City of Fresno
Debt Manag ement
Workshop
JUNE 5, 2025
Overview2
➢California Constitution Debt Limits
➢General Obligation Bonds
➢Lease Revenue Bonds
➢Credit Rating Process
➢City of Fresno Debt Overview
➢Pave More Now, Pay Later
June 5, 2025
California Constitution Debt Limits3
June 5, 2025
CALIFORNIA CONSTITUTION
DEBT LIMIT
Article 16, Section 18
(2/3 vote generally required)
EXCEPTIONS TO THE
DEBT LIMIT
EXCEPTION 1
Current Fiscal Year
(eg. Tax Revenue
Anticipation Notes)
EXCEPTION 2
Contingent
Obligations
(eg. Certificate Of
Participation, Lease
Revenue Bonds)
EXCEPTION 3
Special Fund
Obligations
(eg. Revenue
Bonds)
EXCEPTION 4
Obligations
Imposed by Law
(eg. Pension
Obligation Bonds)
GENERAL OBLIGATION BONDS
True Indebtedness
General Obligation Bonds4
➢ Backed by “full faith and credit” of City of Fresno
➢ Require 2/3 voter approval
➢ Paid from property taxes levied
➢ City of Fresno General Obligation Debt Capacity
▪ City Charter Article XII Section 1213 – Less than 20% of total assessed valuation
▪ 2023/24 Capacity - $9.9 billion (currently none
outstanding)
June 5, 2025
Lease Revenue Bonds5
➢ Secured by lease payments paid by the lessee ( i.e. City General Fund)
➢ Voter approval not required
➢ Lease Revenue Bond Capacity Considerations:
▪ Affordability / Ability to make debt service payments ▪ Facility Asset Availability
➢ Fair Rental Value Determination – Comparability and Essentiality June 5, 2025
Lease Revenue Bonds6
➢ Bond proceeds are used to support:
▪ Infrastructure – Water, sewer, streets/roads, bridges, utilities ▪ Capital Improvement – Fire/police stations, parking structures, parks, administrative center
▪ Refinancing – Consolidate or restructure debt, reduce interest costs
▪ Tax-exempt bond proceeds cannot be used to support salary costs unless capitalized in connection with support for a capital project
June 5, 2025
➢ Municipal Credit Ratings express an opinion of the issuer’s ability to pay debt service, and are generally informed by:
▪ Financial Performance – Examination of financial results, actual reserve levels, and how they compare with planned performance ▪ Economic Performance – Assessment of the overall economic strength of the region and diversity of tax base
▪ Debt Burden/Profile – Examination of the management of debt levels
▪ Management & Governance – Assessment of commitment to disciplined fiscal policies and the ability to implement plans Credit Rating Process7
June 5, 2025
City of Fresno Debt Overview8
June 5, 2025
➢ Debt Management Policy Objectives
▪ Minimize debt service and issuance costs
▪ Provide a scheduling component (planning)
▪ Maintain access to cost-efficient borrowing
▪ Achieve the highest practical credit rating
▪ Full and timely repayment of debt
▪ Balance use of pay-as-you-go and debt financing
▪ Maintain full and complete financial disclosure and reporting ▪ Ensure compliance with applicable State and Federal laws City of Fresno Debt Overview9
June 5, 2025
➢ City of Fresno General Ratings
YEAR MOODY’S S&P FITCH
Rating Outlook Rating Outlook Rating Outlook
2024 A1 Stable AA- Stable AA Stable
2023 A1 Stable AA- Stable A+ Positive
2022 A2 Stable A+ Stable A Positive
2021 A2 Stable A+ Stable A Positive
2020 A3 Stable A+ Stable A Stable
2019 A3 Stable A+ Stable A Stable
2018 A3 Stable A+ Stable A Stable
2017 A3 Stable A+ Stable A Stable
2016 A3 Stable BBB- Stable A Stable
2015 A3 Stable BBB- Stable BBB+ Negative
2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Water Enterprise $26,576,404 $26,480,553 $26,383,654 $26,285,053 $26,179,104 $26,070,478 $25,953,529 $25,731,024 $25,500,667 $25,365,241 $22,657,671 Sewer Enterprise $4,005,348 $4,005,347 $4,005,347 $4,005,348 $4,005,347 $4,005,347 $4,005,348 $4,005,347 $4,005,347 $4,005,348 $4,005,347 Airport Enterprise $9,721,686 $9,965,322 $11,291,175 $11,336,805 $11,377,771 $11,403,779 $11,370,907 $8,980,321 $9,022,432 $9,057,446 $9,104,525 General Government $43,608,740 $41,465,820 $40,450,885 $38,217,055 $34,811,566 $14,368,696 $12,464,298 $8,374,245 $8,546,699 $7,651,782 $7,079,002 RDA/Successor $116,393 $116,341 $16,288 $116,232 $116,175 $16,114 $116,053 $115,989 $115,923 $115,854 $- $0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
$90,000,000
Citywide Debt Service
(as of June 30, 2024)
City of Fresno Debt Overview10
June 5, 2025
City of Fresno Debt Overview 11
June 5, 2025
2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
LRBs $14,576,740 $13,939,975 $13,940,744 $13,371,284 $13,364,218 $11,120,228 $11,122,845 $5,569,719 $5,569,795 $5,573,029 $5,563,178 2002 POBs $12,628,937 $12,627,186 $12,628,996 $12,627,656 $12,628,413 $- $- $- $- $- $- Leases $13,498,502 $12,082,013 $11,071,897 $9,403,973 $6,009,665 $3,950,162 $3,579,362 $3,225,056 $3,399,617 $2,503,333 $1,939,588 $0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
General Fund Annual Debt Service
(as of June 30, 2024)
City of Fresno Debt Overview12
June 5, 2025
Debt Issuance Facility Asset
1998 – Exhibit Hall Expansion New Exhibit Hall
2001 – A & B Stadium Project Fire Station #19, Saroyan Theatre 2004 - A, B & C Various Capital Projects Convention Center Parking Garage 2017 LRB's Refinance (Master Lease)
2020 - Animal Center (Master Lease)
Stadium, Municipal Service Center,
Memorial Auditorium, Parking Garage
#4, Regional Training Center, Fire
Station #16, Valdez Exhibit Hall, City Hall
➢ Facilities Recently Released from Lease Revenue Bond Utilization - Parking Garage #8, Selland Arena, Woodward Park, Fire Station #15, Fire Station #17, Promenade Parking Lot ➢ Other Facilities for Consideration – Southeast Police Substation, Fire Station #18, Fire Headquarters Building, Dickey Youth Center, Historic Fresno Bee Building ➢ Annual Debt Service – Annual payments, principal and interest, and the respective maturity dates are listed by issuance in the City’s Annual Comprehensive Debt Report (ACDR) found at:
https://www.fresno.gov/wp-content/uploads/2025/04/FY24-ACDR-Document-Final-20250321-10w581.pdf Collateralized Fixed Assets
Why Bond for Street Repaving?
➢ Deteriorating Pavement Condition Index (PCI)
➢ PCI by year - 72 in 2008, 60 in 2021, estimated at 55 in 2025 ➢ Repave now before streets decline further
➢ Construction cost escalation
➢ Significantly higher costs for repair of failed streets ➢ Financing the repairs now will be more cost -effective than allowing more deterioration and paying significantly higher future costs ➢ Additional factors: roadway safety, vehicle wear and tear, quality of life
Pave More Now, Pay Later13
June 5, 2025
Pave More Now, Pay Later14
June 5, 2025
Significantly higher costs to repair failed streets
Costs shown per square yard were from the 2021 study and are shown for comparison purposes.
Pave More Now, Pay Later15
June 5, 2025
Citywide Pavement Condition Index (2021)
With recent construction cost escalation, the estimated deferred pavement maintenance has grown to $1.2 billion
$505 $463
$525
$596
$677
$824
$896
$987
$1,072
$1,155
60 61
59 57 55 53
51 49 47 45 43
0 10
20 30
40 50
60 70
80 90
100
$0
$250
$500
$750
$1,000
$1,250
$1,500
PCI
Deferred Maintenance ($ millions)
Average PCIDeferred Maintenance ($ millions)
Pave More Now, Pay Later16
June 5, 2025
Construction Cost Escalation
➢ Throughout the U.S.,
transportation project
construction costs have risen
dramatically since 2021.
➢ 65% increase from 2021 Q1
to 2025 Q1 per US DOT
FHWA.
Pave More Now, Pay Later17
June 5, 2025
Construction Cost Escalation
➢ National index from US DOT: 65% increase over four years ➢ Construction cost inflation varies by region
➢ 2021and 2022 City of Fresno street repaving projects
▪ Chestnut Avenue, Herndon to Bullard: $1,904,754 or $273,700 per lane-mile ▪ Abby Street, Divisadero to Olive: $879,984 or $293,300 per lane-mile ▪ First Street, Hazelwood to Tulare: $899,025 or $321,000 per lane-mile ➢ 2025 City of Fresno repaving projects (approximately double the cost) ▪ Herndon Avenue, Valentine to Marks: $992,655 or $501,300 per lane-mile ▪ Peach Avenue, SR-180 to McKinley Ave: $1,936,880 or $663,300 per lane-mile Council District Location Miles PCI (Avg) DPW Proposed* Council Proposed 1 Ashlan-Hughes-Griffith-Marks 1.10 30 - $1,791,000
1 Ashlan-West to Fruit 0.50 31 $2,002,000 $2,002,000
1 & 2 Shaw-Blythe to Brawley (WB) + Shaw-Brawley to Marks 1.50 45 - $5,766,000 1 & 3 Shields-Brawley to Parkway 1.07 29 - $3,750,000
1,3 & 7 Clinton-Weber to Maroa 1.92 38 $7,000,000 -
2 Nees-Ingram to Blackstone 0.60 35 $2,000,000 -
2 Polk-Herndon to Bullard 1.00 30 $4,411,000 $4,411,000 3 CCB-MLK-Belgravia-Fairview (Belgravia Included) 0.72 24 $1,131,200 - 3 Church-Kirk-Jensen-Elm. 2.79 40 $5,779,200 -
3 Kearney Frontage NE and SW sections 1.20 36 - $1,560,000 3 South of Downtown Industrial (Red Priority) 1.57 22 - $4,800,000 4 Ashlan-168 to Winery 0.80 28 $4,000,000 $4,000,000
4 Dakota-Cedar to Maple 0.50 47 - $1,503,000
4 & 7 McKinley-Peach to Clovis 1.00 47 $3,069,000 $3,069,000 5 CCB-Orange to Cedar 0.50 35 $2,450,000 $2,450,000
5 Cedar-CCB to California 1.00 30 $2,827,000 $2,827,000 5 Winery-CCB to Butler 0.50 33 $1,200,000 $1,200,000
5 & 7 Sixth-Tulare to CCB 0.50 42 $1,375,000 -
6 First-Sierra to Bullard 0.50 43 $1,710,000 $1,710,000 6 Perrin-Champlain to Sommerville 1.41 49 $4,760,000 $4,760,000 7 Belmont-First to Cedar 1.02 47 $3,690,000 -
7 Chestnut-McKinley to Olive 0.50 51 $2,101,000 -
7 Floradora-Millbrook-Olive-First (Bond Excluded) 2.25 48 - $3,722,000 7 McKenzie-Winery-Tulare-Chestnut 0.99 26 - $1,923,000
$49,505,400 $51,244,000
Pave More Now, Pay Later – Year One18
June 5, 2025
Y
E
A
R
1 P
R
O
J
E
C
T
S
*Based on PCI and project implementation consideration
Council District Location Miles PCI (Avg) DPW Proposed* Council Proposed 1 Indianapolis-Cornelia-Ashlan-Ellendale 3.00 33 $5,631,000 $5,631,000 1 Ashlan-Hughes-Griffith-Marks 1.10 30 $1,791,000 -
2 Herndon-Palm-Fremont-Fruit 1.96 36 $3,157,000 $3,157,000 2 Figarden-Santa Fe to Valentine 1.00 50 $4,133,000 $4,133,000 3 South of Downtown Industrial (Orange Priority) 1.15 13 - $3,010,000 3 Kearney-Thorne-Myers-Fruit (Myers Included) 1.27 39 - $2,934,000 3 Kearney-Merced-Thorne Triangle 1.88 29 $2,943,600 -
3 Fresno-U St-Tulare-Q St (R and Q St NOT included) 0.58 38 $1,290,000 - 3 Elm-California-Kirk-Church P1 RCR and North of RCR 1.04 36 $1,807,000 - 3 Belmont-Calaveras-Divisadero-San Pablo 1.88 49 - $1,277,000 3 Belgravia-Fairview-Church-Walnut 0.86 23 $1,449,000 - 4 Santa Ana-First-Gettysburg-Augusta 1.33 25 $2,143,000 $2,143,000 4 Fresno-Gettysburg to Ashlan 0.50 47 $1,446,000 $1,446,000 4 First-Bullard to Barstow 0.50 46 $1,770,000 $1,770,000 4 First-Barstow to Shaw 0.50 33 - $1,738,000
4 Dakota-Cedar to Maple 0.50 47 $1,503,000 -
5 Fowler-Belmont to Tulare 0.50 48 $1,742,000 $1,742,000 5 Belmont-Fowler-Illinois-Fordham 2.32 26 $5,200,000 $5,200,000 6 Sierra-Fourth-Escalon-First 1.08 13 $1,791,000 $1,791,000 6 Palo Alto-Willow-Sierra-Chestnut 1.61 22 $1,531,000 - 6 Nees-Cedar to Maple 0.50 45 $2,277,000 $2,277,000
6 Cedar-Sierra to Bullard 0.50 43 $1,446,000 $1,446,000 6 Cedar-Herndon to Sierra 0.50 39 - $1,590,000
7 Nevada-Peach-Iowa-Sylmar 0.49 38 $1,170,000 -
7 Fresno-Clinton to McKinley 0.50 33 $2,107,000 -
7 Chestnut-Belmont to CCB 1.00 37 $4,167,000 -
7 Belmont-Sixth-Tulare-First 4.89 50 - $7,471,000
$50,494,600 $48,756,000
Pave More Now, Pay Later – Year Two19
June 5, 2025
Y
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A
R
2 P
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J
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*Based on PCI and project implementation consideration
Questions20
June 5, 2025