OFS recommends $1.5 million debt-levy increase in 2026 to stabilize Saint Paul's debt service fund

Neil Youngins, debt investment manager in the Office of Financial Services, told the Budget & Finance Committee that Saint Paul currently carries principal outstanding across general obligation and revenue bonds and that modeled debt service will rise into the early 2030s under current annual-program assumptions.

Youngins reported principal outstanding (as of last August) of roughly $250.4 million in general obligation bonds and about $380.7 million in revenue bonds, noting the increase on the revenue side is driven in part by financing for the Lake McCarran water treatment plant and the lead service-line replacement program. He emphasized that the figures discussed were principal outstanding and did not include interest.

To keep the debt service fund balanced over the long term under current program assumptions (annual CIB, streets and mill-and-overlay bonding), OFS recommended a $1.5 million increase to the property-tax debt levy in 2026, which would raise the levy to about $25.7 million. Youngins said the model assumes the city issues its routine annual program amounts and does not assume one-off additional bond packages; he offered to supply comparative capacity metrics after the meeting.

Youngins outlined recent and planned transactions: earlier in the year the city issued $17.6 million in GO various-purpose bonds, $35.5 million in street reconstruction (including a refunding), and $10.5 million in sewer revenue bonds; the city was closing a $28 million PFA note and had closed $7.5 million for the lead service-line replacement. For 2026, planned issuance included $10.7 million in capital improvement bonds (including authorized-but-unissued amounts), $2.0 million in capital notes, $15.0 million for street reconstruction (including roughly $3.5 million for mill-and-overlay) and $7.0 million in sewer revenue bonds, plus end tranches for Lake McCarran financing.

Youngins also described refinancing (refunding) opportunities as Federal Reserve rates fall, noting OFS monitors callable issues and will pursue savings where refundings are "in the money." He said the team identified roughly 14 or 15 callable issues but that not every callable issue yields net savings at a given market point.

Committee members asked for comparative metrics on debt capacity and whether the model assumes no additional one-off issuances; Youngins confirmed the model uses current programmed annual amounts and offered to provide peer comparisons and refreshed targets after the meeting. He also said any savings from refundings are incorporated back into the debt model and the levy projections are updated accordingly. The presentation included links to GFOA best practices and the city's investor relations resources.

No formal vote or ordinance was proposed during the presentation; the $1.5 million increase was presented as the OFS recommendation for council consideration during budget deliberations.