what is city and county of s.f debt service
The City and County of San Francisco is at the heart of the San Francisco Bay Area's finances. It must carefully manage its public debt to fund important projects. But how does the city's debt service, or regular payments to repay loans, work? This article dives into the complex world of San Francisco's debt, explaining the processes, policies, and effects on the city's finances.
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| what is city and county of s.f debt service |
Key Takeaways
- San Francisco budgeted $646 million for debt service payments in fiscal year 2023-2024.
- The city's outstanding general obligation bonds total $2.2 billion, about 0.6% of the city's assessed value.
- San Francisco's debt service costs depend on the total borrowed amount, interest rate, and repayment period, usually 20 to 30 years.
- The city's overall net debt ratio is around 2.5%, well within the 3% Charter-imposed limit.
- Citizen oversight committees and transparency measures ensure accountability in the city's debt management practices.
Understanding San Francisco's Debt Service Fundamentals
San Francisco's debt service is key to its financial health. It covers the city's bond payments, both principal and interest. In 2023-2024, the city budgeted $646 million for these payments, showing its big financial duties.
Definition and Basic Components
Debt service means the government's payments to its bondholders. This includes money for general obligation bonds and revenue bonds. In the last fiscal year, San Francisco's property tax rate for debt was 17.77 cents per $100 of assessed value.
Role in Municipal Finance
Debt service is vital for San Francisco's financial planning. It lets the city borrow money for important projects like schools and roads. Managing this debt helps keep the city's credit strong and access to funds affordable.
Key Stakeholders and Management
Managing San Francisco's debt involves several groups. The Controller's Office of Public Finance, the Finance Corporation, and the Citizens' General Obligation Bond Oversight Committee all play parts. They work together to set and follow debt policies, aiming for smart borrowing.
| Stakeholder | Role |
|---|---|
| Controller's Office of Public Finance | Responsible for managing the city's debt portfolio and ensuring compliance with legal and policy requirements |
| Finance Corporation | Plays a key role in issuing and structuring municipal bonds on behalf of the city |
| Citizens' General Obligation Bond Oversight Committee | Provides independent oversight and monitoring of the city's general obligation bond program |
Bond Financing: The Primary Funding Mechanism
The City and County of San Francisco mainly uses bond financing for big projects. By selling bonds, the city gets the money it needs for things like libraries, hospitals, and schools. This helps improve and build essential infrastructure.
San Francisco uses different types of bonds for these projects. These include general obligation bonds, lease revenue bonds, certificates of participation, and capital leases. Each bond has its own purpose and helps the city manage its finances well.
General obligation bonds are backed by the city's promise to pay. Lease revenue bonds are paid back from specific income. Certificates of participation are for projects that save money or address urgent needs.
The city makes sure it doesn't borrow too much. It aims to keep bond issuances low. This policy helps keep debt manageable and protects taxpayers. The city updates its debt policy regularly, with the last change in October 2019.
| Debt Instrument | Purpose |
|---|---|
| General Obligation Bonds | Financing the acquisition, improvement, and construction of real property |
| Lease Revenue Bonds | Financing projects with an identified budgetary stream for repayment, revenue-generating projects, or equipment installations for general governmental purposes |
| Certificates of Participation | Financing projects that result in immediate or future savings, projects matched with grants, addressing critical public safety hazards, or delivering services mandated by law |
| Capital Leases | Financing capital equipment and personal property with individual costs over $100,000 or aggregated costs in systems exceeding $100,000 and with a useful life exceeding three years |
Types of Municipal Bonds in San Francisco
The City and County of San Francisco uses three main types of municipal bonds. These are General Obligation Bonds, Revenue Bonds, and Certificates of Participation. Each type has its own purpose and meets the city's different financing needs.
General Obligation Bonds
General Obligation Bonds (GO Bonds) are backed by the City's full faith and credit. They need voter approval and are repaid through property taxes. By June 30, 2024, there was $2.2 billion in outstanding GO Bonds.
San Francisco's GO Bonds are highly rated. Moody's gave them an Aa1 rating, S&P an AA+, and Fitch an AA rating.
Revenue Bonds
Revenue Bonds finance projects that make their own money, like public utilities and transportation. They are repaid from the project's revenue, not the city's taxes. For example, the Municipal Transportation Agency used Revenue Bonds for transportation upgrades.
Moody's rated these bonds Aa2, and S&P gave them an AA rating.
Certificates of Participation
Certificates of Participation (COPs) are a lease-financing option for the city. They fund projects that save money in the future. COPs are secured by lease payments and don't need voter approval.
San Francisco has used COPs for affordable housing, neighborhood improvements, and energy upgrades.
These three bond types help the City and County of San Francisco finance its needs. They ensure the city's strong credit and careful money management.
Current Debt Situation and Fiscal Management
The City and County of San Francisco has a low debt burden. It has $2.2 billion in outstanding general obligation bonds as of June 30, 2024. This is about 0.6% of the city's assessed value for fiscal year 2024-25. There's also $1.6 billion in authorized but unissued bonds. If issued, this would increase the total debt to 1.1% of the assessed value.
San Francisco's net debt ratio is around 2.5%. This is the sum of the city's net direct debt and overlapping debt as a percentage of the city's assessed value. A ratio higher than 10% could hurt a city's bond rating, while a ratio lower than 3% could help.
The city follows a comprehensive fiscal policy framework for managing its debt. Voters must approve the purpose and amount of money borrowed through bonds. This adds an extra layer of accountability and ensures bond proceeds are used as approved.
San Francisco's effective debt management and prudent fiscal practices have kept its credit rating strong. This allows the city to borrow money at favorable interest rates. The city's approach to public finance supports its long-term needs while ensuring fiscal sustainability and responsible use of taxpayer resources.
| Metric | Value |
|---|---|
| Outstanding General Obligation Bonds (as of June 30, 2024) | $2.2 billion |
| Authorized but Unissued Bonds | $1.6 billion |
| Total Debt Burden (if all bonds issued) | 1.1% of assessed value |
| Overall Net Debt Ratio | Approximately 2.5% |
| S&P Rating Threshold (Negative Impact) | Higher than 10% |
| S&P Rating Threshold (Positive Impact) | Lower than 3% |
The City and County of San Francisco's San Francisco county debt financing and San Francisco public debt management practices show a commitment to fiscal responsibility. They ensure the city can meet its needs while keeping a strong credit profile.
Legal Debt Limitations and Compliance
San Francisco's government keeps a close eye on its debt. This is to follow legal limits and stay financially strong. The City Charter sets a limit on general obligation bonds. It can't have more than 3% of the property value in bonds, which is about $10.6 billion now.
By June 30, 2024, the city's bonds were only 0.6% of the property value. The debt team also looks at the net debt ratio. This helps keep the city's credit ratings high.
Charter Imposed Limits
The City Charter's debt limit is a safety net. It keeps San Francisco government debt service payments in check. This rule helps the city manage its finances well and stay stable in the long run.
Regulatory Framework
- Up to 5,842 units of affordable housing are planned to be developed, repaired, renovated, or reconstructed for low-, moderate-, extremely low, and very low-income households in San Francisco.
- Rental units will be affordable for a minimum of 55 years, while owner-occupied units will remain affordable for at least 45 years.
- Bonds issued may be sold through negotiated or competitive sales.
- The agency may subordinate payments to be made to affected taxing authorities for San Francisco debt service fund payments if approved by the taxing entities.
- Legal challenges against the issuance of bonds by the agency must be brought within 30 days of oversight board approval.
- All actions related to debt issuance under this section are subject to oversight board approval as per Section 34180.
By following these rules and managing its San Francisco government debt service payments well, the city meets its financial duties. It also keeps its finances stable and its credit ratings strong.
What Is City And County Of S.F Debt Service Payment Structure
The City and County of San Francisco has a smart way to handle its debt payments. San Francisco debt restructuring and San Francisco debt refinancing are key parts of the city's financial plan. They help reduce risk and make the debt portfolio better.
The city issues bonds that last from 20 to 30 years. These bonds are paid back with both principal and interest to the bondholders. The total cost of debt service depends on how much is borrowed, the interest rate, and how long it takes to pay back.
For general obligation bonds, payments come from property taxes on San Francisco homes. Revenue bonds are paid back with money from the projects they fund.
| Debt Instrument | Repayment Source |
|---|---|
| General Obligation Bonds | Property Taxes |
| Revenue Bonds | Project-Specific Revenues |
| Certificates of Participation | Lease Payments from City Departments |
The city's debt plan is designed to reduce risk and improve the debt portfolio's overall risk. This strategy ensures San Francisco's debt payments are manageable and affordable for the long term.
Debt Service Cost Analysis and Budget Impact
The cost of San Francisco's debt service is key in the city's financial management. It includes regular payments for the city's debt obligations. Factors like interest rates and inflation affect these costs.
With an average interest rate of 6%, the cost to pay off debt over 20 years is about $1.74 for each dollar borrowed. But, inflation reduces this cost over time. The city aims to keep moderate debt and debt service levels through careful planning and coordination.
Interest Rate Considerations
Interest rates are crucial in the cost of San Francisco's municipal debt. The city closely watches and manages these rates. This ensures debt service costs fit within the budget. The city also plans for how interest rate changes might affect the budget.
Long-term Financial Planning
The City and County of San Francisco does detailed long-term financial planning for debt service costs. This planning balances debt service with other financial needs. The goal is to manage city's debt obligations sustainably, without harming the city's finances.
| Key Metrics | Projected Figures |
|---|---|
| General Fund ending balance | $494.1 million |
| Citywide revenue shortfall | $103.7 million |
| Departmental net operating surplus | $198.0 million |
| Expenditure savings and additional revenues | $96.4 million |
Citizen Oversight and Transparency Measures
In San Francisco, strong oversight and transparency are key. They help manage public finance, bond issuance, and debt management well. This lets residents watch how their money is spent on important projects and services.
The Citizens' General Obligation Bond Oversight Committee (CGOBOC) is at the heart of this system. It has nine members chosen by the Mayor, Board of Supervisors, Controller, and Civil Grand Jury. They check how bond funds are used and report back to voters.
If they find money is being used wrong, the committee can ask for changes. The Board of Supervisors can disagree with the CGOBOC, but needs a big majority vote. The City Controller also checks bond spending to make sure it follows what voters agreed to.
These steps show San Francisco's dedication to good money management. They help build trust and make sure everyone's money is used wisely. This way, the city can serve everyone better.
Property Tax Impact and Assessment
Property taxes are key in San Francisco's debt repayment, mainly for general obligation bonds. In 2023-2024, the net property tax rate was 17.77 cents per $100 of assessed value. This means a home worth $700,000 would pay about $1,231, with a $7,000 homeowner's exemption.
The city's goal is to keep new bond tax rates below 2006 levels. This is done by retiring old bonds and growing the tax base.
Tax Rate Calculations
The property tax rate in San Francisco depends on the property's value and debt repayment needs. Proposition 13, passed in 1978, limits annual property value increases to 2%. This means long-time owners often pay less than new buyers.
The California State Board of Equalization (BOE) ensures fair and equal assessments.
Property Owner Obligations
San Francisco property owners must pay their share of municipal bond debt through property taxes. The maximum tax rate is one percent of the property's value, with a two percent annual increase. Homeowners may get exemptions, like the $7,000 homeowner's exemption, to lower their taxes.
It's important for San Francisco residents to understand these tax obligations and assessment practices. This helps them plan their finances better.
Some Questions and Answers:
What is City and County of S.F debt service?
City and County of San Francisco debt service is about paying back money borrowed for projects. This includes things like fire stations, affordable housing, and parks. It's a long-term plan to improve the city.
How does San Francisco's debt service work?
San Francisco's debt service covers payments on bonds. In 2023-2024, the city set aside $646 million for these payments. The property tax rate for debt was 17.77 cents per $100 of assessed value.
What are the key stakeholders involved in San Francisco's debt service?
Important groups include the Controller's Office of Public Finance and the Finance Corporation. The Citizens' General Obligation Bond Oversight Committee also plays a role. Their goal is to manage debt effectively.
What is the primary method for San Francisco to raise money for capital projects?
Bond financing is the main way San Francisco funds projects. The city sells bonds to investors and pays them back over 20 to 30 years.
What are the main types of bonds issued by San Francisco?
San Francisco issues three main bond types: General Obligation Bonds, Revenue Bonds, and Certificates of Participation.
What is the current debt situation in San Francisco?
As of June 30, 2024, San Francisco had $2.2 billion in outstanding bonds. This is about 0.6% of the city's assessed value for 2024-25. The city's debt ratio is around 2.5%, showing a low debt burden.
What are the legal debt limitations for San Francisco?
The City Charter limits general obligation bonds to 3% of taxable property value. This is currently about $10.6 billion.
How is San Francisco's debt service payment structure?
San Francisco repays bonds over 20 to 30 years. Payments include both principal and interest, based on the borrowed amount, interest rate, and repayment period.
How does the cost of debt service for San Francisco vary?
The cost of debt service varies with interest rates and inflation. With a 6% interest rate, the cost is about $1.74 for each dollar borrowed. But inflation can lower this cost.
What citizen oversight and transparency measures are in place for San Francisco's debt service?
San Francisco has measures like the Citizens' General Obligation Bond Oversight Committee. They review and report on bond spending.
How do property taxes impact San Francisco's debt service repayment?
Property taxes are key for repaying general obligation bonds in San Francisco. In 2023-2024, the net property tax rate for debt was 17.77 cents per $100 of assessed value.