Comprehensive Annual Financial Report 2020

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VII. LONG-TERM DEBT Long-term debt activity for the year ended September 30, 2020, was as follows: Beginning Refunded/ Ending Amount Due Balance Issued Retired Balance Within One Year Governmental activities: Bonds payable: General obligation bonds $ 3,770,000 $ 1,830,000 $( 265,000) $ 5,335,000 $ 345,000 Certificates of obligation 13,700,000 - ( 2,410,000) 11,290,000 375,000 Certificates of obligation (private placement) 449,000 - ( 43,000) 406,000 41,000 Revenue bonds - 8,670,000 ( 115,000) 8,555,000 355,000 Revenue bonds (private placement) 2,937,000 - ( 497,000) 2,440,000 751,000 Tax notes 287,000 - ( 147,000) 140,000 140,000 Tax notes (private placement) 733,000 773,000 ( 296,000) 1,210,000 182,000 Less deferred amounts: Underwriter's discount ( 669) - 669 - - Issuance premium 814,297 250,331 ( 38,091) 1,026,537 - Total bonds payable 22,689,628 11,523,331 ( 3,810,422) 30,402,537 2,189,000 Note payable 866,062 - ( 866,062) - - Compensated absences 740,824 542,530 ( 528,380) 754,974 188,744 Total governmental $ 24,296,514 $ 12,065,861 $( 5,204,864) $ 31,157,511 $ 2,377,744 Business-type activities: Bonds payable: General obligation bonds $ 13,925,000 $ 5,330,000 $( 6,855,000) $ 12,400,000 $ 1,050,000 Certificates of obligation 2,330,000 - ( 83,000) 2,247,000 84,000 Certificates of obligation (private placement) 1,077,000 - ( 178,000) 899,000 183,000 Tax notes 73,000 - ( 65,000) 8,000 8,000 Tax notes (private placement) - 411,000 - 411,000 65,000 Less deferred amounts: Underwriter's discount ( 2,966) - 2,966 - - Issuance premium 597,423 631,866 ( 47,635) 1,181,654 - Total bonds payable 17,999,457 6,372,866 ( 7,225,669) 17,146,654 1,390,000 Compensated absences 18,376 22,408 ( 7,912) 32,872 8,218 Total business-type $ 18,017,833 $ 6,395,274 $( 7,233,581) $ 17,179,526 $ 1,398,218 Bond Reserve Fund For the Industrial Development Corporation's 2004 Sales Tax Revenue Refunding bonds, this section requires maintaining in the reserve fund the lesser of: (i) the maximum annual principal and interest requirement of the Bonds; (ii) 1.25 times the average annual principal and interest requirement of the Bonds; or (iii) 10 percent of the aggregate proceeds of the Bonds. This fund shall be used to pay principal of and/or interest on these bonds falling due at any time when moneys in the interest and sinking fund are insufficient for such purpose and to retire the last of the bonds that are outstanding. Total amounts required to be restricted compared to actual funds for the Industrial Development Corporation's bonds are as follows: Required at Actual at Excess or 9/30/2020 9/30/2020 (Deficiency) Interest and Sinking: Sales Tax Revenue Refunding Bonds Series 2014 - Industrial Development $ 11,309 $ 11,537 $ 228 Series 2015 - Industrial Development 48,249 58,686 10,437 Total $ 59,558 $ 70,223 $ 10,665 Bond Reserve: Sales Tax Revenue Refunding Bonds Series 2014 - Industrial Development $ 76,000 $ 76,000 $ - Series 2015 - Industrial Development 335,000 340,836 5,836 Total $ 411,000 $ 416,836 $ 5,836 33
Certificates of Obligation The City issues Certificates of Obligation to provide for the acquisition and construction of major capital facilities. Sales Tax Revenue Bonds In the current year, the City issued Sales Tax Revenue Bonds, Series 2019A and 2019B in the amounts of $2,990,000 and $5,680,000, respectively. The 2019A bonds carry interest rates of 2.75-3.00% and mature in fiscal year 2038. The 2019B bonds carry interest rates of 2.10-3.35% and mature in fiscal year 2040. The proceeds of the bonds will be used for the construction, improvement, and expansion of streets, roads, sidewalks, parks, land and drainage and utility infrastructure to promote new or expanded business development. Tax Notes The City issues tax notes to provide funds for the acquisition of equipment. Tax notes have been issued for both governmental and business-type activities. Tax notes are direct obligations and pledge the full faith and credit of the government. In the current year, the City issued Tax Notes, Series 2020, in the amount of $1,184,000. The notes carry an interest rate of 1.80% and mature in fiscal year 2026. The proceeds will be used for the purchase of materials, supplies, vehicles and equipment for the City. General Obligation Bonds The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities. General obligation bonds are direct obligations and pledge the full faith and credit of the government. Current Refunding In the current year, the City issued General Obligation refunding bonds, Series 2020, in the amount of $7,160,000. The bonds carry an interest rates 3.00% and mature in fiscal year 2030. The proceeds from issuance were used to refund Certificates of Obligation, Series 2010; General Obligation Refunding Bonds, Series 2010; Certificates of Obligation, Series 2013; and General Obligation Refunding Bonds, Series 2013. The net proceeds (including a $848,811 premium after payment of bond issuance costs) were used to refund the old debt. As a result, a portion of these bonds have been removed from the statement of net position. The current refunding reduced the City’s total debt service payments by $1,007,437 and produced an economic gain (difference between the present values of the debt service payments on the old and new debt) of $915,153. Compensated Absences The compensated absence liabilities are generally liquidated by the General, Utility, and Storm Water Funds depending on the assignment of an employment at termination. Other Information Should the City default on its outstanding bonds, any registered owner of the certificates is entitled to seek a writ of mandamus from a court of proper jurisdiction requiring specific performance from the City. 34
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City of Red Oak, Texas Comprehensiv
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Required Supplementary Information
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Comprehensive Annual Financial Report 2020

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