The analysis of the total capital projects operating costs impact highlights the need for strategic decision-making that ties in with short-term objectives and long-term sustainability. Thoroughly examining the financial impacts of capital projects on the operating budget underscores the importance of responsible allocation to avoid potential strains on daily operations. This assessment empowers the City's decision-makers to make well-informed decisions that are in line with the City's strategic objectives while ensuring the continuous delivery of vital services to the community.
Regarding Long-term debt, the City will make timely payments for all debt outstanding. It will strive to maintain an underlying issuer's credit rating of no less than Aa3 (dependent on the credit rating agency). General Obligation Bonds may be issued as prescribed by law. Revenue Bonds or Notes may be used to fund major capital purchases or construction projects, but such financing shall be no more than 30 years. The City will not issue long-term debt to refinance current operations. Refinancing will be considered when it is economically beneficial to do so. The City has been unable to sell three Downtown parcels for a reasonable price, and in FY2026 the City refinance the CRA balloon loan, issued in 2020.
Regarding short-term debt/leases, debt for less than five-year periods shall be avoided, unless a debt mechanism is in place that provides decreased costs of issuance. Leases or lease purchases are allowed when the total costs of the lease and maintenance are less than the total costs of the purchase and maintenance or if there are other special factors to be considered.
Interfund loans are also permitted unless otherwise prohibited by law. In such cases when interfund loans are made, interest will be paid to the loaning fund equal to the interest it would have received under the normal investment performance of the City's cash management program.
The City currently has two State Revolving Fund Loan issues, a Water and Sewer Revenue Bond, a Community Development Bank Note, a Water & Sewer Bank Note, and both a loan and a lease for fire equipment:
State Revolving Fund Loans 350300 and 350302 - These loan agreements with the Florida Department of Environmental Protection are secured by water and sewer revenue. The original loan amounts totaled $5,557,247 and were used for wastewater plant upgrades in compliance with Environmental Protection Agency nitrification regulations. The interest rates range from 1.28% to 1.46%, and both loans extend through FY2031/32. Debt service payments are being made from the City's Sewer Impact Trust Fund. The remaining balance for notes payable SRF 350300 and 350302, at the end of FY 2025 was $2,122,710. The bond rating is at the lowest risk investments: AAA by Standard & Poor's.
Series 2016 Water & Sewer Utility Revenue Bond – This issue of $8,184,691 provides funding for the City's Water and Sewer Capital Improvement Plan Implemented in October of 2016. It is secured by utility system revenues with an interest rate of 3.21% and has a maturity date of October 2036. Debt service payments are being made from the City's Water and Sewer Revenue Fund. The principal balance at the end of FY2025 was $4,925,000 with an unamortized bond premium balance of $323,646. The bond rating is at the lowest risk investments, AAA by Standard & Poor's.
CRA Loan 2020 – In September of FY 2020, the City’s Community Redevelopment Trust Fund secured financing of $3,000,000 with USB Bank for the purchase of three large lots in Downtown Eustis. The five-year financing balloon loan is at a fixed interest rate of 2.875%. Principal balance at the end of FY 2025 was zero. The balloon payment was due in September 2025 and was repaid. The bond was refinanced in October 2026.
The City of Eustis currently has no legal debt limitations imposed on its ability to borrow funds.
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