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2 <br /> million to $1.1 billion. Woolpert is recommending an option that would require $1 billion in capital <br /> investment over the next 15 years. <br /> County staff has worked with the County's financial advisors to determine alternative plans of <br /> finance that would be needed to fund the various options. This presentation details the debt <br /> metrics that are used to evaluate the amount of debt the County carries, the revenue and <br /> expenditure assumptions contained in the debt model, and the tax rate and debt policy <br /> implications of the options presented by Woolpert. <br /> Debt Metrics <br /> As credit rating agencies evaluate the County's financial condition, they examine three primary <br /> metrics related to the amount of debt the County is obligated to pay. <br /> • Ten Year Payout Ratio <br /> This metric measures the amount of principal to be paid in the next ten-year period to <br /> prevent backloading debt payments. One rating agency adds a positive adjustment if the <br /> ten-year payout ratio is 65% or greater. This means that 65% of outstanding principal <br /> payments are paid within ten years. The County's current payout ratio is 67.1% and is <br /> managed by structuring level principal payments over the entire term of the debt issue. <br /> • Debt to Assessed Value Ratio <br /> This metric measures the amount of outstanding tax supported debt as a percentage of <br /> the County's assessed value (tax base). This is one measure of the County's ability to raise <br /> revenue to make debt service payments. As assessed values increase, the County's ability <br /> to generate enough revenue to pay back existing debt also increases. The County's <br /> current policy is that total outstanding debt will not exceed 3% of assessed value. The <br /> County's current debt to assessed value ratio is 1.28%. Having a ratio under 3% also <br /> results in a positive credit rating adjustment. All of the financing scenarios discussed below <br /> maintain a debt to assessed value ratio of under 3%. <br /> • Debt Service to General Fund Revenue Ratio <br /> This metric compares the amount of debt service payments the County is obligated to pay <br /> on an annual basis to total projected general fund revenues. This is a quantitative <br /> representation of the County's ability to pay debt obligations on an annual basis. If debt <br /> service is growing at a higher rate than general fund revenues, the proportion of the <br /> County's budget that is dedicated to debt will increase and lower the ability to fund other <br /> operating expenses. The County's current policy is to maintain annual debt service costs <br /> at or below 15% of general fund revenues. The County has modestly exceeded this policy <br /> in the past. According to one rating agency, a "strong" position is 8% to 15%, and an <br /> "adequate" position is 15% to 25%. In FY2023-24, debt service is 13.60% of total general <br /> fund revenues. This ratio is tracked in each of the financing scenarios below. <br /> Model Assumptions <br /> The debt model makes several assumptions to predict the likely impact that a given amount of <br /> borrowing will have on the debt service to general fund revenue metric and the property tax rate <br /> required to make annual debt service payments. <br />