Debt-to-income (DTI) ratio is a financial metric that compares the amount of debt the City has compared to its overall income. It provides an indication of the City's financial health and its ability to manage and repay its debt obligations based on its income sources.

A higher DTI indicates a larger amount of debt relative to income, which can be a sign of financial strain and potential challenges in meeting debt repayment requirements. Conversely, a lower DTI ratio indicates a healthier financial position with a more manageable level of debt compared to income.

The City’s DTI ratio is an important consideration for lenders, investors, and credit rating agencies when evaluating the City’s creditworthiness and financial stability. A lower DTI ratio helps when evaluating the City’s borrowing capacity and its ability to take on additional debt for capital projects or infrastructure improvements.

Maintaining a healthy DTI ratio is crucial for the City's long-term financial sustainability. It ensures that the City can meet its debt obligations while continuing to provide essential services and invest in its growth and development. Monitoring and managing the City's DTI ratio is essential for prudent financial planning and responsible fiscal management.

The City of Eustis Community Redevelopment Agency held a five-year loan with a balloon payment due September 2025. The loan was paid off in September and refinanced in October 2025. The outstanding balance at the end of FY2025 is zero, however the refinanced balance will be reported in the FY2026 Annual Comprehensive Financial Report.

See Table 11 for the City's debt obligation as of September 30, 2025. The revenue is from the FY2025 Annual Comprehensive Financial Report (ACFR), MDA section.

DTI = (Total Overall Debt Service / Total Annual Revenue FY) *100 (7,047,710 / 48,698,650) *100 = 14.47%

The City’s present Debt-to-Income (DTI) ratio is 14.47% and falls well below the City’s policy of a DTI range of 28-36%. This range is considered healthy and financially sound.

Borrowing capacity refers to the maximum amount the City can borrow to finance various projects, initiatives, or infrastructure improvements. It represents the available financial resources that the City can utilize for debt to invest in its development and continue to meet its financial obligations.

The borrowing capacity of the City is determined by several factors, including its financial stability, revenue sources, existing debt obligations, creditworthiness and legal constraints. It is typically evaluated based on various financial ratios and guidelines set by regulatory bodies or financial institutions.

A higher borrowing capacity indicates that the City can access more funds for capital investments or public projects. This enables the City to undertake essential infrastructure improvements, fund public services, stimulate economic growth or address urgent community needs. Proper financial planning, debt management strategies, and monitoring of the City's financial health are crucial to maintaining a healthy borrowing capacity and ensuring the City's long-term financial well-being.

The City currently has a borrowing capacity of $3,558,875, equivalent to $355,887 per year for the upcoming ten-year period. This borrowing capacity is determined using the formula:

Borrowing Capacity = (Total Annual Revenue * Debt-to-Income Ratio) - Total Annual debt Service.

Based on the City's financials (ACFR) for FY 2024/25, with a total revenue of $48,698,650, a

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