Page 285 - CityofWataugaAdoptedBudgetFY24

DEBT SERVICE

During FY2021-2022, the City issued $4.2 million in General Obligation Refunding
Bonds with an interest rate of 2 to 4% and was used to advance refund the outstanding
Series 2012 Certification of Obligation Bonds in the debt service fund. This refunding
resulted in a gross savings of $419,775.

In August 2022, the City Council approved the issuance of $4.93 million Combination
and Limited Pledge Revenue Certificates of Obligation with an interest rate of 4% to
fund street projects, building improvements, parks projects, and the Capital Outlay
plan.

In September 2023, the City Council approved the issuance of $8.93 million
Combination and Limited Pledge Revenue Certificates of Obligation to fund street
projects and an ambulance for the Fire Department.

The focus for future budgets will be on phasing in portions of the bond program and
adopting a combination of bond issuance and cash financing to fit within budgetary (tax
rate) constraints. Special consideration will be given to the leveling of City Debt.

Current Bond Ratings

In recent years, S&P Global Ratings assigned its ‘AA’ long-term rating to the 2019,
2020, 2021, 2022, and 2023 issuances and affirmed their ‘AA’ rating on the city’s
certificates outstanding. The rating is based on the City’s very strong reserves
combined with steady budgetary performance produced by a very strong financial
management team. In addition, S&P cited expectations for the city to continue stable
operations and the projection for assessed values in the city to continue growth.

Moody’s had assigned an Aa3 underlying rating to the City’s 2011 and 2012 Certificates
of Obligation issuances which have now been defeased through the refundings
described above.

Debt Service and impact on operations:

The City’s debt service schedule is shown below. The City continues planned debt
service contributions to fund capital projects without tax increases when possible for
General Fund projects. The Utility Fund capital projects are generally planned in the

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