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DEBT SERVICE FUNDS

Bond Ratings – North Richland Hills’ bond ratings are as follows:

M oody’s Standard and Poor’s
General Obligation Bonds AA2 AA+
Utility Revenue Bonds AA2 AA+

Ratings provided by these agencies directly affect the interest rate on new debt issue. The City’s policies are
focused on issues that maintain high bond ratings and keep debt costs reasonable. The City’s bond or “credit”
rating is an assessment of the City’s ability and willingness, and its legal obligation, to make full and timely
payments of principal and interest on the debt security over the course of its maturity schedule. Ratings are
designed exclusively for the purpose of grading debt instruments according to their credit qualities and do not
constitute a recommendation to buy or sell a security. The rating process evaluates the past performance and
trends, and evaluates estimated future prospects. Both qualitative data and quantitative data are considered.
Historical trends and current conditions, in addition to prepared projections, are utilized when making evaluations
about future performance. Evaluations are generally based on what has taken place over the last five to ten
years.

When applying for a credit rating, the items required of the City include audit reports, current budget documents,
current capital improvement program, statements of long and short-term debt, and an indication of appropriate
authority for debt issuance. Standard & Poor’s ratings range from AAA to BBB, with AAA being the highest rating.
Moody’s has nine basic rating categories for long-term obligations, ranging from AAA to C. An AAA rating
indicates the issuer has an extremely strong ability to meet its debt obligations, whereas a C rating represents
an adequate ability to meet debt requirements.

Financial Advisor – The City currently uses First Southwest Asset Management, a division of Hilltop Securities,
Inc. in the capacity of financial advisor. First Southwest Company coordinates the debt issuance for the City.
They assist in the determination of the City’s capacity to authorize, issue, and service debt. On the basis of this
determination and with the approval of the City, First Southwest Company proceed with the sale of the debt
instruments. When the City accepts a bid for the debt instruments, First Southwest Company directs the closing
of the sale.

Debt Capacity – As of October 1, 2018, the City currently has capacity to issue approximately $13.43 million in
tax supported debt. The following assumptions were made in figuring the City’s debt capacity: a reduction in the
City’s property tax rate to $0.585, average bond interest rates equal to 4.11%, debt maturity equal to the useful
life of purchased or constructed assets for all issues, and average annual tax base growth equal to 1%, and the
City maintaining its current bond rating.

DEBT SERVICE FUND SUMMARY

Below is a summary of each of the City’s outstanding obligations. Please note the figures in parentheses
represent the remaining principal amount for each issue. The total remaining principal and interest amount as of
October 1, 2018 equals $165,418,628.

GENERAL DEBT (Series 2005-2017)

Certificates of Obligation, 2017 – In 2017, $7,545,000 in Certificates of Obligation were issued for street
maintenance, improvements to Northfield Park, and three (3) new fire vehicles.

General Obligation Refunding Bonds 2016 – In 2016, General Obligation bonds were issued totaling $1,695,000
in a private placement. This issue refunded portions of the Certificates of Obligation, 2007 and the General
Obligation Refunding and Improvement Bonds, 2007.

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