Deltona reviews options to finance $200 million five‑year capital plan; $22 million reimbursement noted

Deltona city commissioners heard a debt‑issuance overview from Jeremy Niefelt, financial advisor with PFM, that outlined options to finance roughly $200 million in five‑year capital needs, including a $50 million water/wastewater project for which $22 million in reimbursement is currently guaranteed.

The presentation put the potential financing in context: the city has about $150 million in outstanding principal and three‑quarters of that is utility‑supported debt. Staff and the adviser described a proposed funding mix that includes roughly $35 million of new debt next year, about $75 million from cash and grants, and approximately $100 million of capital needs not yet funded or assigned a financing source.

“The plan of finance is really based on needs,” Jeremy Niefelt said, describing the approach the city would use to match financing types to project useful lives and affordability. He told commissioners that long‑lived assets such as treatment plants typically suit public bond issues, while shorter‑life equipment and vehicle leases can be handled with bank loans or capital leases.

Niefelt outlined timing and structure differences: a publicly offered bond typically takes four to six months and requires a ratings process and documentation; a bank loan or loan RFP can be completed in about three to four months and may be cheaper for smaller or shorter‑life financings. He also noted staff should pursue State or federal programs first — for example, State Revolving Fund (SRF) loans — when a project is eligible because those programs generally offer lower interest rates.

City staff gave project details used in the plan of finance. Next year’s planned debt portion includes the water/wastewater project (a $50 million project with $22 million of planned debt financing). A prior plan called for a $20 million fire‑station project, of which roughly $13 million would come from cash and $7 million from debt. Staff said other needs — parks, stormwater and additional water projects — also appear in the five‑year master plan but are only partially funded at this time.

On credit quality, Niefelt said the utility debt trades in the double‑A category, which gives the city broad access to the public bond market with relatively tight spreads to benchmarks. He walked commissioners through existing maturities: a stormwater special assessment note has about five years remaining, SRF notes step down significantly after 2035 and the larger taxable utility obligations run to about 2050.

John McKinney, the city manager, emphasized the presentation was a May 3 snapshot and not a commission approval. “So as I’ve always said, the budget’s a fluid process,” McKinney said, adding that figures — especially for fire stations — may change as the budget process evolves. When asked whether any grants were guaranteed, McKinney said, “Right now, the only guarantee is the $22,000,000.”

Commissioners asked about possible rate impacts and alternative funding. Staff said water/wastewater projects are incorporated into regular rate studies and that any future debt service for utility projects would be considered in those studies; if grant funding or cash is insufficient, increased utility user fees are a potential option. On ad valorem revenue, staff said roughly one‑third of the general fund comes from property taxes and acknowledged the commission must consider risks such as potential state changes to property tax structures when deciding whether to issue long‑term, tax‑supported debt.

Fire‑station site and performance work was raised in the same discussion. Chief Schneider said the department used analysis tools from Dark Horse and an earlier assessment from Finch & Associates to model response‑time performance; Dark Horse provided software recommendations rather than a single formal stand‑alone report. Staff said they will present full station location recommendations at an upcoming workshop and that budget workshops on July 14 and July 21 will include additional CIP and rate information.

No commission action or vote was taken at the meeting. Staff and the city’s financial adviser said they would return with formal financing recommendations only after the commission provides direction and when market and funding details are clearer. If the city needed borrowed funds in advance of reimbursements, staff explained the practical constraint that issuance often must precede invoicing so that cash is available while grant reimbursements are processed.