I’m still trying to interpret the City’s presentation of debt. The accompanying notes don’t match the tables, more later.
By: Diane Benjamin
The City of Bloomington has issued their Financial Statements as of 4/30/2014. http://www.cityblm.org/Modules/ShowDocument.aspx?documentid=7479 The numbers below start on page 51.
The current debt payments are set to explode in 2020:
The outstanding general obligation bonds payable from governmental activities mature as follows:
April 30, 2015 – Total Principal and Interest $ 8,377,704
April 30, 2020 – 2024 Total Principal and Interest $30,604,101
Increase of $22,226,397 in 5 years
The outstanding general obligation bonds payable from business-type activities mature as follows:
April 30, 2015 – Total Principal and Interest $ 870,565
April 30, 2020 – 2024 Total Principal and Interest $ 2,100,125
Increase of $1,229,560 in 5 years
The outstanding loans payable as of April 30, 2014 matures as follows:
April 30, 2015 – Total Principal and Interest $ 804,515
April 30, 2020 – 2024 Total Principal and Interest 4,762,620
Increase of $3,958,105 in 5 years
The outstanding notes payable as of April 30, 2014 mature as follows:
April 30, 2015 Total Principal and Interest $ 947,962
April 30, 2020 – 2024 Total Principal and Interest $ 4,739,811
Increase of $3,791,849 in 5 years
Total increase by 2020 of $31,205,911! That increase is every year from 2020-2024!
Payments drop some in 2025, but not to 2015 levels.
Why are all these payments set to explode at the same time? Is the can going to be kicked down the road again by re-financing the debt, or are your taxes going up?
Is the structure because David Hales will be gone by 2020? Maybe because Renner will be gone?
INTEREST costs never enter the discussion when the City chooses to borrow money.
Restructuring the debt looks good. The City celebrates saving tons of money because the interest rate is now lower.
Left out of the conversation is the total interest costs if the term is extended. How much are you REALLY paying for the Coliseum? A LOT more than the Council approved before it was built!
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Please correct me if I’m wrong about this, but aren’t you comparing single year figures ($8,377,704 in total principal and interest for general obligation bonds for 2015) to *five year* cumulative totals ($30,604,101 for 2020-2024)? It sure looks that way from what you’ve written and from the chart you linked to. The totals at the bottom line of the chart on p 51 for general obligation bonds only work out if you assume that $4,739,811 is the *total* for that 5 year span rather than the yearly figure. (Also, note that if you divide the notes payable figure for 2020-2024 of $4,739,811 into five years’ payments, you get a yearly average of $947,962—exactly the figure for 2015.)
If that’s right, then the debt payments you list aren’t exploding. They’re stable for notes payable and, for general obligation bonds, they’re actually decreasing on average. The yearly average payout for general obligation bonds from 2020 to 2024 would be $6,120,820: less than the $8,377,794 figure for 2015. But I’m not an accountant. Am I missing something?
The chart shows the same payment from 2020-2024 – much higher than 2015. The totals they listed on the chart are not correct. They attempted to list how much the payment was per year, but neglected to do the math.
I’m looking at the accompanying notes again – it still doesn’t make sense. 30,604,101 divided by 5 years is 6,120,820 per year, but the notes say a maximum of $1,140,000. Either the table or the notes are incorrect. At this point, I don’t know which.
Thanks for your reply. I’ve looked at it again, and I think the note says that a maximum of $1,140,000 will go toward *principal*, not total payment. The average yearly payment on principal (no interest) listed in that p. 51 table for 2020-2024 is $5,248,750 (i.e., $20,995,000 divided by 5). That’s lower than $6,120,820, but still a lot more than $1,140,000. But it looks like the $1,140,000 figure is principal payment just for one specific bond: Series 2013C. Maybe the $5,248,750 is the yearly principal payment across *all* bonds that were issued for governmental activities?
Oops, $20,995,000 over 2020-2024 is $4,199,000 per year, not $5,248,750. (I divided by 4 years instead of 5. Really good thing I’m *not* an accountant.) Still a lot more than $1,140,00, but it still might make sense if the $1,140,000 figure is just for that one bond series and others are included in the table on p. 51.
Maybe, I haven’t had time to look into it further. It’s sure not the way a CPA would report, but then government lives by different rules.