VII.3. Debt Update; Bishop
CITY OF HOPKINS
Memorandum
To: Honorable Mayor and Council Members
Mike Mornson, City Manager
From: Nick Bishop, Finance Director
Date: May 3, 2022
Subject: Debt Update
_____________________________________________________________________
PURPOSE
To provide an overview and update related to the City’s Debt.
INFORMATION
The City of Hopkins issues debt for infrastructure (roads, water, sewer and storm
sewer) and large scale equipment (fire trucks and garbage trucks, among others) with a
lifespan at least equal to the length of the debt (in most cases much longer). Despite
the lifetime of the infrastructure being decades long, the average city debt is issued for
only 15 years, which reduces the amount of interest paid.
The City has been focusing on projects to reconstruct streets, and ensuring our
infrastructure is prepared for Southwest Light Rail and the development expected from
the significant change projected for the community.
All streets in Hopkins are planned to be reconstructed by 2030. Continuing this program
and annual street surface improvement projects ensures the future preservation of our
roadways and helps maintain the quality of life Hopkins residents have come to expect.
As of May 3rd 2022, the City of has $53,396,300 of Tax Levy-supported debt. The City
also has $18,683,700 of debt paid by Utility Revenues and $9,940,000 of debt paid by
Tax Increment Financing (TIF). Total debt outstanding is $82,020,000.
Finance Department
83% of the City’s outstanding debt will be paid off within the next 10 years. The City
would pay off all existing debt in 2038. The following chart shows the total amount of
debt outstanding as of December 31st of each year:
Future debt issuances would be needed to reconstruct all City streets by 2030.
Projected payments roughly equal the same amount as planned issuances over the
next several years. Total outstanding debt would remain the relatively stable between
2022 and 2026. The following chart shows the total existing and planned debt
outstanding as of December 31st of each year.
The debt planned in future periods would be paid for with tax levy, special assessments
and user charges for water, sewer and storm sewer. The following chart shows the
projected debt levies required to continue the pavement management program as
included in the 2022-2026 Capital Improvement Plan.
FUTURE ACTION
City Council will review a preliminary version on the Financial Management Plan (FMP)
on June 14th. The FMP is a multi-year fiscal plan for all tax supported funds. The FMP
will include existing debt, future debt, Capital Improvement Plans, Equipment
Replacement Plans, tax base growth, TIF de-certifications and projected operating
expenses.
2022 2023 2024 2025 2026 2027
Current Debt 4,003,044 3,911,255 3,896,932 3,916,482 3,726,313 3,583,232
West Central Avenues - - 185,000 185,000 185,000 185,000
2023 Project
Central Avenues (3 year project)- - - 295,000 295,000 295,000
2024 Project
Central Avenues (3 year project)- - - - 300,000 300,000
2025 Project
Central Avenues (3 year project)- - - - - 305,000
2026 Project
Total Debt Levy 4,003,044 3,911,255 4,081,932 4,396,482 4,506,313 4,668,232
Increase (Decrease)(2.57%) (2.29%) 4.36% 7.71% 2.50% 3.59%
Levy Year
Projected Debt Levy Based on 2022-2026 Capital Improvement Plan