Page 284 - Microsoft Word - FY 2020 Adopted Budget Document

Appendices

STATEMENT OF FINANCIAL PRINCIPLES (CONTINUED)

Debt Management (continued)

 All professional service providers selected in connection with the City’s debt issuance and management program shall be
chosen through a competitive process such as request for proposals (RFP’s) on an as needed basis.

 An advance or current refunding of outstanding debt shall only be considered when present value savings of at least 4.25%
of the principal amount of the refunded bonds are produced, unless a debt restructuring, or bond covenant revisions are
necessary. Savings from refundings will be distributed evenly over the life of the refunded bonds.

 An analysis of the risks and potential rewards of a derivative product for debt management must be prepared before the
structure is selected. The City’s Bond Counsel must opine that the City is authorized to enter into the necessary
agreements under all existing statutes.

 The use of reimbursement resolutions shall be encouraged as a cash management tool for debt funded projects.
Reimbursement resolutions may be used for any project that has been approved in the City’s Capital Budget.
Reimbursement resolutions may be used for other projects if the projects are revenue supported or funded within
departments’ operating budget.

 The City shall obtain a clear opinion from qualified legal counsel that the City is not liable for the payment of principal and/or
interest in the event of default by a conduit borrower. If no such opinion can be obtained, the conduit borrower will be
required to purchase insurance or a letter of credit in the City’s name in the event of default. Examples of a conduit issuer
are special authorities, tax-increment financing districts, public improvement districts, or industrial development issuers.

Debt Management – Ratio Targets

 The ratio of net debt (total outstanding tax-supported general obligation debt less debt service fund balance) to total taxable
assessed valuation shall not exceed 2%. This excludes debt of overlapping jurisdictions. The City shall structure its bond
issuance to achieve and maintain a debt-to-assessed-value of 2% or less.

 The ratio of debt service expenditures to total expenditures (General Fund operating expenditures and debt service
combined) shall not exceed 20%.

 The ratio of outstanding net tax-supported debt to population shall not exceed $1,180.

 The Finance Department shall prepare an analysis of the impact of adopted tax-supported debt prior to the issuance of the
additional debt. The analysis shall project the debt ratios described in numbers 1, 2 and 3 above as well as any other
applicable debt ratios.

FY 2017 FY 2018 FY 2019 Target
Debt Ratio Targets Actual Actual Estimate
Net Debt to assessed valuation 1.79% 1.74% 1.65% <2%
Debt Service expenditures to total expenditures of General Fund Plus
Debt Service 17% 16% 16.9% <20%
Net tax-supported debt per capita $997 $1,064 $1,111 $1,180

2020 Adopted Budget and Business Plan 271 City of Arlington, Texas