Local Government Water and Wastewater Debt in North Carolina

3/26/2014

Local Government Water and

Wastewater Debt in North Carolina

Jeff Hughes

Environmental Finance Center at the University of North Carolina

efc.unc.edu

Housed at the UNC

School of Government.

Dedicated to enhancing

the ability of governments

and other organizations to

provide environmental

programs and services in

fair, effective and

financially sustainable

ways.



1

3/26/2014

Presentation Overview

? Share findings of recent debt study

2

3/26/2014

Paying for the Big Stuff

?

?

?

?

Someone else pays (grants)

Save and pay later (reserve funds)

Pay as you go

Borrow and pay it back later

Debt and Debt Trends in NC

? Local government utility debt has been

increasing steadily over time:

¨C $6.7 billion outstanding debt in 2008

¨C $8.1 billion outstanding debt in 2013

In 2013, local NC governments had $32 billion

of outstanding debt for all capital

3

3/26/2014

Characterizing Debt

? By collateral/securitization method

? By funder

? By borrower

Types of Utility Debt

? General Obligation

¨C Requires a majority vote in a bond

referendum

¨C Sold as general obligation bonds on the

commercial capital markets

¨C Utilities issuing general obligation debt pledge

their tax raising authority

¨C Most utilities rely on revenues from rates to

retire debt, even if they have legally pledged

their tax authority

4

3/26/2014

Types of Utility Debt

? Revenue Bonds

¨C The security behind this type of debt consists

of the utilities¡¯ legal authority to generate (and

if needed raise) user fees and rates

¨C Utilities pledge their rate setting authority

¨C This type of debt is becoming more common

as utilities increasingly turn away from

general obligation debt

Types of Utility Debt

? Installment Purchases

¨C Utilities are allowed to pledge their assets as

security for loans

¨C More typical for smaller utilities

¨C May interfere with ability to use other types of

debt in the future

5

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download