Craig Regan 14 said:
EBrazosAg said:
What part of the debt service increase is due to rising interest rates ? What part of the debt is subject to interest rate increases in the next 1,2,5 and 10 yrs ?
Great question(s)!
The image above is from one of the most recent bonds issued. This reflects apart of the interest rate increase we saw come down from the Fed but we are about to issue $43m which blows right past staff projections of $25m in this years issuance.
Over half of that $43m is for infrastructure. See statement below and break down.
The rate COCS gets for these bonds will start to tell the tale of interest rate trend lines but I would expect something similar to last year. 4-5% with a TIC around 3.5% on average (TIC = true interest cost which is effected by inflation and other factors)
But to provide a direct answer - the debt service is a combined figure of principal and interest and clearly just based on using simple math of addition and subtraction the interest rate will gobble up more and more of that "debt service fund" line. Meaning the more debt we keep taking out the more funds will have to be dedicated to that one line item in the budget and correspondingly the 41% we currently pay on the tax rate.
That is broken down by I&S and O&M. I&S currently = ~41% and O&M 58%. That I&S (debt) part will have a larger and larger part of it due to interest. Which means less money to do other things with.
Thoughts? Hope I answered the question(s)
Good information to digest when I have more time.
My main comment would be due to the economiy many families making choices between food, housing costs,utilities, etc. I think that the city should for at least a few years minimize all discretionary spending on capital projects.
Many projects would be great but not essential to spend money on at this time.
As I have said for most of my life, we have a lot of wants, but very few needs.
My other main comment would be about the COCS spending habits is to eventually treat College Utilities fiscally as an indendent entitiy and not take money from utiity receipts and put in the general fund to address non-utility expenditures.
