion is reflected in Taxes and EATS in the Fiscal Year column. The amount of money required for debt service on the 1998, 2001, and 2006 Certificates of Participation during the current fiscal year is retained in this fund, and monies in excess of that amount may be transferred to the city park construction funds. Monies held in this fund are transferred to the Trustee for the 1998, 2001, and 2006 Certificates of Participation five business days prior to the July 1 payment date on the Certificates. In 2006, the City issued additional debt relating to the new plan for the parks system, "Legacy for Tomorrow and Beyond." Interest earnings are calculated at 5% for FY , based on the retention in this fund of only the monies required for the current year's debt service with all additional amounts being transferred to the City Park Fund 057. The debt service in Fiscal Year exceeds expected revenues; therefore, the ending balance in Fiscal Year is being retained in the fund to apply to the debt service. Please note: Transfers In for FY and FY include the scheduled reimbursements for Blackwell Road expenditures from the Road & Bridge Fund advanced by Legacy Park. The Transfer In for FY comes from the City Park Fund to pay off the 1998 COPs. The Transfers Out are moved to the City Park Fund, as stated in the paragraph above. 7,500,000 6,750,000 6,000,000 5,250,000 4,500,000 3,750,000 3,000,000 2,250,000 1,500, ,000 0 REVENUES, EXPENDITURES, & FUND BALANCE ACTUAL ACTUAL BUDGET ESTIMATED BUDGET Revenues Expenditures Fund Balance Debt Service Funds 329

8 NORTHEAST TAX INCREMENT FINANCING DISTRICT FUND YEAR BEGINNING JULY 1, ACTUAL BUDGET ESTIMATED BUDGET Revenues: Taxes 1,551,736 1,040,952 1,202,935 1,086,155 Penalty/Interest (2,723) Interest 4, ,094 0 Total Revenues 1,553,757 1,040,952 1,205,227 1,086,155 Expenditures: County Collection Fees 15,161 10,409 12,031 10,861 Debt service: Principal Retirement Interest & Fiscal Charges Transfer Out/Chapel Ridge TIF 1,528,861 1,030,543 1,202,403 1,075,293 Total Expenditures 1,544,022 1,040,952 1,214,434 1,086,154 Excess of revenues over (under) expenditures 9,735 0 (9,207) 0 Fund balances, beginning of year 6,844 16,579 16,579 7,372 Fund balances, end of year 16,579 16,579 7,372 7,372 Restricted bond reserve Unreserved fund balances, end of year 16,579 16,579 7,372 7,372 This fund was established to account for public improvements required to support development in the Northeast Tax Increment Financing District. Previous year's deficits were funded with an interfund loan. On December 7, 2000 an amendment to redraw the boundaries of this TIF was approved by the city council. This amendment reduced the overall geographical size of this TIF by approximately one-half. The detached portion of this TIF is now a part of the Chapel Ridge TIF District. The remaining properties have serviced the original debt which was paid in full on February 1, Pursuant to the provisions of the Chapel Ridge TIF, any TIF revenues received by the Northeast TIF District after December 7, 2000, not required for debt service on previously issued bonds, is required to be transferred to the Chapel Ridge TIF District to be used to pay debt service on bonds issued by the Strother Interchange Transportation Development District on behalf of the TIF District. This transfer will continue until fiscal year Interest earnings for fiscal year are estimated at an average rate of 3.00%. Since all original outstanding debt has been paid, the restricted bond reserve reflects a zero balance, and, transfers out to the Chapel Ridge TIF District Fund results in a zero fund balance at the end of FY REVENUES, EXPENDITURES, & FUND BALANCE 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , ,000 Debt Service Funds 330