Debt Service Funds Long-Term Debt and Lease Obligations

Provided herein is an overview of long-term debt and lease obligations which addresses the methods used by the City and County of Denver to finance certain capital projects including property and equipment. Included in this overview is information about general obligation and revenue bonds, and lease purchase agreements including certificates of participation.

Any information in this section dated after December 31, 2015 is estimated and unaudited.

Since May 2010, the City’s General Obligation bonds have been rated AAA, the highest bond rating, by all three major national credit ratings agencies. These strong ratings will attract investors and help lower the cost to taxpayers when the City borrows money.

General Obligation Bonds

General obligation bonds are backed by the full faith and credit of the City and are payable from ad valorem property taxes and other general revenues. Except for refunding bonds issued to achieve savings, Denver voters must approve general obligation debt prior to issuance.

Debt Limitations

The City Charter limits general obligation bonded debt, excluding self-supporting water bonds, to three percent of the actual value of taxable property within the City.

The following schedule sets forth the computation of the general obligation debt margin of the City as of August 25th, 2016.

Computation of the General Obligation Debt Margin ($ in thousands)

TOTAL ESTIMATED ACTUAL PROPERTY VALUATION $105,449,010

Maximum general obligation debt allowed (3 percent of total valuation) $3,163,470 Outstanding bonds chargeable to limit 761,406 Less amount reserved for long-term debt in fund balance 12,495 Net chargeable to bond limit 748,911

LEGAL DEBT MARGIN $2,414,559

Percent of Charter limit 23.67%

Since 2009, the City has issued $549,730,000 of general obligation bonds for the Better Denver Bond Projects authorized by the voters in 2007. The City has no remaining authorization to issue general obligation bonds.

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Long-Term Debt and Lease Obligations

Existing Debt

It is expected that the City’s outstanding general obligation debt as of December 31, 2016 will consist of the following:

Final Maturity Amount Date Outstanding

2007 Justice System Facilities (Mini-Bonds) 2022 *8,860,5002008 Justice System Facilities Bonds 2025 109,530,000 2009A Better Denver and Zoo Bonds 2025 69,980,000

Final Maturity Amount Date Outstanding

2010B Better Denver Bonds (Build America Bonds) 2030 312,055,000 2010D Better Denver Bonds 2025 29,150,000 2011A Better Denver Bonds 2025 16,455,000 2013A Better Denver & Refunding Bonds 2030 73,215,000 2013B1 General Obligation Refunding Bonds 2025 43,475,000 2013B2 General Obligation Refunding Bonds 2025 86,685,000 2014A Better Denver Mini-Bonds 2028 *12,000,000

Total General Obligation Bonds $761,405,500

*Amount outstanding do not include compound interest of $5,103,000 and $1,362,000 on the Series 2007 and2014A mini-bonds, respectively.

Indicators Related to General Obligation Debt Burden

Outstanding general obligation debt $761,405,500

Total Estimated Actual Value* $105,449,009,500

Net Assessed Value* $13,482,572,713

Population (US Department of Commerce) 682,545

Ratio of net direct general obligation debt to actual value 0.71%

Ratio of net direct general obligation debt to net assessed value 5.55%

Net direct general obligation debt per capita $1,097.23

*From 2016 Preliminary Certification for Valuation by County Assessor

Excise Tax Revenue Bonds

Revenue Bonds are payable from a specific, dedicated source of revenue which does not pledge the full faith and credit of the City. Other than the debt described below, Denver’s only other revenue bonds are supported by the Denver International Airport Enterprise Fund. There are no City Charter limitations stipulating maximum revenue bond debt.

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Long-Term Debt and Lease Obligations

Existing Debt

The majority of Denver’s non-airport revenue bond issues are backed by certain excise taxes (Lodgers’ tax and sales tax on short-term auto rentals and prepared food and beverages). It is expected that the City’s outstanding excise tax bonds as of December 31, 2016 will consist of the following:

Final Maturity Amount Date Outstanding

2016A Dedicated Tax Revenue Refunding & Improvement Bonds 2046 242,500,000 132,460,000 2016B Dedicated Tax Revenue Refunding & Improvement Bonds (taxable) 2032

Total Excise Tax Bonds $374,960,000

The Series 2016A and 2016B Dedicated Tax Revenue Refunding and Improvement Bonds were issued to refund all of the Series 2005 and 2009A Excise Tax Revenue Refunding Bonds as well as finance a portion of the construction and improvement costs of the National Western Center campus and the Colorado Convention Center. The Series 2005 Excise Tax Revenue Bonds were originally issued to refinance a portion of the Series 2001A Bonds, which, in addition to the Series 2001B Excise Tax Revenue Bonds, were originally issued to finance the expansion improvements to the Colorado Convention Center. The Series 2009A Excise Tax Revenue Refunding Bonds were originally issued to refinance the Series 2001B Excise Tax Bonds.

Airport System Revenue Bonds

As of December 31, 2015, the outstanding Airport System Revenue Bonds totaled $4,112,490,000 and have multiple maturities that range from 2016 to 2043. The bonds were issued for the purpose of financing the construction and capital projects at the airport and to refinance earlier bond issues. The bonds are payable solely from revenues derived by the Airport System and the City, through its Department of Aviation, has pledged future Airport system Net Revenues, as defined in the 1984 Airport System General Bond Ordinance and the 1990 Airport System Subordinate Bond Ordinance. It is expected that the outstanding Airport System Revenue bonds will total $3,941,940,000 as of December 31, 2016.

Wastewater Revenue Bonds

In January 2012, the City issued $50,425,000 of Series 2012 Wastewater Revenue Bonds on behalf of the Wastewater Management Enterprise Fund of the City’s Department of Public Works to finance improvements to the City’s Storm Drainage Facilities and to refund the remaining $20,350,000 of outstanding Series 2002 Wastewater Revenue Bonds. The bonds are payable solely from revenues derived by the City from the operation of its storm drainage and sanitary sewerage facilities. The bonds mature in 2032, and as of December 31, 2016, $37,860,000 of Wastewater Revenue bonds will remain outstanding.

In November 2016, the City will be issuing $115 million of Series 2016 Wastewater Revenue Bonds on behalf of the Wastewater Management Enterprise Fund to finance the Platte to Park Hill storm drainage project. The bonds will mature in 2046. It is anticipated that the City will issue an additional $121 million in 2018 for the Platte to Park Hill project and other Storm Drainage Facilities.

Golf Enterprise Revenue Bonds

In March 2006, on behalf of the Golf Enterprise of the City’s Department of Parks and Recreation, the City issued $7,365,000 of Golf Enterprise Revenue Bonds. The bonds are payable solely from revenues derived by the City from the operation of its golf facilities. The bonds mature in 2020, and as of December 31, 2016, the outstanding principal on the bonds will be $2,430,000.

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Long-Term Debt and Lease Obligations

Lease Purchase Agreements

The City has used lease purchase agreements to facilitate the financing of certain public capital projects and capital equipment. The leases are subject to annual appropriation by the City Council and do not constitute a general obligation or other indebtedness of the City within the meaning of any constitutional, statutory, or Charter debt limitations. The City’s obligation to make payments relating to its various leases is contingent upon the City appropriating the rental payments for the then- current fiscal year. In the event of non- appropriation, the lease terminates and the pledged asset is liquidated to the benefit of the lease holders. As of December 31, 2015, the principal portions of base rentals under the lease purchase agreements, not including enterprise funds, were $403,554,781. Of this amount, $390,133,333 was attributable to certificated lease purchase agreements, and $13,421,448 was attributable to non-certificated capital leases.

Certificated Lease Purchase Agreements. Certificates of participation (COPs) have been executed and delivered in conjunction with various lease purchase agreements discussed in the paragraph above. Principal outstanding on COP transactions as of December 31, 2016 is expected to consist of the following:

Final Maturity Amount Lease Purchase Agreements Date Outstanding Series 2005A Human Services Center 2020 9,330,000 Series 2008A1-3 Wellington E. Webb Office Bldg. 2029-31 220,280,000 Series 2008B Denver Botanic Gardens 2028 15,690,000 Series 2010A Central Platte Campus 2030 17,590,000 Series 2010B Wastewater Office Building/

Roslyn Maintenance Facility 2021 10,755,000

Final Maturity Amount Lease Purchase Agreements Date Outstanding Series 2012A Cultural Center Parking Garage 2021 5,610,000 Series 2012C1-3 Police Stations and other

Denver Properties 2022-31 *34,016,806Series 2013A Buell Theater Properties 2023 31,135,000 Series 2015 Fire Station & Library Facilities 2034 21,450,000

TOTAL $365,856,806

*Does not include $6,278,194 attributable to Wastewater Management Enterprise Fund

The estimated 2017 payments for all certificated lease purchase agreements, including swap payments associated with the Series 2008A COPs, are $41,114,847. Of the total payments approximately $26,308,757, is paid from the General Fund or Capital Improvement Funds, $12,059,408 from special revenue funds or non-General Fund/ capital fund sources, and $2,746,682 from sources outside the City. The $26,308,757 in payments from General Fund and Capital Improvement Funds represents approximately 2.0 percent of the combined projected revenues for those funds.

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Debt Service Funds General Obligations Bonds – Schedule 2000

($ in thousands) 2015 2016 2017

Actual Estimated Recommended Financial Resources

Property Taxes $87,982 $109,784 $111,976 Investment and Interest Income 752 908 1,054 Miscellaneous Other 5,524 5,756 5,958

Total $94,258 $116,449 $118,988

Uses of Resources Bond Counsel & Financial Services $8 $9 $9 Interest Payments - Bond 39,047 36,759 34,144 Principal Payments - Bonds 51,972 54,270 56,825

Total $91,027 $91,038 $90,978

Excess of Revenues Over (under) Expenditures $3,231 $25,411 $28,010

Other Financing Sources (Uses) General Obligation Bonds Issued $0 $0 $0 Payment to Refunding Escrow 0 0 0 Transfer In 0 0 0

Total $0 $0 $0

Net Increase (Decrease) in Fund Balance $3,231 $25,411 $28,010

Fund Balance - January 1 44,501 47,732 73,143

Fund Balance - December 31 $47,732 $73,143 $101,153

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Debt Service Funds General Obligations Bonds – Schedule 2500

($ in thousands) 2015 2016 2017

Actual Estimated Recommended Financial Resources

Sales and Use $38,128 $40,034 $41,235 Lodgers 36,399 38,219 40,130 Investment and Interest Income 394 473 549 Miscellaneous Other 2,290 0 0

Total $77,211 $78,727 $81,914 Uses of Resources

Bond Counsel & Financial Services $1 $1 $3 Interest Payments - Bonds $10,434 $9,291 $14,143 Principal Payments - Bonds 19,784 22,350 23,485

Total 30,219 31,642 37,631

Excess of Revenues Over (under) Expenditures $46,992 $47,085 $44,283

Other Financing Sources (Uses) Transfers Out (46,426) (39,582) (39,804)

Total ($46,426) ($39,582) ($39,804)

Net Increase (Decrease) in Fund Balance $566 $7,503 $4,479

Fund Balance January 1 $24,814 $25,380 $32,883

Fund Balance December 31 $25,380 $32,883 $37,362

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