Memo for fiscal year 2019, updated 2018-03-30

[Archived] Question #50: How does the City's Proposed 10-year (FY 2019 to FY 2028) CIP impact the City's outstanding debt?


How does the City’s Proposed 10-year (FY 2019 to FY 2028) CIP impact the City’s Outstanding Debt?


The Proposed 10-year CIP contemplates, as a result of projected capital projects, an increase in the total outstanding debt from $680 million to $1.152 billion. While this appears to be a substantial increase that will have major impact on the City’s General Fund, that is not the case. The reason behind the increase is the net increase of $186.4 million in Sanitary Sewer Fund fee supported debt (much of which AlexRenew will likely issue as part of their proposed work on CSO 001-004), a net $27.0 million increase in Storm Sewer Fund supported debt, and a $201 million net increase in self-supporting Potomac Yard debt. If one sets that aside, that leaves a net increase in General Fund supported debt of just $58.0 million, which is an 8.8% increase over the current outstanding debt of $652.5 million. 

On a present value basis1, using the Proposed CIP debt issuance plan, the City’s net outstanding debt (in today’s dollars) will actually drop by 16.6% to $544.2 million. The reason for this drop, given the large dollar amount of the CIP, is due to the fact that the CIP is funded by 48.5% cash-source funding, as well as continuation of the City’s aggressive debt repayment practices. Attachment I depict these calculations. 

1. This assumes an annual inflation rate of 3%, which is the same rate used to inflate out year capital project cost estimates.


Attachment I - Outstanding Debt Forecast

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