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Debt Service
The City of Suffolk maintains a separate Debt Service Fund that tracks long-term debt obligations for General and Special Revenue Fund activities. Debt activity for Enterprise and Internal Service funds are maintained in the respective individual funds. The Debt Service Fund accounts for the accumulation of resources for and the payment of General and Special Revenue Fund long term debt principal, interest, and bond issuance costs. Revenues in this Fund consist primarily of a transfer of the citywide revenues generated from the various general property and local tax revenues of the General Fund.
The City borrows money by issuing bonds or bank notes for the acquisition, construction, and renovation of public facilities and infrastructure as well as major equipment purchases. The City uses an objective analytical approach to determine whether it can afford new or additional general purpose debt to include measures of annual debt service payments as a percent of current expenditures and amount of outstanding debt as a percent of taxable real estate value in the City.
The rate of interest paid for long-term debt is determined by the competitive aspect of the bond and finance institution market based upon credit ratings from Standard and Poor’s, Moody’s, and Fitch rating agencies. The better the City’s credit rating score, the lower the interest rate charged on the borrowing. The highest credit rating that can be attained is Triple A (AAA or Aaa). The City currently enjoys a Triple A credit rating with all of these institutions as follows:
Rating Agency
Moody's Standard & Poor's Fitch
Bond Rating
Aaa AAA AAA
Pursuant to the Constitution of Virginia, the City is authorized to issue bonds secured by a pledge of its full faith and credit and unlimited taxing power. There is no requirement in the Constitution, the Virginia Code, or the City Charter that the issuance of general obligation bonds be subject to the approval of voters of the City at referendum. The issuance of general obligation bonds is subject to a constitutional limitation of ten percent (10%) of the assessed value of taxable real property. The City’s Charter further limits the issuance of general obligation bonds to seven percent (7%) and the City’s Financial Policy further limits to four percent (4%) of the assessed value of taxable property.
Policy Target Actual Debt as percentage of assessed value 4% 1.7% Debt as percentage of general government expenditures 10% 6.4%
Utility Fund debt is subject to revenue coverage requirements in the City’s adopted financial policies. The net revenues of the Utility Fund should be at least 1.15 times the annual debt service requirement. The projected Utility Fund debt service coverage ratio for FY 2022-2023 is 1.16.
The City sometimes uses short-term obligations (e.g. Bond Anticipation Notes, Capital Leases, and Lines of Credit) to bridge the time gap between the initiation of a project/purchase and the anticipated bond issuance, when the nature of a purchase precludes the issuance of long-term debt, or when it is fiscally prudent and advantageous.
The total debt service required in FY 2022-2023 is as follows:
*General Fund **Short-Term Obligations
Route 17 Special Taxing District Fund
Public Utility Fund
Refuse Fund
Road Maintenance Fund
Stormwater Fund
Principal & Interest
*Reflects new debt for FY23 of $28,882,741. **FY23 Budget reflects $274,000 interest expense, as opposed to the $1,480,000 of required principal for Fleet and Information Technology short-term obligations. It has been the City’s practice to use a conservative approach by budgeting for the greater of depreciation or principal consistent with the financial statement presentation basis. The adopted FY 23 budget includes depreciation expenses to adequately cover the $1,480,000 of required principal for short-term obligations.
The attached schedule provides an overview of the City’s total debt service and obligations.
Principal Interest Principal Interest Principal Interest 2023 19,429,871 8,149,149 1,480,000 274,000 14,340,512 10,931,195 2024 20,568,524 7,398,016 1,030,000 200,000 14,890,512 10,385,309 2025 20,538,533 6,536,931 1,080,000 148,500 15,441,503 9,836,905 2026 20,169,037 5,865,477 1,130,000 94,500 15,900,000 9,385,583 2027 20,149,037 5,301,028 720,000 38,000 16,430,000 8,906,489 2028 20,634,037 4,701,567 40,000 2,000 16,685,000 8,399,408 2029 16,854,037 4,093,899 - - 17,180,000 7,953,867 2030 16,354,037 3,574,920 - - 17,640,000 7,498,057 2031 16,604,037 2,914,949 - - 17,910,000 7,072,722 2032 14,884,037 2,285,770 - - 18,205,000 6,646,891 2033 15,299,037 1,871,732 - - 18,725,000 6,191,919 2034 12,419,037 1,472,241 - - 19,225,000 5,689,187 2035 11,829,037 1,165,365 - - 19,835,000 5,148,581 2036 9,294,037 862,059 - - 20,430,000 4,564,188 2037 7,384,037 618,348 - - 21,045,000 3,923,157 2038 5,444,037 423,468 - - 21,760,000 3,234,496 2039 4,340,000 290,506 - - 22,405,000 2,516,026 2040 4,435,000 195,619 - - 18,060,000 1,833,492 2041 3,150,000 98,600 - - 18,830,000 1,142,996 2042 1,780,000 35,600 - - 7,275,000 665,081 2043 - - - 5,020,000 423,583 2044 - - - - 4,060,000 253,488 2045 - - - - 3,090,000 134,556 2046 - - - - 2,290,000 50,547 2047 - - - - 750,000 8,250
General Obligation Bonds Short-Term Obligations Public Utility Bonds
Total 261,559,403 57,855,242 5,480,000 757,000 367,422,528 122,795,974
Source: City of Suffolk - Debt Service - General Long-Term Debt, Suffolk Department of Finance City of Suffolk - Debt Service - Fleet Management, Suffolk Department of Finance City of Suffolk - Debt Service - Information Technology, Suffolk Department of Finance City of Suffolk - Long Term Debt Service - Utility Fund, Suffolk Department of Finance
Route 17 Special Taxing District Refuse Bonds Road Maintenance Bonds Stormwater Bonds
Principal Interest Principal Interest Principal Interest Principal Interest 110,000 41,935 160,000 8,000 1,080,962 248,929 15,000 13,363 115,000 37,155 - - 1,125,963 205,200 15,000 12,613 120,000 32,088 - - 1,175,963 158,846 15,000 11,863 125,000 26,740 - - 1,180,963 151,319 15,000 1,113 130,000 25,678 - - 1,195,963 141,784 15,000 10,363 130,000 24,313 - - 1,205,963 130,161 15,000 9,613 130,000 22,753 - - 1,220,963 115,959 15,000 8,863 135,000 18,935 - - 1,235,963 1,003,391 20,000 8,113 140,000 14,960 - - 1,255,963 84,585 20,000 7,113 145,000 10,830 - - 1,270,963 67,188 20,000 6,113 145,000 8,365 - - 1,285,963 48,082 20,000 5,113 145,000 5,755 - - 1,305,963 26,839 20,000 4,513 150,000 3,000 - 25,963 3,979 20,000 3,913 - - - - 30,963 3,135 20,000 3,313 - - - - 30,963 2,090 25,000 2,688 - - - - 30,963 1,045 25,000 2,031 - - - - - - 25,000 1,375 - - - - - - 25,000 688
Total 1,720,000 272,505 160,000 8,000 14,660,415 2,392,530 345,000 112,756
Source: City of Suffolk - Debt Service - General Long-Term Debt, Suffolk Department of Finance Source: City of Suffolk - Debt Service Schedule - RT 17 Special Taxing District, Suffolk Department of Finance City of Suffolk - Debt Service - Fleet Management, Suffolk Department of Finance City of Suffolk - Debt Service Schedule - Refuse Fund, Suffolk Department of Finance City of Suffolk - Debt Service Schedule - Road Maintenance Fund, Suffolk Department of Finance City of Suffolk - Debt Service Schedule - Stormwater Fund, Suffolk Department of Finance
Total Debt Service
Principal Interest Total 36,616,345$ 19,666,570 56,282,916$ 37,745,000$ 38,371,000$ 38,520,000$ 38,640,000$ 38,710,000$ 35,400,000$ 35,385,000$ 35,930,000$ 34,525,000$ 35,475,000$ 19,033,155 56,778,155$ 17,632,571 56,003,571$ 16,203,712 54,723,712$ 14,997,325 53,637,325$ 13,878,144 52,588,144$ 12,817,209 48,217,209$ 11,734,963 47,119,963$ 11,673,105 47,603,105$ 9,663,368 44,188,368$ 8,558,354 44,033,354$
33,115,000$ 31,860,000$ 29,775,000$ 28,485,000$ 27,260,000$ 26,770,000$ 22,520,000$ 21,980,000$ 9,055,000$ 5,020,000$ 4,060,000$ 3,090,000$ 2,290,000$ 750,000$ 7,619,268 40,734,268$ 6,654,573 38,514,573$ 5,736,845 35,511,845$ 4,791,038 33,276,038$ 3,855,920 31,115,920$ 2,940,868 29,710,868$ 2,124,686 24,644,686$ 1,338,615 23,318,615$ 763,681 9,818,681$ 459,183 5,479,183$ 253,488 4,313,488$ 134,556 3,224,556$ 50,547 2,340,547$ 8,250 758,250$
Total 651,347,345 192,589,995 843,937,341
Source: City of Suffolk - Debt Service - General Long-Term Debt, Suffolk Department of Finance City of Suffolk - Debt Service - Fleet Management, Suffolk Department of Finance
