Page 226 - Microsoft Word - FY 2020 Adopted Budget Document

Capital Improvement Program

Capital Budget
Each year a capital budget is presented to City Council for approval. The Capital Budget provides the city staff with budgeted
funds and authorization to begin or continue working on capital projects that were programmed year-by-year on the Capital
Improvement Plan.

Arlington’s Capital Budget cycle spans from October to March, when the Capital Budget is adopted. This process begins with
the City’s Capital Budget Executive Committee. The Committee last met in October 2018 to discuss a priority project list for the
use of the remaining City’s 2014 Bonds and the 2018 New Bond authorization. In developing the capital budget, the Capital
Budget Executive Committee considered a variety of factors on the decision-making process, including:

 City Council Priorities
 Neighborhood Needs
 Infrastructure Investment
 Financial Policies
 Debt Ratio Targets
 Sector Plan Strategy
 Master Plan, Thoroughfare Plan, etc.
 Appropriate timing of the project
 Projected O&M costs
 Efficient use of bond funds

Once the Committee has prioritized its capital projects for the coming fiscal year, City staff prepares the capital budget for
Council to adopt.

Bond Sales
A bond sale occurs annually, the amount of which dictates the appropriation approval of the Capital Budget. In this action, the
City sells bonds on the open market and incurs debt to finance the cost of building the capital projects as identified on the Capital
Budget. Voter-approved general obligation bonds and non-voter-approved certificates of obligation serve as the primary sources
of funding for general capital projects. These include capital initiatives such as parks construction and improvements, land
acquisition, public works projects, building construction for public safety, and airport improvements, among others. The City’s
ability to sell bonds depends on the remaining authorization from bond elections, the City’s tax rate and property values that
support the bonds, and the ability for the City to meet its stated debt management ratio targets, found in the financial policies
section of this document. The City most recently sold bonds to fund capital projects in June of 2019 for $61.2 million, utilizing
authorization from bond elections held in the most recent Bond Election in 2018.

Debt Service

As the City incurs debt for the acquisition and construction of capital projects, the City also makes annual payments to repay
the bonds previously issued. General obligation bonds are funded wholly through a designated portion of the City’s property tax
rate, while certificates of obligation incorporate other various funding sources as well as ad valorem taxes. Of the City’s total FY
2020 tax rate of $0.6240 per $100 in assessed valuation, $0.1773 will be used to retire general obligation bonds and certificates
of obligation.

Debt Retired
Each year, the City satisfies a portion its debt obligations. This means that the City has completely repaid a portion of its debt
from general obligation bonds and certificates of obligation. Currently, the City has a financial policy that requires debt obligations
to be repaid on a conservative schedule (level principal) so as not to burden future taxpayers. In general, the City issues twenty-
year debt with an average life of nine years. On average, the City retires approximately $26 million in general obligation and

2020 Adopted Budget and Business Plan 213 City of Arlington, Texas