Budget Message / Highlights - Metropolitan Water Reclamation ...

METROPOLITAN WATER RECLAMATION DISTRICT OF GREATER CHICAGO
FINANCIAL NARRATIVE (continued)
BOND SALES
The District's Capital Program is financed primarily with general obligation bond
sales. Bond sales are used to provide necessary revenue for capital project cash
flows. In May of 2006, $346.6 million in unlimited bonds and $50.8 million in
limited bonds were sold and used to refund variable rate bonds of June 2002. An
additional $100 million unlimited bonds and $250 million limited bonds, were
sold and the sale completed in July 2006. In March of 2007, $280.1 million in
unlimited bonds were sold and used to refund variable rate bonds of December
2002 and $101.9 million in limited bonds were sold to refund bonds of July
2006. Another bond sale is not anticipated to be necessary until 2009.
Tax cap laws restrict the District’s non-referendum bond authority to funding
projects initiated prior to October 1, 1991, which generally include only
TARP projects. However, Public Act 89-385 provided additional nonreferendum
authority to the District to authorize the issuance of “limited
bonds.” In 1997, Public Act 90-485 was adopted that expands this “limited
bond” authority by excluding bonds issued for TARP purposes from the tax
extension limitation. The District’s limited bonds have sold successfully and
will be used in the future. In 2003, Public Act 92-143 was passed to authorize
the issuance of 30 year bonds and Public Act 92-726 extended the nonreferendum
bonding authority from December 31, 2006 to December 31,
2016.
The Capital Funds narrative on page 97 provides a more detailed discussion.
The statement of outstanding bonds and statutory debt margin on page 60
shows the District's strong position. The Five-Year Financial Forecast on
pages 66 and 74 details future bond sale projections. Bond sales are
summarized in Exhibit 3.
PROPERTY, SERVICES, and MISCELLANEOUS
Exhibit 4 summarizes revenue from property, services and miscellaneous
items. A major revenue source is a user charge system, which imposes a
surcharge above property tax payments for commercial, industrial and taxexempt
users of the sewage systems. Estimated user charge revenues in 2009
are $49.3 million.
Land rentals, investment income, sewer permit fees, connection impact fees,
and other revenues will provide an estimated $42.7 million in 2009. Estimates
for land rental revenues are based on existing and renegotiated leases.
Investment income is based on projections of cash flow and interest rates for
2008. Interest rates on short-term securities are expected to remain stable or
decrease through 2008. Our investments are predominately short term in
nature. Sewer permit revenue estimates are based on anticipated development
projects and 2008 rates. Connection impact fees were established in 1998 to
require new service areas to contribute to the past investment in the District’s
infrastructure.
NET ASSETS APPROPRIABLE
Exhibit 5 shows the trend in net assets appropriable which is primarily
impacted by bond sales, expenditures for capital projects, and the reservation
of future years’ principal and interest payments in the debt service funds. Net
assets appropriable have been used to reduce future years’ taxes. Beginning in
2004, a portion of the projected Corporate Fund net assets was left
unappropriated to maintain a fiscally sound fund balance. The negative
amount in 2009 is because the obligation basis of budgetary accounting is
used for the Capital Improvements Bond Fund and indicates that future bond
sales will be necessary to finance projects.
2009 BUDGET
Exhibit 3
Million
$400
Bond Sales
$350
$300
$250
$200
$150
$100
$50
Unlimited Limited
$0
2007 2008 2009 2010 2011
Projected ---------------------------
Exhibit 4
Millions
Property, Services & Misc.
$160
$140
$120
$100
$80
$60
$40
$20
$0
2005 2006 2007 2008 2009
Estimated Projected
Exhibit 5
Millions
$900
$700
$500
$300
$100
-$100
Net Assets Appropriable
2005 2006 2007 2008 2009
Estimated Projected
79
79