24-1332 : 2025-2029 Comptroller's Estimate & Report - Five Year Capital Debt Plan

This report, "2025-2029 Comptroller's Estimate & Report - Five Year Capital Debt Plan," outlines the City of Buffalo's financial condition and its capacity for incurring capital debt over the next five years. It adheres to the City Charter, which requires the Comptroller to advise on the maximum prudent capital debt without impairing the city's credit rating.

Key Findings and Recommendations:

• Debt Capacity: As of July 1, 2024, the City is $1,384 million beneath its debt-ceiling limit, with net indebtedness increasing by $34.4 million from the previous year.
• Capital Debt Management Policy: The policy aims to keep Net Direct Debt as a Percentage of General Fund Revenues below 60% (goal < 30%), Total Debt Service as a Percentage of Expenditures below 10% (goal < 8%), and Net Direct Debt as a Percentage of Full Valuation below 4% (goal < 1.75%). Current figures are 36.3%, 7.8%, and 0.89% respectively, indicating adherence to or improvement towards goals.
• Debt Issuance Limits: The proposed maximum borrowing amounts for capital projects over the next five years are:
  • 2025: $28,000,000
  • 2026: $28,000,000
  • 2027: $29,000,000
  • 2028: $29,000,000
  • 2029: $34,000,000
• Capital Project Status: As of June 30, 2024, the available balance of all open capital projects is $252.6 million, including $135.6 million in encumbrances. The report notes a lack of required bi-annual progress reports on capital projects, which could hinder decision-making.
• Unspent Proceeds: The City incurred unnecessary interest costs by borrowing more than needed for projects. The policy requires unspent bond proceeds to be transferred to the Debt Service Fund five years after a project's inception.
• Non-Capital Expenditures: The policy clarifies that non-capital expenditures (e.g., demolitions, tree removal, passenger vehicles) are no longer eligible for bond proceeds and must be funded from other revenue sources.
• Authorized but Unissued Debt: There are $15.7 million in authorized but unissued capital projects that require review for future viability.