Page 152 - Haltom City FY19 Annual Budget

expected to maintain positive fund balances. Each fund may borrow internally from other City
funds to provide cash flow requirements. These loans will be on a short-term basis.

Use of Surplus. It is the intent of the City to use surpluses to accomplish three goals: meeting
reserve requirements, avoidance of tax or rate increases in ensuing years, and avoidance of
future debt.

Capital Planning Criteria

Multi-year Planning. The City will develop a multi-year plan for capital improvements and update
the plan annually. The City will enact an annual capital budget based on the multi-year Capital
Improvement Plan.

Capital Improvement Budget. The City will coordinate development of the capital improvement
budget with development of the operating budget. Future operating costs associated with new
capital improvements will be projected and included in operating budget forecasts. The
estimated costs and potential funding sources for each capital project will be identified before
the project is submitted to the City Council for approval.

Alternative Capital Financing. The City shall explore funding alternatives in addition to long-term
debt including leasing, grants and other aid, developer contributions, capital recovery fees, and
current funds.

Intergovernmental assistance will be used to finance only those capital improvements that are
consistent with the Capital Improvement Plan and City priorities. As well as those operating and
maintenance costs which have been included in the operating budget.

Debt Management

Limits. The City will strive to limit general obligation annual debt requirements to 25% of general
government expenditures. Furthermore, the debt service portion of the tax rate will not exceed
$0.25 per $100 to service the bonds as approved by the voters in 2010.

Long-Term debt shall not be used for financing current operations. The life of the bonds shall
not exceed the useful life of the projects. Capital items financed with debt should have a
minimum useful life of four years.

Required Coverage. Revenue bond coverage (Water & Sewer) shall be maintained at a
minimum of revenues, less operating expenses, exceeding the annual debt service cost by 25%
(1.25 times coverage). This exceeds our covenanted standard of 1 times coverage,

Continuing Disclosure. Full disclosure of operations and open lines of communication shall be
made to rating agencies. The City staff, with the assistance of bond advisors, shall prepare the
necessary materials and presentation to the rating agencies. Inter-period reporting of material
events to rating agencies and other oversight agencies is required as events occur.

Variable Rate / Floating Rate Debt. Debt instruments structured with variable rate or floating
rate features (including derivatives) are to be utilized only after careful review by the City’s
financial advisor and bond counsel and subject to continuous monitoring and reporting.

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