CERTIFIED - City of Deltona, Florida

Budget Summary - Narrative
City of Deltona, Florida
DEBT
In February 2007, the Financial Planning Policies were approved. The policy provides a general
framework of guidance for debt issuance and debt management, while providing flexibility to permit
the City to take advantage of market opportunities and to respond to changing conditions without
jeopardizing essential public services. The City Charter and State law require that general obligation
debt or debt pledging property taxes (ad valorem revenue) will only be issued after an affirmative
vote of the electors of the City. However, the City Commission can authorize and issue revenue
bonds pledging non ad valorem revenues, consistent with the City’s debt policy.
In November 2003, the City issued $81,725,000 of Utility System Revenue Bonds, Series 2003, for
the purpose of acquiring and making capital improvements to the City’s Water and wastewater
system. The bonds are insured and have been assigned a A rating from Standards and Poor’s
Corporation, a A1 from Moody’s Investor Service, and a A+ from FITCH on each bond issue.
On July 12, 2006, the City issued $18,240,000 of Transportation Capital Improvement Revenue
Bonds, Series 2006 for the purpose of improving existing roads within the City. The bonds are
insured and have been assigned a A rating from Standards and Poor’s Corporation, a A1 from
Moody’s Investor Service, and a A+ from FITCH on each bond issue.
In April of 2006, the City entered into an Option to enter into an interest rate swap (swaption). Put
simply, an interest rate swap is the exchange of one set of cash flows for another set of cash flows
over time based on interest rate specifications. The City approved and entered into a contract with a
swap provider to grant an option to have the City issue variable rate bonds on or about October 1,
2013, at which time $67.75 million of the 2003 Utility Bonds should be outstanding, to refund the
2003 Utility Bonds in exchange for an upfront payment of $3,206,837 estimated to be equal to the
estimated present value savings the City would achieve as a result of such a refunding. Should the
swap option be exercised in 2013, the City would either; 1) issue the variable rate bonds at which
time the swap provider would pay the City an agreed to variable interest rate, and the City would pay
the swap provider an agreed to fixed interest rate or; 2) the City would have to pay the swap provider
a termination payment to cancel the right.
On April 8, 2009, the City entered into a loan agreement with Branch Banking and Trust Company
for $6,569,345 for stormwater capital projects and has budgeted for debt service payments
accordingly.
In FY 10/11, the City anticipates issuing additional Utility System bonds or bank notes to finance
water and wastewater capital projects. Capital outlay and debt service has been budgeted
accordingly.
The City has no general obligation debt.
SOUND PUBLIC STEWARDSHIP
The preparation of the budget involves a variety of challenges and difficult decisions. Our efforts in
preparing this budget were guided by a commitment to long-term, sound public stewardship
practices. The City operates within a complex financial environment and is dedicated to strong
financial management of the public’s resources. This is especially critical when there is everincreasing
pressure to realize greater productivity with fewer dollars. The City’s primary focus is
current and future financial stability through projection of future impacts of current decisions.
10/11 Annual Budget
71 Adopted - 9/20/2010