Transcript City of Phoenix Downtown Development Initiatives

Evaluating Investments in
Infrastructure Panel
Overview of Public Infrastructure
Financing in the City of Phoenix
ACMA Conference
February 8, 2007
Public Infrastructure Needs
for the City of Phoenix
•
•
•
•
•
•
•
•
Streets, Transit and Light Rail
Fire and Police (Public Safety)
Parks and Open Spaces
Water, Sewer, Flood, Solid Waste
Neighborhoods and Housing
Libraries
Education and Cultural Facilities
Airport Improvements
CITY OF PHOENIX CAPITAL ASSETS
BY TYPE
FY 2005-06
Construction
In Progress
21%
Equipment
6%
Buildings
16%
Land
13%
Infrastructure and Improvements
44%
Total Assets $8.9 Billion
Revenue Sources to Pay
for Infrastructure
•
•
•
•
•
•
•
•
Secondary Property Taxes
Local Sales (Excise) Taxes
State Shared Revenues
Water, Sewer, Solid Waste Fees
Airport Fees and Charges
Impact or Development Fees
Grants
Other User Charges
How will Infrastructure be
Funded?
• Pay-As-You-Go (Cash)?
• Debt Finance (Short or Long Term
Borrowing)?
Factors to Consider When
Debt Financing
• Can the project be funded with current year revenues or
be deferred until revenues are available?
• Availability of a long-term stable revenue source to make
debt payments.
• Available debt capacity. Is credit already leveraged?
• The useful life of the projects being financed (defines
term of the debt).
• The credit quality of the municipality and revenues
pledged (i.e., property taxes vs utility revenues).
• The borrowing cost or interest rates for the credit.
City of Phoenix
Debt Program
Types of Bonds Issued
•
•
•
•
General Obligation
Highway User Revenue
Utility Revenue
Municipal Corporation Obligations
– Revenue Pledge
– Excise Tax Pledge
DEBT FINANCINGS BY TYPE
FY 2005-06
G.O.
Bonds
Revenue
Bonds/Other
21%
4%
Municipal Corporation Obligations
75%
Total $6.1 Billion
Civic Improvement
Corporation
• Non profit corporation established in
1973
• Main Financing Arm of City for Other
than G.O. Bonds
• Debt Obligations Issued by Corporation
Secured by Enterprise Fund Revenues
or Excise Tax Pledges
Municipal Corporation
Outstanding Obligations
June 30, 2006
$ Millions
Pledge
General Govt.
254.7
Excise Taxes
Airport
885.1
Revenues
Sewer
610.3
Revenues
Water
1,058.8
Revenues
Sports Facilities
116.0
Excise Taxes
Convention
Center/Garage.
611.1
Excise Taxes/
State Distributions
Solid Waste
159.5
Excise Taxes
Hotel Corp.
(separate nonprofit
for Hotel)
350.0
Hotel Rev./Excise
Taxes
Transit
508.0
Excise Taxes
Total
$4,553.5
General Obligation Bond
Program
• Primary mechanism used historically to
fund non-enterprise fund capital needs
• Debt secured by secondary property
taxes of the City
• Require voter approval
History of Voter Approved G.O. Bond
Programs
City of Phoenix
$ Millions
1200
$1057.4
1000
$878.5
$753.9
800
600
$525.7
$436
400
200
0
1981
1984
1988
Year
2001
2006
Public Review Process for
General Obligation Bond
Programs
• Departments develop requested capital
projects
• Citizen Bond Committee and
subcommittees appointed (600 citizens)
• Fiscal Capacity Subcommittee reviews
Assessed Valuation forecast and debt
capacity analysis
• Operations and Maintenance
Subcommittee review of operating costs
Public Review Process for
General Obligation Bond
Programs
• Subcommittees hold public hearings (over
80 public meetings)
• Subcommittees recommend projects to
Executive Committee
• Executive Committee develops
recommendation within fiscal capacity
• Council approves Bond Program
• Citywide vote on Bond Program
Financing Downtown
Public/Private Partnership Project
(CITYSCAPE)
Cityscape Project
• Project to develop 3 blocks in core of Downtown
between Jefferson and Washington Streets, 1st
Street and 2nd Ave.
• Led by Red Development in partnership with
Baron Collier
• Planned 2.5 million sq. ft. of four mixed-use
residential and commercial towers, including 150
room hotel and 220,000 sq. ft of retail space
• Total project cost approximately $900 million
Challenges of City
Participation
• City Excise Tax capacity leveraged for Convention
Center Expansion and for backing of new
Downtown Hotel
• No reserves or pay-as-you-go funding available
due to other City commitments
• Speculative nature of the project and large
financing required by the Developer (more than
$800 million)
• Uncertainty of revenue and sales tax generation
from the project
City Participation
TERMS OF DEVELOPMENT AGREEMENT
• No City purchase of parking until construction in form of
Certification of Completion (C of O) of parking garage,
220,000 sq. ft of retail, 500,000 sq. ft of commercial and
150 room hotel are completed.
• Developer guarantees projected parking and sales tax
revenues from project for first five years through a letter
of credit from a bank approved by the City that can be
drawn upon for any shortfalls to finance $70 million in
excise tax bonds.
• City sells Jefferson Street Garage near U.S. Airways
Center to provide for $20 million to purchase additional
underground parking from the Project.
Questions?