By the way, just everyone s going to do. Okay. All right. Call the meeting of the Saint Paul Organization Policy Committee to order. Welcome, everyone. Good morning. I forgot, do we do roll call for these jacket or. Sorry. Bad timing. Nope. Okay. Um, we have two items on our agenda today. We are actually going to take the second one first, which is dead capacity. Really appreciate, um, our office staff, MR. Young uns in particular for MISS Brown for being here today. And MISS Logsdon. Um, we have had questions about capacity in the past. It s often been during budget season. It often has not yielded us the time to really dig in the way I think we d like to. And as we have talked about many times, understanding
our debt capacity really helps us understand the full measure of what we can do with our budget and and where our limits are. So grateful to be having this conversation, I think, perfectly timed as we approach another budget season. And welcome up. Thanks for being here. Okay, well good morning. Uh, Council PRESIDENT, Council members. Um, I am Neil Young. Hands the debt manager in the Office of Financial Services. Uh, I m here also with Sarah Brown,n, city treasurer. So she is happy to answer any questions as well. On debt. It is a complicated topic. Um, and then Laura logged in as I was also around. Can I just interrupt you very briefly to say I really want this to be a a no holds barred, no stupid
questions kind of presentation. I really think it s important. I mean, I will be the first to admit that my knowledge of these financing mechanisms is limited. Um, and so I really want to encourage all of us to just ask what you don t know. Let s get a good handle on this. Um, and I m sure the questions we have the millions of viewers at home also have, um, and we can use it as an educational opportunity, so. Okay. Yeah, absolutely. Stop any time to ask for questions or ask any questions. Um, and if we can t answer any of them, we ll certainly come back and provide any follow ups. So this morning I m going to be going through. So our agenda is bonding 101. So uh, this is a really high level look at what bonding is. We re going to step
back and uh, kind of look at it. Um, through that kind of a bonding 101 lens. And then I m going to do a financial overview of our debt outstanding right now and our financial picture. Um, and then I m going to go through the three areas that are influencing the amount of debt that we can issue. So that ll be legal debt limitations. Our credit rating considerations. And then also kind of budget constraints, uh, slash property tax debt levy. So what is a bond. You know a bond is a much like a home mortgage or car loan. Um, it is you borrow money and you re paying back that principal with interest. Over time. Um, uh, bonds or debt can come in a lot of
different flavors, but, um, it really that is like the core concept to a bond. Uh, municipal bonds are debt securities. So they re issued by states, cities, counties and other governmental entities. Um, we do so to finance large capital projects. Um, so we agreed to repay the principal over a certain amount of time and repay those bond holders. So the goal of bonding is really just to spread the cost of large capital projects over the life of an asset. Well, I ll be the first to have question. So when you say, um, issue bonds, one of the things I m trying to understand, um,
when the bonds when we are issuing, are we also so is the city. The financer, and also the financing of these bonds. Like, are we financing ourselves or like because someone else is paying for that bond? So we d be borrowing from someone else. So when we go to sell our bonds, we issue our bonds. We go. And a bank essentially, or an underwriter, they give us the capital and then we repay. Um, it gets a little complicated because there s investors on the other end of that. But we are repaying essentially those investors. So we are uh, the term is obliger. Uh, um, so we are financing. We are the
finance, I suppose. So for the underwriting, that s what I m trying to understand. Like who is the mystical person, you know, that does the underwriting? Is it also us or is the investors is a totally different entity? Well, usually when we re talking about underwriters, we re talking about, uh, banks. So there s, uh, banks will essentially buy our debt. And so they will provide the principal to us, and then we ll be repaying. And sometimes those banks are kind of the other end of that will be putting that into different portfolios. But really, um, a bank, a large bank. So I m trying to think like jp Morgan or, you know, some larger like Goldman Sachs, they ll purchase our debt or like the state s debt. Um, and so they ll give
us the capital, the, uh, initial money, and then we ll be repaying. And it s not necessarily we re we re repaying the people that they sell those investments to, but essentially we re repaying those to a bank. Got it. Thank you. Thank you for the question. And so when you come to us, just as a further question on that note, and there s an agenda item that says that you did a bond sale and there are all these banks listed, um, or other underwriters lisd, and you ve got the interest rates that they bid for. We re putting that out to banks to see who will give us the lowest interest rate, which means the cheapest borrowing, choosing the lowest one. And that s who we end up. That who that s who
becomes the financier. Absolutely. Yeah. So when you know, on bond sale day, we in the morning at like 10 A.M., we usually, uh, we have there s like a system that we, uh, where these banks bid through. And so it s all awarded based on their true interest cost, which is, um, uh, it incorporates a bunch of different measures of, like, what, the price. But really it s just about the interest rate. So we re awarding based on the lowest possible interest rate. So that s the best deaea for the city. So um, usually when we come through and I come through here and talk and I say we re awarding, we recommend awarding to, um, ex bank. It s because they have the lowest interest cost. It s just okay.
Thanks for. The questions. Um, we re going to be on slide one for some time. Okay. Yeah. So I just want to make sure I understand. So the on the first slide. So the fourth bullet point, the bond issuer and the bond holder, the bond issuer is oftentimes the city. And then and then the bond holder is the one of those financial institutions. Correct. Yeah. So the bond issuers us and we re agreeing, uh, legally that we will be repaying the principal. Okay. And interest to. Okay. Thanks. And I assume this is just well, I assume it makes it makes sense to do this for capital projects, because if you
re trying to build, say, a street, that street will hopefully last 30, 40, 50 years. And why not pay for that over time, rather than having to find all the money up front? You said spread the cost over the life of the project. Um, is it just financially horrible practice to ever bond for anything that s not capital? Is it illegal? Is it? I just unsound? I mean, I think as a practice it would be unsound for us to bond for operational costs or operations, um, at least. But I guess back to your question about the capital. There s a concept of a generational equity. So you re spreading the cost of the users of that project over, you know, if the terms ten years and the
project exists for ten years, you re spreading the cost. But the people who would use that over time. So it s not just people in year one. It s and they re paying for the benefits of someone who would receive something in year ten. You re just spreading those costs over time. So people who use it are the ones that pay for it. Got it. Thank you. Okay. Um, so some of our common financing tools we use at the city. So we have general obligation bonds and notes. Um, and then also revenue bonds and notes. So, uh, a general obligation bonds are repaid by the property tax levy. So we pledge our property tax levy to repay those. So that s for programs like cib Saint Paul Streets and our Mill
and overlay program. Um, and currently we have a aa rating for with s&p and Fitch for both for our general obligation bonds. And I guess, uh, one note here, the distinction between bonds and notes is just, uh, the distinction between the term of the bond. So most of our, you know, our gossip bonds, those are ten years, uh, have a ten year term. And notes typically are like 3 to 5 years. So it s just a mostly about, uh, the length of which we repay that principal. MISS Johnson. All right. Thank you so much for that as well. And I recognize that we re, like, trucking along. We re on slide five, but I just wanted to ask you just I think, you know, I can understand the difference
between, like, triple a, double aa ratings, you know, especially from a lens of like, obviously we re aspiring for the highest rating. What is difficult sometimes. And I think one thing that is a question for me is just like the significance between each rank and just like what happens or what would warrant a decrease or increase and how substantial of a difference is like is a triple a versus a a, a plus or a double a minus, like what is the difference? And then just how significant of a change is that when you go from rating to rating. So we uh, I ll talk a little bit more about the rating considerations and a couple more slides. So I think I. Get let me get back to your question. Okay. Um, and before you keep going, just to make sure I understand. So there
s general obligation bonds and notes, revenue bonds and notes. It looks like the you re saying general obligation bonds and notes. We pledge our property taxes to those. So if we have no other source of revenue to pay them back, we promise to use our general fund to pay them back. So the pledge is from the, uh, from the property tax debt levy. But we do also use some other sources to kind of plug the the gap between what we owe in general obligation debt service and our property tax debt l ly, which I also kind of talk a. Little bit later. Okay. That s kind of what I was getting at. It looks like we can use other things to pay back geo bonds. It s just. That we do. Yeah. And we do. But there s like a flaw of like, if
nothing else happens, we promise we will levy for this. That s why they re so valuable. That is the pledge. That s I mean, we re telling, uh, bondholders that we will be repaying, uh, we have a moral obligation to repay with our property tax debt levy. Okay. Vice PRESIDENT. And don t isn t one of the sources that we also pledge our parking lot fund? Um, yes. So and we just had our, uh, parking sale, just, I think two weeks ago. Um, but. So that would be on our revenue bonds and note side. So each of these are individual credits, so to speak. So we have sales tax, parking, sewer water recycling and solid waste
funds. Um, those are repaid by the revenues generated by those, uh, credits.O, um, you know, if we re issuing sales tax bonds, we repay those with sales tax. And, uh, just a note, we re thinking about our half cent sales tax here, not our $0.01. Um, but for parking, it would be, uh, revenues derived from the parking, uh, our pledged parking ramps, um, sewer and water and recycling solid waste. Those are repaid by, uh, the charges that are derived from those different systems. And so. And then. We as young, it s. One second. Sorry. Maybe you were about to answer this question. Um, so is the difference between, like, the general obligation bonds and, and notes and the revenue
bonds and notes like how they are repaid. Is that why like the different, um, you know, they re, they re used for different, different things because that s how those are typically paid for. Correct. Yeah. So, uh, they are I mean, so for revenue bonds and notes, we re saying that we are pledging our sales tax to repay them. So we can t we re not using our general obligation like our property tax debt levy, to say that we will repay them. So that s the legal guarantee or pledge that we re making for each of those sources. Right. Um, so that that s like the big difference between it s really the general obligation think property tax. And then the other ones are just the revenues derived from each of those sources. Okay.
That makes sense. Okay. And if the revenue from those sources ever weren t sufficient to repay the bond, um, I assume that s a that doesn t ever happen because we don t issue that much debt. But is that then does it fall back on the the general fund or. No, because we don t we d only put our we only pledge our go for specific things. So these other ones they re I m trying to think of one case where we have a geo pledge to any of these of the other revenues, but, um, these there s a thing called a double barrel where you put your geo and the revenue from one of the credits on there. That s like a pledge. Um, but as far as I know, we re only
pledging the revenues from each of those different sources to their own bonds. Okay. So what s a good fit for bonding? Um, so there d be larger capital projects, uh, public purpose and use. Um, these are fixed assets. So land buildings, capital equipment or other improvements to land. Um, we can, as part of a sale, we can include preliminary design, design and engineering land. Uh, equipment construction. Um, you know, major renovations that substantially improve or expand a project, not merely ordinary repairs or maintenance. So it has to outlive, uh, the project has to at least outlive the repayment of the bond term. So if it s a three years, it has to be longer than that. Useful life
of the project. Um, we can also bond for fixtures, furnishings and equipment, but only if they re installed at the time of like a larger project. Um, upon the initial construction of it. So, uh, on the our financial overview. So this is as of our last bond sale, our general obligation bond sale in JUNE. Um, we have $249 million in general obligation bonds outstanding. And this is just the principal. This doesn t include interest. Um, and so we have 249 million. And for revenue bonds, we have $411.7 million outstanding for a total of $660.7 million in total. So you can. See. So if we look
over the last, if we go back to 2021 and project forward to 2030, you can see on the slide and that red, uh, general obligation debt, um, general obligation back debt, uh, it stays relatively flat over those years. And that s because our programs have stayed relatively the same size. Uh, so for gossip, uh, Geo Street assessment bonds or street reconstruction bonds or capital notes, those programs have been relatively the same size. Uh, and I will I have a slide on that later. Um, but they ve stayed about the same size for many years. And so when we re adding debt, we re also paying off debt. So that s why it s relatively flat. Um, on the revenue supported debt side,
you can see in 2022, we start ramping up, um, up to 2023, uh, largely to do with the Lake McLaren s water treatment plant project, as well as, um, the lead service line project, which are both we re doing some projecting in here, but those are both incorporated in there. And so it s more debt than we would have we had had taken on in from 21 or 22. This just. Uh, thank you. Council PRESIDENT. Um, I just noticed that the, the, um, the general obligation bonds and debt are usually higher than the revenue ones. Is that just, you know, because we we have the the revenue sources to pay those and we d like to, you know, not use as much of the, the
property tax dollars. Um, and so there s just kind of more of a opportunity there. Or can you explain why those are usually more. So for, uh, for the revenue debt like that, that, that being larger. Yeah. Yeah. That s because I mean, it depends on the I guess, like capital programs involved with each of the, uh, those credit sources. So, um, so for Saint Paul Regional Water, uh, they re issuing more bonds for those kind of large projects that they ve they ve been building rates to. So they have more ability to borrow, but it s dependent on how much they re charging their ratepayers. Right. Does that get to your question or. Am I. Yeah, I think that makes sense. I think I just I just was
wondering why the like why the, um, the revenue bonds are always we have a lot more of those than the, the general obligation bonds. Uh, yeah. I mean, it s. Fully just dependent on those sources and what their capital plans are looking like. But the reason why they they re bonding more is because they re able to charge, you know, so for the sewer fund or the water fund, they are charging higher rates because they re, um, they can charge higher rates because they have their rate studies and they re passing on rates to customers. And it s not we ve just the city has kept its general obligation at roughly the same size. Okay. But and also there s kind of a budgetary element to that. But I can talk about like later in
the presentation as well. Okay. Yeah. That makes that makes. Sense. And just MR. Young, as you might have said this earlier, sorry before you keep going, but the geo debt you mentioned has been pretty stable since 2021. Has it also been pretty stable since like the 90s? Um, I m not sure how I m not quite certain about at. I don t believe so, but I m looking over at Sarah Brown here. I m not sure I could do some research to find out. You know, look back longer than 2021. I I m not sure, though. I mean, we kept some of the same programs have been relatively the same size since I think even like 2006. I feel like there s there was some data point. Maybe the 90s is too far back, but about, yeah, the 11 million issuance for cip being having been constant for decades, maybe others can
corroborate that, like Mr. Solomon, but he s not at micron. Okay. We have. Two former debt managers here. They ll all be called up at some point here. Don t worry okay. Sorry. Keep going. Um. So these are each of our individual geo bonding programs within our geo debt. Outstanding. So again, it looks like we re relatively flat over, you know, 2021 to 2030 as, uh, uh, we re paying debt off. More debt is coming on. Um, the dip in 2022, I believe, is due to us paying off some bonds early. Um, but then we we ramped back up to 2023. Okay. Oh. I m sorry. Thank you. Council PRESIDENT, I have a quick question. What is the example of, like, geo bonds for
public safety? Um, I m trying to remember for geo public safety bonds, I m trying to think of what projects that would have been for, but it s still essentially the same type of financing, except the legal authority is from our. I might have to get back to you. On that. Okay. We ll note that down as a as a follow up are the other. I m just checking to see because that s a great question, MISS Buie. Um, I assume most of these other types are pretty self-explanatory. Library tax increment, street. Um cib. And then I guess the only one I don t understand is capital Notes. Is that a specific thing? And then Chair. Johnson. The capital notes are just short. Those are for public safety vehicles. Um, and they are repaid between uh, I mean, we issue them through our
general our we issue them as Geo Bond or geo notes, but they re just shorter in term. But they ll go to finance, uh, police and fire. Vehicles.. So those are the police and fire vehicles. And then separately, there s a geo for public safety that we re finding out. What that s for. Yeah. Yes. That s correct. Okay. Got it. Uh, Chair Johnson. Um, and just out of curiosity for like, the Geo Street category, um, just noticing the the continuation of it being around the relatively the same size when we do, like, uh, street related, street, related, street related projects. Jesus. When we do street related projects, is that, like, kind of defaulted to doing geo bonds
for them. For, uh, street reconstruction project? Yeah, we typically those are financed with, uh, street street reconstruction bonds. And then also through street assessments. Okay. And then of the I guess of these like outstanding, uh, dead by category or type, the length of some of them. Like what are the shorter ones versus like the longer ongoing ones that we carry for multiple years? Uh, I m sorry, can you repeat. Your question? Yeah. Like what? So looking at the graph, like, what are some of the things, I guess, that carry year after year that are probably longer in length? Which program type would be tend to be longer in,
um, bonding length of. Funding. So yeah. So the, uh, street reconstruction bonds, those have a 20 year term. Okay. Um, and, uh, gossip bonds have a ten year term. And the, uh, geo capital notes that just has a three year term, and I d have to I have to check on those. Uh, the library would similarly be ten years. And then the, uh, public safety ones. I have to double check on. Okay. And then as a follow up. Or do you know, you. Know. That one? Um, is it is it just to make sure that my eyes aren t playing tricks on me when it comes to the color graph? The the geo, um, tax increment category disappears up to 2021. Is that correct? Mm. Which one? It looks like we paid that off in 2021 okay. So do we. Like if I m looking at this do we currently have like no tax increment. Geo bonds I
don t believe. So okay. All right. Thank you. I just wanted to make sure I wasn t blurring purples with my blues. So appreciate it. Well great. Yeah. MISS Brown come on up. And then I think I have a follow up to that. Uh, council. PRESIDENT, Council members, I just want to answer the question about the public safety bonds. So the ones that were issued in 2017 was for the public safety training facility. Um, in general, you can issue, um, it s just kind of like a different type of legislation for public safety bonds. So we actually considered issuing these for, um, Fire Station seven and ended up just issuing it under our normal gossip. Um, legislature legislation instead. So it
s just like a different type of, um, law that we can issue under, but we can still do it as a cib bond. Um, we do that arguably, if, you know, at one point we could only issue up to $20 million of cib bonds that was now increased to 30. So if we ever get close to that amount, that s where we could do something like a public safety bond. You can also do a library bond. So we consider that also for Hamlin. Midway Libraries and example. Um, but if possible it s just easier. And underwriters like it for a larger block size. Um, if we do it all as just a big Geo cib bond. So interesting. So what you re saying is that these different categories, even though they re all being backed
by g, they re all geo debt, all geo, um, are these all official categories that were allowed to create these buckets in public safety is sanctioned tax increment okay. Are there others other buckets that we could create. Those are the ones that I m aware of. We can certainly follow up with um bond council. Um, it just depends on what sort of law is available out there. And so that s where the public safety bond, a library, Bond, street reconstruction bonds versus a street improvement bond. Um, there s different things that come with it. But those would all be different types of geo borrowing. I think it would be interesting to know what the what the categories are as a follow up. And what can you say one more time? Sorry. And then Vice PRESIDENT Kim, what the advantage is to if they re all being backed by the same source
to having them in different tranches like this, I think the main one would come back to that seal by borrowing limit, um, which has recently been increased to 30 million. Um, and then the other advantage when I think about Geo street reconstruction bonds would tie to, um, how we assess for those projects with street improvement bonds. As an example, we were required to assess 20% on those bonds with a street reconstruction bond. We have more greater flexibility to assess as we deem fit, which obviously the assessment revenues have been going down. Can we say what you said about the 30 million limit one more time? I didn t understand, yes. Um, within cib law per year, we can issue up
to $30 million of cib debt. Got it. Thanks. Vice PRESIDENT Kim. Um, thank you. Oh, um. Yeah. Sorry, I was writing that down. Um, who is the regulating? A authority for determining categories and sort of like parameters for what qualifies for each of these sort of buckets of. Dollars that would be laid out in state statute. So there s, um, I think it s chapter, uh, 471. I have a reference later in the presentation. But, um, if that s where the cip, uh, cap on how much we can issue in a single year, that s where that lives within the state statute. For all of our other tif
projects, then to chair Johnson s question, we obviously have lots of tif outstanding Tiff out there. Um, does that show up in debt at all then, or how does that get repaid? That s not incorporated here because this would just be inclusive of the city and not the hra. Oh, okay. And those would all be through hra. It s different people. Okay. Sorry. We re ready. Okay. Talking about how the hra is made up of different people. So it s confusing. Um. So I can t have gonenehrough this yet, but uh, so here s a look at our 21 through 2030, uh, revenue debt outstanding by type, just like our last slide. But just looking at revenue, um, our revenue backed, uh, debt. So we
have our half cent sales tax on, on the bottom. Um, we have the sewer revenue in the middle there in green. And then, uh, recycling in solid waste revenue, which is a new credit that we establish in 2024, although it did slightly exist in a different form before that. Um, and then we have our water revenue, uh, water revenue, uh, bonds and notes and then straight state grant revenues. So you see this increase in 22 to 23, the, the the reason for that large increase is that Lake McLaren s water treatment plant project, um, we ve been issuing I think we re on our fifth of six financings now with the public
public Facilities Authority. Um, we also issued some regular bonds competitively through the capital markets. Um, but so as that project, I believe it s 80% or 75% of the way through, um, we are continuing to take on more debt. Um, as we re nearing the completion of it and as we re winding down with the financing of that project will be starting a new round of funding with the lead service line replacement project, which will also go through the public Facilities Authority. And I know you said that we are not. This only shows the half cent sales tax, not the common sense. Are we not bonding with any of that revenue. As of
right now? No, we are not bonding for the $0.01 sales tax. Okay. So for 2025 wee have uh we ve had three bond sales so far this year. So we ve done our general obligation various purpose bonds. Uh, for $17.6 million. Uh, we did a street reconstruction and a refunding bond. So that s, uh, for $35.4 million. Um, and then $16.2 million for our parking, uh, revenue and refunding bonds and kind of on the horizon, we have our lake water treatment plant project. We are working on another tranche of funding for that. We re hoping to close,
uh, on the financing of it in AUGUST. Um, and then another round of funding or another round of funding for the lead service line replacement project. Um, and then we are hoping to get our sewer revenue bond sale, uh, closed in early AUGUST or mid AUGUST. And then for next year, uh, we have our $15.6 million in capital improvement bonds. Um, this includes our kind of standard, uh, uh, routine annual issuance amount and then also any amount that was unissued from the year before. Uh, we are issuing bonds on a more of a cash flow basis now. Um, so we re asking departments, how much do they expect to spend? And so we re bonding for the amount that we
believe that they ll be spending this year. Um, and then we have our, uh, geo capital notes, uh, our routine annual issuance of $2 million, $15.5 million for our street reconstruction bonds, which includes our $12 million for, uh, street reconstruction bonds and 3.5 million for mill and overlay. And then we ll be issuing for $7 million for sewer revenue bonds, and then we ll be issuing for 6.5 million for our pfa note, which will be the last round of financing for the Lake. MacLaren s water treatment plant project, and then another round of, uh, financing for lead service line replacement. So for the top three, where you say routine annual issuance, does that mean that s the same amount that we
ve issued for in the past, or what you said about departments asking them how much they re going to spend? Does that mean this number is different from what it sn in the past? Well, so the budget is $11 million for gossip. But, uh, we did have our deferred capital maintenance program start, uh, I think in 22 or 23. So some of this, some of these dollars are actually, uh, uh, amounts from those projects that we still haven t spent or. Um, yeah. So we re still waiting to spend some of those dollars a month. So the annual issuance amount, is this like the $11 million? Um, yeah. That s the same as it s been. We ll find out for how long at some point, right?
Yeah. Okay. Okay. So on to, uh, some of the, uh, the three things that are limit the amount of debt that we can take on. Um, so this is just kind of a frame framework for how we think about it. Um, so we have our legal debt limitations. So what s set out in state law? Our credit ratings and some of the considerations about what happens if we issue more debt, um, and then our budget constraints. So, uh, budget constraints being our property tax debt level. So we re reay going to be looking at our geo we re going to be geo focused right now. So for uh, legal debt limitations, uh, chapter 475, which is in state statute, uh, defines and says that the debt of the city MAY not exceed three and a third percent of
the market value of taxable property. So, I mean, this is kind of just a math exercise, but the 24, 25 estimated market value from the assessor s office says that the city of Saint Paul has $35.8 billion in estimated market value. So if we if we if we multiply that by, uh, three and a third percent, uh, our statutory debt limit would be $1.94 billion. Um, and then we would subtract out the amount that s already pledged for that source. So for general obligation, we would take it down by $190 million. So in total, legally, we have an unused debt limit of slightly over $1 billion. So
that is a very high ceiling for the amount of debt that can be issued. Uh, we would not want to do that. Uh, based on several other factors, but that is at least our, our limitations that are set out in state law. Everyone s eyes were gleaming. But I know there are more. Slides. Yeah. Vice PRESIDENT. Just to sort of clarify that point, it t s sort of like when you get a preapproval from a bank and they re offering like the maximum loan in your eyes, get really big. And similarly, if you have multiple lines of credit and you re maxing it out, all of the balances obviously create a strong, um, like credit score, basically is what the city s establishing. So I really appreciate you
noting that because the that s a really large number. But yeah, we never want to max out our credit card or take out the largest loan possible that we could ever be eligible for, because that s not the reality of financing that we live in. So I appreciate you naming that. I m just sorry, noting the like sub note here, the city has special authority under the charter for the debt limit to be higher than that or no, that s the same. That s exactly the. Same. 3.333333%. All right. Yeah. That s seems a little redundant of our charter, but I. Apparently. Okay okay.Y. So sorry., MR.. Um, council PRESIDENT, if it s also in the charter and in state statute, if it were to change
in state statute, we d have to change it in the charter.. From my reading of that, yes. We d have to change the charter as well. I wonder if our charter was. First. Yeah, maybe we ll. Find out. Okay, that s a follow up question for the city attorney s office. Okay. Thank you. Oh, sorry. Chair Johnson. Um, something tells me that would be a rather easy vote for the Charter commission if the law changed at the state, but, um, I guess I m. I m just wondering the 190 million. Could you just specify again where that comes from? Um, that is repaid from, uh, the property tax debt levy. So. Okay. As you ll notice earlier, there was, uh, $250 million is
called out. Um, but on this slide you can see that these are solely repaid by the tax levy. So there s some of those other repayment sources that are part of that general obligation that we repay the debt service with. But that 190 is where you re seeing that, um, the amount that s already outstanding. Okay. And then as a follow up, uh, while this MAY be the legal debt limitation, I am curious if there s an internal debt limitation or at least a goal fromhere we try to aspire to be. Yeah, I can keep going and I can kind of talk through some of those other factors that how we consider it. Sure. Because, I mean, I think when the average person hears the legal thing, we re like, oh, okay, we ll be good. We ll always be legally
compliant, hopefully for like, ever. But I think it would just be really helpful to hear about, like where we aim. Yeah. To land. Let s move on. Okay. So um, onto the second, uh, limitation on our debt is the our credit rating considerations. So bonds are rated by one of more or one or more of four major credit rating agencies. So there s Moody s uh, Standard and Poor s. So s&p, Fitch or Kroll. Um, and the rating uh is a representation of our, an independent evaluation of the city s, uh, financial and economic health. Um, it s really an indicator of risk,
our willingness and ability to pay debt service in full and on time. And, uh, a Triple-a rating with a stable outlook is the highest possible rating you can get and translates to the lowest borrowing costs. Um, and right now, as I mentioned earlier, the city of Saint Paul and the Port Authority have a Triple-a rating from s&p and Fitch. Um, Ramsey County has a Triple-a from s&p and Moody s and then Saint Paul Public Schools has a aa+ from Moody s and s&p. So to chair Johnson s earlier point, what s the difference between the Capital a s, the lowercase a s, the pluses and minuses. How much what is it? Can you give us an
example even in dollar terms or interest terms of what the what one of those gradations would mean. Um, so it is a slightly more complicated question because based on the difference in credit rating, investors will it kind of depends on what s happening in the market that day. But we have, uh, asked our municipal advisor to advise on what would it cost if we werer at a different rating. So if it was at Triple-a versus a+, um, and for an example, if it was, let s say $8 million borrowing over a ten year term, uh, it would cost us roughly $200,000. So it, it but it very much depends on what s
happening in the market. Um, and, you know, the issue size, uh, of, uh, when we re selling bonds. So it s, it s a slightly more complicated question than just saying, uh, what today there is a market difference. And what a triple a versus a+ is selling today versus what was selling, let s say like a year ago. Because it s really depending on what s happening in the market. It s just. Um, thanks. Council PRESIDENT, it sounds like like you said, it s kind of driven by the market. Um, but is there, would you say, like going down, um, like
from triple a to Double-a, or are those, like, kind of proportional decreases or is it like to exponentially drop off once you go downn certain point, or is it not really work that way? Um, that s a good question. I, I don t I mean, it is dependent on the, uh, rating methodology. So, um, if the rating agency is dropping us from like a Triple-a to a aa plus or to a aa from there, that would mean that there was, like deterioiotion in some of the, uh, their rating methodology. So there they would be marking us down because of those. Presumably there are s se qualitative factors that also play into each of the rating agencies
methodologies. Um, but there is a there is a cost for going down for each. Of those. Right over the long term. Right? Okay. But it sounds like if I m understanding right. And I know it s super variable, I think we re trying to get like big ballpark estimates here. Um, we re not talking in the, in the millions or billions of difference. It sounded like you said $200,000 over eight years. Might be if I heard you right. The gradation change in one example. That s that s one example. Right. Like, it depends on, uh, the type of credit that we d be looking at to versus like a general obligation versus a revenue backed bond. Um, and those
different sources. But, um, it s again, hard to give you an exact figure on what thatt cost looks like. And is there a reason why we choose certain of these rating agencies versus others and our peer municipalities, municipal institutions choose different ones? Does it does it matter how many of them say what, like. Um, that s. A good question, sir. I don t know if you. I m not. Uh. Funny enough. I know we reetting I know we re getting weedy, but council PRESIDENT, Council members, I m trying to think of the best way to answer this. Um. There are a lot of us had a credit rating with Moody s a long time ago. Um, arguably, you do not need three credit ratings. Every time we have a credit rating, we re paying,
you know, $20,000 per rating. Like, they re not. They re not cheap. Um, in order to go to market, you need typically at least one, somomimes two to is recommended for geo. Um, and so several years ago, um, not just Saint Paul, but a lot of jurisdictions Hennepin County, state of Minnesota, state of Minnesota is actually still with Moody s. Um, but Hennepin County, Ramsey County, we all kind of moved away from Moody s. They re just really challenging to get a Triple-a with even the state of Minnesota just recently received their Triple-a back after they were sitting on millions and millions of dollars of cash that one year. Um, and so it was just a choice
at that point to, to move away from Moody s at that time. Kroll, for example, is just really new. They started in 2010. Um, I I s a different type of rating methodology. Um, I m actually really intrigued by ththeir rating reports. Um, but they are really new. And so you also arguably maybe want a credit rating that has been around for a while. Um, and, you know, carries a lot of weight in the market. So it is a choice by the issuer who we want to work with for credit rating purposes. Um, and for Geo, we have chosen s&p and Fitch. Um, and then for all of our other revenue credits, we have chosen s&p. I Iope. That helps a little bit. Super helpful. Thank you. Also, as
far as your queueion goes about aa versus aa and the spread, there s just so many things ththat go into it. It is very dependent on the market. Um, you know is is the curur very flat at the time. Is it very steep? Um, you know, like a big spread between like ten year versus something short term? Um, there are alsls instances on the flip side, I want to point out, um, back when I worked for the state of Minnesota, where they were double aa, but they were pricing in the market as a aa. So investors, I guess what I m saying is underwritersso their own homework, their own research, and they will bid accordingly. T t rating is just
one metric thehe use to place risk on an issuer. If that makes any more sense. So going back to the slide where you showed us the different types of geo bonds and revenue bonds that we have, each one of them had its own score. Each credit rating. So, uh, is the City of Saint Paul Port Authority credit rating. The aggregate of all of its different funds, all of those different buckets, is credit ratings averaged, or what does it mean for each of those to have its own credit rating? And then for the city to have a credit rating? Um, so, I mean, when we go to sell or issue the bonds, like that rating goes on the bonds that we re issuing for. So, um, you know, for Saint Paul Regional
Water, the they have a aa rating. Maybe that s a bad example, but, um, let s say for, you know, sales tax, which I believe is a double aa plus, um, that, uh, our aa minus, um, that is just it s selling under its own name and rating. So it s separate from the city s general obligation bonds. So when we re selling general obligation bonds, it s separate from those other credits. So this chart is our general obligation rating. And and any of those others would go would be rated differently. Correct. Yeah. Vice PRESIDENT. Did you. Know. Thank you. Just. Um, so I want to preface this slide and say that, uh, we are not, uh,
rating methodology experts by any means. So, uh, we re going to be slightly limited in our ability to answer some of the questions relating to the rating m mhodology, and we re happy if there are additional questions to contact our we e ll we can set up a meeting with our municipal municipal advisor, who is a better, uh, and more, uh, has more expertise with the rating methodology. Um, but so at a very high level, the s&p publishes a scorecard, uh, and how they score, uh, different criteria.M, it to they do so to create transparency, transparency on how ratings are
assigned. Um, and so these scorecards scorecards provide an estimated rating outcome. So on this chart or innhis little picture below here, uh, there are five areas or criteria of which, uh, s&p looks at, um, and each are weighted equally at 20%. Um, and so they produce a score for the city or whatever credit. Uh, we re, they are evaluating. And that puts out an indicative rating, which is their kind of initial review of, uh, of the credit or, or the city so that, um, and from there they can either adjust it up or down depending on some other qualitative, uh, information. Um, but so for
this so we have economy. Um, it really s&p evaluates the strength and diversity of a municipality is local economy which includes income levels, employment trends and tax base. Uh, they look at financial performance. So up in the financial performance category, uh, they look at recent budgetary results, uh, including revenues and expenditures, uh, to assess whether the municipality consistently operates with surpluses or deficits for reserves and liquidity. Uh, theyxamine the level and trend of available reserves, uh, such as fund balance or cash liquidity. So really cash that we have available, uh, determine our flexibility. And for management, they look at
our financial policies, our internal controls, long term planning. And responsivenesss and responsiveness to challenges. Um, and then we also have debt and liabilities. Uh, so s&p assesses the municipalities, uh, overall debt burden, pension obligations and other long term liabilities. Um, and a moderate or declining debt profile is generally viewed more favorably as it reduces financial pressure on future budgets. So, you know, when we re taking out debt, it takes us a long time to repay that debt. So it s a long term fixed cost.. Vice PRESIDENT. Can you just say two more things about what that would look like in terms of
responsiveness to challenges? Can you give us an example of what that might include? Um, that is a good question. I m not I m not sure if I can provide an answer. I can, uh, go and produce some information from their rating methodology itself. Um, but I don t have a great answer for that. I don t know, it was a perfectly good answer. And then we ll get. Follow up. Okay. Totally fine. Thank you. We also don t know. Right. You gave us the caveat of you re not going to know all of this. So but that s thank you for that greatat question. Um, I m also curious, do we know how we obviously we have a Triple-a credit rating for our Geo Bonds. So we re doing as well as we possibly could. But
um, do we know how we rank on all five of these categories? For example, if we were to issue more debt, but then do better on something else that we can control, would we be able to stay at Triple-a because we ve toggled? Does that make sense? Uh, I understand, yes. So they do produce their scores so we can I have two more slides down. I ll show you that. But, uh, just a note here. So there s several of these items that are really out of our control in these measures. So we have pension and other post-employment benefits economy. You know, the city kind of sets the tone, I guess, for our local economy. But we re not driving employment or income levels or the total market value of all real and
personal property. Um, a ather item that is out of control is population trends. So looking at our rating from s&p. So you can see those five categories. So um the scale is 1 to 6. So a one is strong and a six is weak. So um in under economy the city scores at 1.5. Um and just for reference I added uh, Minnesota s Triple-a meaning. So these are other cities within Minnesota that have a Triple-a rating. So we have, uh, we score 1.5 for economy, uh, a two for financial performance, where, uh, other Minnesota medians are, uh, below that at 1.5 or 1.6. Or
better. Excuse me below meaning better? Uh, yes. The Minnesota medians are would be better. Yes. Because that, uh, one is strong and six is weak. Um, reserves and liquidity. We score two. Uh, Minnesota medians. Uh, the other Triple-a medians are closer to a one. Management is at a one. Um, which is better than, the Triple-a medians across Minnesota. And then debt and liabilities. We have a slightly higher score at 2.75 out of that six. Uh, and we re slightly, slightly worse off than,m, otherriple-a medians. And as your next slide going to say, say more about financial performance and reserves and liquidity. Uh, it
is not.. Can you say more about do we know why? I really appreciate the comparison to other Minnesota Triple-a cities? That s that s exactly I think, what we need to be looking at. But do you know why what we could do differently to rate better on financial performance and reserves and liquidity? Um, I don t know if the top of my head, they they are pretty. They do explain a lot in their actual rating reports. So we can pull some of that information and send it, um, after after today to get some more kind of feedback on that chair. Johnson. That d be. Great. And just to be clear, like this, the ratings and everything that we re looking at is not inclusive of the hra.
No, this is just the city unto itself. Do you as a city into it itself? Does you do you like track it or kind of compare I I I guess, to that of the hra, since we technically have the same financial like entity that handles all of our financing, all of our debt type of pieces. So is that a question? Do we track hra. Like into do you take this into consideration? I guess when you re looking at this and like how does I guess I guess I m wondering just kind of how closely the Saint Paul or how much the Saint Paul s like, um, debt capacity and the hra debt capacity at all? Um, either mirror each other or are used as like, uh, is the hra on track because I don t see their
ratings and stuff and the presentation. So. Um, I mean, they don t take into account our debt and liabilities. Correct. The hra is credit rating. Yeah. Um, I m not quite sure how to answer your question, but I think we could pull hra credit rating information. But it is. It is a separate credit than like, the city s general obligation. Okay. Do you. No.Kay. Thank. Well, well, Councilmember Johnson s questionust sparked where I just thought like who kind of who is in charge, I guess, of looking at our credit rating, is that the director, um, or is that just in terms of, like our own rating? Because I don t think we ever got that briefing. From the attorney
specifically. Or. I don t. Think. We have it. Is or is it that part of like office or because. Are you asking me. Well, because I think I m. Asking like, I m like, I feel like they both watch it, but, um. You know, I guess, l le, yeah, I was kind of, um, hoping to also like, kind of see where the hra landed in somom of this and said, it s not on this since it s not a part of the presentation. Yeah. What would we have t t do to get that? Um, Council PRESIDENT, Council members, I think there s a few things to note. One, the hra is not able to issue geo d dt without the city, so all of the hra debt would be like that geo tiff bond that you were asking about, which we haven t issued
since the Ford redevelopment site. Um, and I guess to follow up for a deeper dive into their debt program than I would, um, have Jennie Wolfe, um, the debt manager for the hra, come and give a presentation. Okay. Thank you so much. Let s keep. Going. Um, so I wanted to, uh, provide some feedback we ve received in these rating reports from s&p. So, uh, they cite that Saint Paul is very diverse and growing economy, uh, benefiting from the presence of several stabilizing institutions paired with the city s robust and forward looking management framework. Um, they say somewhat offsetting these strengths is the city s debt profile. Well, we believe the costs are
manageable. They are weaker compared with other credit qualities of the city. What does that. Mean? Um, so like on these scores, we re scoring worse in our debt and contingent those long term liabilities. Right. But can you say, like while we believe the sts are manageable, they are weaker compared. Like we have too much debt. Um. It s too expensive. It s I think that the long term debt is. Uh, Council PRESIDENT, council members specifically for that debt and contingent liability ore. It factors in, I think, three different things. But the two big things that come to mind is our total debt outstanding, which, yes, we have a lot of um, to answer
your question, but also pension is included. Pension is something that is out of our control. It is managed by the state of Minnesota. And back in 2018, Minneapolis was actually downgraded because of pension pressures. Um, at that point in time, Mikik Solomon was still with us and we had a separate presentation. Um, with Sid Fitch, one of the ratatg agencies. I think it was Fitch who downgraded Minneapolis, um, specifically to address what was happening with pensions at the state of Minnesota. We kind of lucked outut with timing. Um, there was this very unique kind of whiplash effect, so to speak, so to speak, I would call it, where our pensions looked really worse att that specific point in time. And we
were ablbl to show them how if they just waited a year, that things would kind of whiplash back to how they were. And that had to do with what was going on I I the market. In addition to that, back to us timing it. Well, um, the state of Minnesota was going through pension reform, and there was a bill that was pending, and luckily it passed. And now our pensions are back on track to being fully funded. Um, they re not there yet. So that s why I m saying it is a mix of we still need our pensions to do better, and they are on track, but we do have a lot of debt outstanding. So it s really both of those. It s really helpful. And by the way, I think it
s worth noting. While debt and liabilities looks worse for us, it also looks the worst for every other city with the aa. So maybe that s reflecting some of those pressuressou re talking about that aren t within the city s control. Um, and management is the only area in which we are better than everybody elsls And that s all you. So kudos. That s correct. Um, also, for reserves, accountability. Um, your questions about that, my thoughts were just around our fund balance, trying to get that up a bit. And it is ticking in the right direction now, which is great. Um, and then Neil will be talking about on a future slide. Just our act for timelinins. So that s our annual comprehensive financial rerert. Um, it has been late. It
s also going in the right direction. We hope to have it on time this year. Um, specifically, our sewer rating did hold that against us as well. So those are some things, um, that I guess I could call out for financialal performance anan then reserves and liquidity. I ll pass it back to Neil. Thank you. Uh, so as Treasurer Sarah Brown just mentions, uh, the this is some of the other feedback we received from, uh, s&p. Uh, our late annual comprehensive financial report. Um, we ve had several years of late achievers. Um, but as Sarar mentioned, that we have been improving in the last year. Um, we also had in 2023 a reduced general fund balance. Um, and they also cited, uh, a large
fund rececvable reflecting negative fundalances and several funds. So we are having some negative fund balances. Um, and as they stated in their 2025 rating, uh, we will take a negative rating action if available, reserves decline for any reason. Downside pressure could also emerge if future debt issuances lead to weakening our of our assessment the city s debt and contingent liability profile. That was from this most recent bond sale, uh, and from the one the year before. If a sustained negative trend emerges in the city s financial or debt profiles, or if the inter fund receivable is available, general fund reserves to levels no longer comparable with those
peers. Uh, we can lower the. Rating. Would you say both of those things in more simple language? Uh, yes. Uh,o there s, uh. If we have a let s see if, if we future debt issuance has lead to a weakening of that, uh, score, that debt and contingent liability score, they are they could downgrade us because of that. Um, so that s kind of the feedback we got from last year and or this, this, this last bond sale. And then, uh, from the year before, it s several funds that are negativiv uh, that they re essentially holding against the general fund. So for example, when we had ourresentation on Como Zoo and we talked about how that s a special fund that is not pulling its weight. And so
we have to transfer funds from the general fund to cover that. That hurts us here. That s an example. And um, not to keep asking for simpler language, but what amount of future debt issuance would lead to a weakening? I mean, what what about one more dollar of debt? Like, what does thaha mean? Slide 24. Uh, let s see the next slide and. Then oh, sorry. So I can I can get to that in two. Slides. Okay. Sorry I ll hold their viceresident. Yep. Um, so looking at so then it s like looking a a essentially like trends of our ratings. But what if we were consistently a double a rating or like a whatt if our trend has been stagnant but not like the best one? I m just sort of wononring around
like sustained negative trends that are emerging and sort of our debt profiles. But what what does that look like? If our trend was already sort of like mediocre? Um, how does that impact our ability to. Like in my mind, the translation then is then we just don t get as favorable of terms on our on our bonds. Right. But what if there s a city out there that s just sort of like a mediocre one in terms of all the ratings andnd but our trend is excellent and it goes down a little bit, right? Isn t there some sort of difference between someone t tt s been sort of mediocre and is trending down versus us, which looks like we have very sort of strong financial like trends here? How much of that would
actuallympactur score and our ability to have favorable terms on our bonds? If it s sort of just temporary or we go from like excellent to great. I mean, s&p has kind of that qualitative factor that they can apply. So if things are I think more of a one off versus a trendnd they can, you know, they can hold us to ourur still our triple a and stable outlook. B But I think it s year after year when we keeee showing negative fund balances. Um, then that s when it becomes they ll start. Uh uh. That s like a trend that s formed. And then that would set out what would be leading to a ratinin downgrade. And just can you
give an example thenn my mind, again, it s less favorable terms for the actual bonds that we re going after. Right. But like what are the other impacts? If we were to like ever be reduced in our score, what s st of the financial impact of the city? Uh, I mean, if we were downgraded, we re just going to have to pay more dangerous costs. Um, that and thehe also, I think there are some kind of bragging rights withh havingg being a t Tple-a rated city, like, um, we lovov to say that we re Triple-a rated city. Um, but thererere the costs are higher, uh, interest costs over a l lg term. MISS, Jost. Um, thanks. Council PRESIDENT. Um, so for the bullet point, about since 2023, reduced general
fund balance, does that mean the balance or the of the general funundr the general fund? Fund balance. General fund. Fund balance. Okay. Um. Thank you. And thehe um, that alal incncdes the the fund balance of the library, is that right? Yes. That s correct. Okay. Thanks. T Thi might be another. Maybe MISS Brown needs to come back. But what how much debt should weave? And what does our fundalance need to be at? I know the answer is always better is better. But like, is there, you know, 30% fund balance and you re solid. Anything beyond that is just overkill. Um, x percentagag of debt to general fund. Like what is the what is the not too much debt number or percentage? Um,
great question. I mean, I, I know come. On. Um. Council PRESIDENT, council members, I think one thing we should do is jump ahead to slide 24, because I think that s going to talk about at least our debt issuance constraints as far as when you re going to be downgraded. There s also constraints around our budget pressures. So and maybe this answers I think it was Council Member Johnson s questioio earlier on. We don t have specific debt guidelines. I m going to call them that. Sayay we don t want to go above x. That s something the state of Minnesota doeoe have. Um,m, we ve thought about drafting a debt policy o o sorts. But if we ever became out of compliance with our policy, that
s also a negative. And so it s been this balancing fact of, you know, do we want to put this in writing? Why or why not? What does that look like? Um, and so it s really, I would say looking at the credit ratings and determining, do we want a triple a or do we want to double aa? W w or why not. Um, but then also, you k kw, if you want to issue more debt, specifically geo debt, we need revenue to pay for that. Right. And so is there a different revenue stream like sales tax that can come in, or are youou willing to increase the debt levy? Um, and we do have more slides that can show you exactly what that looks like.
But there are already constraints on our debt budget, which is another thing that we want to talk through with you. So part of me says, sit tight, okay. Yeah. And I recognize we have a lot moreelilis thaha I thought. So let s let s keep going. And I will personally try to hold my questions till the end. I won t tell my lleagues what to do. So, um, I wanted to highlight some feedback we ve received from Fitch. Uh, so they ve noted that the city has superior financial resilience. Uh, assessed at the highest level at a a given a high midrange level of budgetary flexibility, um, we have strong demographic level metrics. So, uh, the demographics of the city and metro areaare important in
their rating criteria. Um, one of the rating sensitivities was, uh, sustataedeclines in financial resilience. So if we continue to see a trend of that general fund reserve going down or falling t to below 10% of spending and transfers out, so similar feedback from Fitch that if we continue to spend down or general fund reserve, um, that uh, that could lead to a downgrade. Um, also slightly out of our control, but, uh, deterioration in, uh, uh, of population levels in the city. So, um, for debeb issuance consnsaints, um, we have so, uh, based on some of our researchch we ve done with Fitch s methodology, uh, the
city could have about a 60% increase in long term liabilities. So that would be debt. And, uh, those pension obligations. But approxixitelyly $270 million m me in debt before they would downgrade us. And when we look at s&p, the city could add approximately $26 million in debt service before the score was affected. Um, which, uh, it really depends on kind of the term of what that would be. But I just did some rough math arounun $200 million in additional debt before we d be downgraded solely because off that. Um, so that is kind of a larger constraint. But keep in mind that we continue to take on
more debt, uh, with Saint Paul Regional w Wer Services. So Lakeke MacLaren s so we have we re notot fully through the financing of that project. Um, we still have a few more rounds of debt that we re taking out for it. Um, and then we have the lead service line replacement program. So upwards of $220 million and more in debt, um, we also have an arena renovation proroct somewhere on the horizon. And, uh, it s h hd totoay right now what that would look like, but that could be upwards of $200 million. And this is not just, uh, lookiki at the Geo, but all of t t city s debt. And thattould impact the city s, uh, debt scsce. And are the two numbers you h hav above from Fitch and
said I would take my questions, just this question. Do those relate to just geo debt or to. All debt? It s all debt. Okayy. So our. Third constraint, uh, for our debt limitations, um, our property tax debt levy. So currently the debt service fund, um, is structurally imbalanced over the longer term. So, uh, at our current levels, the debt service that we raise through the p pperty tax debt levy does not pay for, uh, our our annual borrowings for cip and street reconstruction bonds and those capital notes. Um, and that is why we ve been recommending these increases year over year to get us to a structurally balanced fund over the longer
term. So from 2026 to 2029, we re still recommending a a increase of $1.5 million each year,1 million in030, and then from 2031 to 2035, $500,000 increases. So this, chart here shows, uh, is really the representation of that. So on the t t line is the amount we owe and geo debt service. So, um, you know, roughly slightly above when we look back to 2016, it soughly $27 million that we owed and d dt service from, uh, the pledge from general obligation, generara obligation bonds. Um, and the amount thaha we raised through the propertyax debt levy was roughly 12.5 million. So there s a aarge gulf between
those two. So as you can see, over time, uh, we ve been, uh, to fill that gap, those we usese other revenue sources to plug, uh, the amount that we re paying for debt service. So, most cities pay for their geo debt service through their property tax debt levy. So the majority of us paid for the property tax debt levy, a a we arar t there yet. So we ve been trying to build up the property tax debt levy to repay our debt service at t t levels that it currently is at, but we are still very far away from, um, of accomplishing that g gl. So you want to asksk any questions? I do, but i m trying too hold myself to m m standard. Okay. We can ask if you re going to ask
a question. Okay. Well, I ve been asked one. What what were those magagal sources of funds that existed in previousays that we use to fill this gap, that now we don t have or want to use? And also, what were they thinking? Well, you can t answer thattuestion, but what about the the special sources? , um, the and I wanan to reiterate that like some of the choices that we re dealing with now are b bas on, uh, choices that people have made in the past. Soe have long term fixed costs. That s that ss how the debt works. Um, but so this is just for 2026 proposed budget. Um, but here are some of the sources that we ve been using. And I m, I m not quite
sure in the 2016, I d have to go back and figure out exactly what those sources were to plug that gap. But for here s jusus kind of a flavor of thetuff that we ve been using to kind of creativelyinance thaha debt service. So $3.5 million from the half cent sales tax, uh, $2.5 million for street from street assesesents, uh, 3 million, uh, relating to our sewer fund transfer, uh, which rolls off in the next couple of years. Uh, another $1.5 million from the halal cent sales tax. Um, and then general fund support and $1.1. Million. And that sshy we re continunug to tryyouildldp that property tax, that levy to, u u remove ourselves from thosether revenue sources that we ve been using to kind of p pg that gap betwtwn debt service and our
property tax debt levev. Why is it not okay t t be using sales tax to plug that debt gap? Um, I mean, we a are I mean, we re also using t theales taxax toay for sales tax bonds.H, so we are using that source to r ray geo d debt. I don t think it s a great practice.E. Um, since over the long term, I mean, Ihink this is just a budgetary choice,eally, but I think best practice would be too align the sources and uses with those specificic uh, issues. So geo. With property. Taxax debtt levy. So, s s we talked often about wewe re a high tax citit andur thth tax burden on residents compared t to sales tax which
somewhat affects residents butut also can be paid for by those who aren r resents. And given that we re we re also a magnet for folol to c ce in for lots of otherer things, it might make sense too for a city like uso be relying moror on our s ses tax f f s se off this, if ththe s no. But it sounds like you re s sing it does hurt us be relying on thingss that aren t our debtevy toay for debt. What leaves us leses able to use sales tax for other sales taxrograms tt we have? I mean, I think it is just a a budgetary choicic. Okay. Thank you. So,m, we in office haha a debt model that goes o and looks out about 15 years or
20 years. Um, so we have our debtbt model here. Um,m, and we have, uh, projected out that $1.5 millili increase. Uh, you can just s s herehe fivee ar,, uh, l lk at it. Um, b b in 20202 we have $57.7 million total expenses for 2026. Um, anan we have,e, uh, we re aligning that with our revenueue sources. So we have the equivalalt in revenue, um,m, from, uh, only a portion of which is that property tax budget. U and then t tse other revenue sources are plugging that gap. Um, andnd then you can see and like the years after, u u we continue to ramppp t tt property taxax budget. So just wanted to giviv a look at what it costs to if we were goingng to
raise t t, um, gossip budget. Um, so if we were to r rse it $1 millionor one time increase, it wouou costt $130,000 increase to the debt levy. Um, if we were wanting to makekehat an ongoioing uh, inincrse,, we would thatould bebe a $1.3 millionon increase to the debt levy. Andndhat s for the ten year term of the city rtreet reconstructionn bondnd a 1,000,001 t tim increase is roughly $686800. Uh, debt levy increase. And to do that, uh, ongoing would be a $680,000 increase. A a the diffffence t tre is, just becauseet s a 20 year terer. Andd is is theame, um, calclcus for t t debt levy, thth forhe total property tax
levy..O $1.3 millionons rougugy a 1% incncree orr2 llion is a 1% increase. Is that the samee here. Soe re talklkg a aut a a $ $0,000 increaea to the d deb levy. I I that q qrter percece. InIncrse that.T.Ook like the ovovall levy? Um, I I m not actuallylyure.E. Thehe thi I have the pererceagee incncase li w wt that equatates an levy increase. I m not s sur if I, I mot I don ttave that mberer On I I Thank you. B b we ve got ourumbebe Um, and then I just wanand to put on herehe,ur bond funded cacatal program.O c c, when I loloackk t tough p pviouou budgetet itt looooke like the
lastst u uncrease wasasn 26.6. S a little complicated becausus uh, the Street Improvovent Bonds, whi iss t program w w h had beforor strtrt reconstrtrtiononondsds um, they were kind o o comomngled in t t sasa line. Uo therere actually was a somewhat o an increaea. I thihi I I was ughlyy $22illion betweenen cib and strtree reconstructctnn bondsds back in 20000 Um, andhehe moree recentnt,,eedddd the milil a a overlay progrgr inn023. So there thehes somom addddional fundndg that t s o ourrerenn at, uh,h,treet reconststctioio millllndnd orlrl sectiti.M, dhen publili safetyy vehiclcl, u u thahat we ve s sn some incncases I I that program
in the lastt y yea. S s I guess in mmmmy, you know, we have ththeays thaha we e re thinknkg ababt ourimitations to debt. U k kw, there shat, high billionollarr ceieing to o debtbt limimit andnde he o o crededitatatg c csidedetions. Um, a a thenn our budgege budgetaryy cononraints wit our, uh, strucuctul ialance debt servrve fund over t t longege termrm Sone thihi to keep inn mind, we and hopopully e eveonee at the citit is thinking a aut her capitit f fundi opportrtitieieo debtt I t the st expxpensi wayeeanuiuild in the citit Um,m,ee arelways on the l lkout for, you kw,w, feferal g gnts, wheheer that s rough. I for the Infrastrucucre I Iesesenttnd Jobs a a, u u irara funundi,
other earmamas, um,m, you knonow, roughhhehe statetehehe s the Publicacilities a Ahority. Um,, y y know, weeave anfr that we e , uh, accesesngng funds throrohhnd t t Minnesota Pollllionnonontr Agency, uh,h, as w wll a a m Mouncncil And then I I k kww Ramamse Countyy alsls hass newransnsit tax thaha um, ii m mea thehe tillooking to s spe. So, u thehe s manan ototrr potot o of mononeyhaha wee ouldld b b alslso considering w wn we re thinking about doingng capitall I the c cit justt cacae t there ss c ct. Ery time that we go a issueonon. SoSo Iavav a aisistff resesrcrc here..M,utut witit that, I think I Ian stand f fnyny additionon questions.Inallyly, we c c ask..Ueueionsns..Isis nes. Um,hanks. Cncnc prpridenent.Hiss I don knono ifif e expt you t t k kw thehe
answer toohisueueion. U but whahat I a am just thinking abtt w wheou re whennn t slideeboutut other capital fundndg o opportutieses andnd a lot o of t tm are a y knonow, of c coue,e, ourigigrr levs of govevemementnd thehe fededalal vernmentnt ahat,t,ouou kw, dede, a a youou saiaiss t most pensnse way t t f fdd capitital. UmUm I g gss w wtt whatt ccecerns we havavveve t the n ntewew years? Um,ouou knonow, whh m mbebe not n b bng abl to get the fefedel fundidi t tt we hohongngor,ikeehaha the impapact wil b be,m, o on ourebebt inhehe cy a and alslso ourur ababily to,m,oo fd cacapil.L.R m mbebeeususton t
fund as mucucapapal. Couldld youou talkboutut thatt l lite b? Wellll, guessss uer,,ou k kw, rrrrt administrationnnd CoCongress l likee,e, u a a fefedel f fundingsoioi tooee at risor,, u u forrecisionon ororm, jusus clalawiacac nds. Soo t thi ultataty therere I a a rk f for a any f fereral fufundinghat w w wou,, u I ess,mbark o o Um, I not susu w what tt wouldldeanor debt, exaxaly. B,, uouou kn, I if weecece t to d d a capipil pjectct, u u andhe fefeds decee totot fun onene o of theses p pgramams, w wititherouou hahave toanance t p pjectct orr wewe wououldavee to finddome otrr wayooinancet.T. U grgrt. O Oy.Y.Hair Johnson a a Iueuess alo tse linines youou knkn,, j justithhhe b bdingng
increasereherere is the ke a lis s silar too what we have wh just likike t the differtt bdidi increreasesr ojojteted deb t tttilll be seen? Inow t tre was a a 2026 bt,, u psesentatio slide ththat jus had leeertata inings tha w wenticicate congng forward. I t tre ceaiai t tngs we antipatat lliningffff o thehe dtolol?? And then orr t nexext c cplple yrs to offse t tt? S Sor, Iasas having trorole h heangng yoyour f first par offouou questiti,, I Yououon t minin Ok.. S s in thelili,, the ththereasas0266ind o o ojojeconff things tha wee opopos debebtssuauae, um, and thee dtt I I issuaee slilide alg w with likeondingng incrsese Slili. I mm jus wonderggf t there ss setetng
similalaroror wtt we antipipate roininffff o thehe d dtt rl I I theextt coupl of years. J Jt because looki at t slilide anand just the proctionsoror beeeeen n n a and 2030, trere seems t b be a pretty sndard like shrk,k, of of s see ofurur, umum, d dtmomoun.. And I mm jus ndndering, wha a are thohat we I intend t to s s r rolling o?? ,, it s. S Sewewhat, uh, a at asast for l lee on t geo sid we rere s still kin oft the same progr lel.. So w re stil antnticatatgssssui, u uu kw, t tha avegege auaua 1 m mliononndnd t samame f reetet recononruruction bonds. S I wouldldn tt a anticatat forhehe geo mhh to be I mean,herere wiwill be se d debt r rolling offff, and Ianan w can s splyy that inrmatatio bututhahat progr
is goioing t tee e effectively lik level overheheongg term jt becaus we rere we re s stayingtt that sam p proamamevevel and we rere going to be tining on rere debt thisearr and n ntt year Um, so Iouould I could susupply lik what ssollingng o.. Itigight be more I intertiting to sese leehahat other at lea fr y ynonow, MAY like l Lee McMcCarr o or, uh,h, Saint p Paul Regional Werer or one of like the revenue side. W What ss rolling off o thoseoo see atat s, um, you kw,w, wha debt is r rliling off Sooee could I nn look int t thatoo. Oka anank you. All. Um, I have two Ihinknk fin q qstioions. These herr capital f fundi
opportunities, these grass yoyou re talki a abo,, can the be use t to p off debt, either extiting debt o or futureebeb That is. A good q question. I ththink it wouldee reayy dendndtt on wtt the program is.M,m, and t limatations on wh the w wha t the gntnt oppoununity is. M not qui sure I kno Laura,ff you have an thoughts on that, but. O Oh, we are doingm, oneininanci for lead servi line replacemen that the f feder government is fundi t the Publicic Facilities Authority. And we a essentially paying off debt, uh, every year with fundingrorom the s state, which is lee a pss touough grant fromom t t fereral government. OkOkay. I ask I p part becau I if
we were, y k know, the the llllars you gave us elilier, th eimateses for t imptt to ththe deb s service levy, if we were to add aititional debt, assudd that we were payin a all of that off only o t the basis of propertyaxaxes. Rig.. And if wessssued more debt but soughtht opportutities to pay ckck, p p I it bkk usi o other sources, um, maybeenuouous financiall I I d don t know how readersouould look at that, but,m,m, j just wondering what theptioions are. And thehen I guess my lastueuestion is how does our. T t thi thahat kee motitingng me is o our roads are in terrible shape. We heahaha all the tim w We know that it s bebecause of decades of deferred maintenance. We kno w we don t want to kpp kicking the can down the road. We know thahat our our $0.01 sales tax I g going to
help with that. W k know it s not going to h help with neayy all o it. Um, and sott seems to me that we j jus n need to vevest more. We just need to do whatthther generations of us didn t dondnd a anonoededge that thingsosost aotot more now t than theyidid 19 years ago. Um, even ten years ago. Two years ago. Right.Oo do other cieies. I mean, is this sort of keeping your 11 million cip issuance theamame f for 20 years? Is that stdadard, or dothther cities tend to raise the amount that they re issuing based on costs of doing the kinds of work that those bonds are intende to pay fo You know, it s hard for me to speak on w what other cities are, Iueuess, like across
Minnesota, I, I was, uh, capital budget analyst when I was at the city of Minneapolis a couple of years a.. And their program did fluctuate, kind of depending on what tirir needs wer b But again, the adade off theress that we d have to increase, uh, property tax oromome other revenue source to rep that. So that is, I guess. The trade off. You have to pay for it somehow. There s no question about that. I m just wondering, like, are we an outlier I this constancy over so much time, or is ttt just cities just set it and foetet it for a long time. And that s that s the norm. Maybe atat s something you could follow up on as well. Again, I think you re finding the avagages of the other Triple-a ratings. These was really
helpful. In that context. I think is helpful for this esestion too. Okay. Certainly something to. Look into. Okay. Any final questions? We do have one more topic. Okay. Um, thank you so much. This was such a helpful presentation. You did such a good job putting it in layman s terms. Um, and, uh, we can either get a follow up. Well, let s get follow up information via email. But I would say to my colleagues, if you re looking at those attachments and feeling blurry, I d like I sometimes do and we want to do another 2.0. I think we can also consider doing that. So if you re willing. Okay. Thank you very much. Thanks again to the whole team. MR. Solomon. We ll get you up
here eventually. Come up and talk about copper wire theft if you want. Okay. So our last subject today is copper wire theft and update. We, um, this is something a lot of us are hearing out from our constituents. Obviously questions about this. It s been in the news lately, um, especially with the recent legislation to try to, um, to curb it. Um, we did invite the mayor s office, dsi, Public Works and police to come and present about this, but unfortunately they weren t available to join us today. So what I d like to do is just hear from folks at the table what you re hearing from your constituents, what questions you have, um, what you think is concerning or noteworthy in terms. Of progress we ve made
sort of get a status report. Um, and then what questions you would have for staff at a future presentation. Chair Johnson. Yeah, I appreciate just having the opportunity, I think, to list off a few things that, um, our office has been thinking about, you know, in Ward seven, we have well, I will say we have dedicated constituents that will often share with us just anytime there s an update on a, uh, a street that has been hit by copper wire theft. And I think we ve continued to see that just through, like, uh, parks, through streets, through bike lane pathways that are lit because they aren t surrounded by residential. We have a lot of, uh, park space. We have a lot of trail space, luckily.
And some of the areas where most people frequent and in many ways, you know, people are looking at it as a safety concern. And so I, I think one of the things that would be really helpful for me to continue futuristic budget conversations is really around the amount that we allocated this year on copper wire theft initiatives. So how much money are we actually spending in the city to, uh, adjust or, um, almost respond to maybe the growing need? And then how can we plan ahead? Not necessarily to we ll never be able to fully keep up. I think with all of the different efforts that are happening and there are a lot of different, um, practices, even, you know, things that are being put in place through the
city to try and, um, almost, uh, negate or somewhat control the amount of copper theft that we re seeing here in the city. But I think being able to translate it to actual what are the dollars we re spending? What are the dollars that we earn needed to like, meet the demand even gives us an option, an open picture of how bad the issue MAY be or how urgent it MAY be, or just in general, how large of a scenario are we dealing with. And so those numbers, I think, especially as we head into futuristic conversations, would be very helpful to me versus seeing a like $500,000 allocation with very little information. Um, for the 2026 budget conversation. And so I think folks are interested in knowing, just like what we ll
do, what efforts we re taking, and especially with some of the conversations that have been happening at the state and federal level, I think it would be really helpful to know locally, like what we re what s the dollar amount. And so that was one question that I had. And then the other question, um, in the other piece of this, I just really want to know, like in our city, the entities that are kind of responsible for this, sometimes when we have a copper wire theft inquiry, we often go to the the Department of Public Works because that is, um, it s all often street related. It s often light related. But, um, you know, I have had some times where folks cc the police department, they cc other
entities, the parks department, um, and I think it d just be really, really helpful to know, like where that work is housed. So we know, you know, just how to streamline those requests. And also from community members, they know who to contact if that comes up. And so I think sometimes people do play a little bit of a guessing game of who to contact where. And so we often steer them into like, you know, we get the emails, we ll steer them forward to someone. But I m not sure at this point how long the lists are or how they prioritize just how they address those concerns. I recognize capacity is a huge, um, piece of this. And so just really being able to know, like, you know, to me this is an important issue because it definitely changes can change the feel, but also like the
safety of a community overnight because it ll just be pitch dark. And so, you know, uh, that s something that for me is just like important enough to be able to just share what our approach is holistically and like who to contact. If there is an issue, who to report it to, if you see something in real time, and then also just like what we re doing as a city to respond. To it. Thanks, Tara Johnson. That s those are great points. I agree wholeheartedly, and I think your who s responsible question is really well taken. I was looking back at the the emails that we send out just to invite people to present today and we the number of people on those chains just goes to show, you know, how many different folks we, we think are involved in this but don t necessarily have the one. So it
s a great point. Other. Yeah. Vice PRESIDENT Kim. Yeah, um, we have a lot of, uh, constituents that also call in. Um, sure. Around the trails and the parks and the lake. Um, the way that our office has been fielding it. And again, I think, like naming what we ve been doing MAY not actually be the best way to funnel it through the departments, but, um, I know, I believe is that, um, Public Works is trying to work on them in batches. So the more that we can report out, the more that they can address in the same area versus being there one day and having to come back like a few days later. So just thinking about like, I think they re working through the efficiency piece of that. Um, and uh, my recollection MAY be wrong, but
I remember the number $1,200 per light being thrown out last year. Um, I d really love to also. So now, now, um, moving on to kind of things that we, we would like updates on in addition to what Johnson has offered. Um, we we re hearing reports of thefts, um, through APRIL 30th, we re down 60% in Saint Paul. I d really love to continue to get updated information on that. Since modeling it off of, uh, catalytic converters has been, I think, wildly successful. And the ability to then get state action was, um, I think that much more possible. Um, I will add, though, that this last year there was, um, the
recycled Materials Association, um, filed an injunction against the state, um, saying that most all scrap metal contains copper and there isn t enough clarity in the state law to distinguish between brown copper metal and other scrap metal that MAY have copper. Um, the injunction was denied, but it is to say there might be just continued opportunity, like with the kiosk conversation we had earlier this year where we help or revisit those laws to continue to tighten and, um, to tighten them as, as they are being implemented to see sort of like areas of gaps that we MAY not have included on the first time out. So those are sort of the initial thoughts from Ward five. That s a great
point. Thanks, Vice PRESIDENT, and thanks for lifting up the the 60% decrease, which is really significant. And I m interested in knowing, you know, sort of how we achieve that. What we attribute that to. Um, I think Minneapolis had a 12% drop. So that s a dramatic difference between the two churches. I mean, it s. Just board chair just. There we go. Uh, thanks, Council PRESIDENT. I ll just share. Um, in in Ward three, kind of similar to all of our communities. We ve been getting a lot of questions and concerns about copper wire theft all across the ward. I think a couple areas that, um, you know, are kind of top of our
minds are Shepherd road. Um, and then, you know, we re bounded by River road, um, in Ward three. And so I just want to thank Public Works for, for, um, for restoring the lights on on River road really quickly. I think that was last year. Uh, our residents really appreciated that. And I know that they re continuing to work on Shepherd road and really all across all across our city. Um, one thing I ll just share that I learned, uh, in the last year or so is that there s so many measures that Public Works takes to try to, um, deter copper wire theft. And one of them is leaving the lights on, um, which I, you know, didn t didn t know that until I kind
of asked that question. And so I m looking forward to, you know, hearing more about that. But that was a question we got from one question that we d been getting from our residents is why we do that. And so. Um, I just wanted to share that too. Thanks so much, MISS Jost. Um, I want to echo your Shepherd road comment. We hear about that all the time. And, uh, Chair Johnson, to your point, the most egregious thing about this, to me feels like it s the thefts are happening in places where it s easy to steal from, which is where there isn t a lot of traffic, which is often where it s really dark if there aren t lights. And so it just feels like it s a compounding problem. Um, and also MISS Just I agree, I hear a lot of questions about, um, the strategy of keeping the lights
on and also the cost of keeping the lights on compared to the potential theft. So maybe that cost benefit analysis would be helpful. Um, and then the last thing I ll throw in is, I know Public Works had talked to us about different strategies for besides just preventing copper wire theft, for using alternatives to copper wire, whether that s solar, um, aluminum. I know they had sort of said aluminum doesn t work. But then I think I heard recently Minneapolis is using aluminum in some cases. So I d be interested in revisiting that. Um, alternatives to copper wire conversation. Anything else? I know that we re at time, um, that we want to make sure we get an update on. Great. Uh, we will send this along. I want to thank everyone, as always, for a
great conversation. And we are