Page 81 - Haltom City FY20 Approved Budget

City of Haltom City Annual Budget, FY 2020

Debt Service Fund

DEBT SERVICE FUND DESCRIPTION

The Debt Service Fund is established by ordinances authorizing the issuance of general
obligation bonds, certificates of obligation and tax notes. The purpose of the fund is to
provide for the payment of bond principal and interest as they become due and payable.
The debt service tax rate and levy are required to be computed and collected to provide
sufficient funds to pay principal and interest as they become due.

The issuance of debt finances the City’s purchase of land, buildings, building
improvements, street reconstruction, sewer system rehabilitation, capital equipment, and
drainage facilities. Current projects are described in the Capital Projects Funds section
of the budget.

Retirement of the notes, bonds, certificates of obligation and contractual obligations in
General Long-Term Debt is provided from taxes allocated for debt service together with
resources transfer from other resources and interest earned within the Debt Service Fund.
Certificates of obligation issued for water and sewer improvements are retired from net
revenues of the Water and Sewer Fund. Certificates of obligation issued for drainage
improvements are retired with net revenues of the Drainage Utility.

Debt Management

The City issues debt only for the purpose of acquiring or constructing capital assets for
the general benefit of its citizens and to allow the City to fulfill its various missions as a
local government unit. Capital assets must have a value of at least $5,000 and a useful
life of at least two years by policy. In practice, assets financed with debt needs to have a
useful life of more than three years. Debt may be issued for land acquisition, right-of-way
purchase, improvements to land, construction projects, and purchase of capital
equipment.

The ordinances authorizing the issuance of the Combination Tax and Revenue Refunding
Bonds and the Public Property Finance Contractual Obligations require that the City’s ad
valorem tax revenues and charges for services be enough to generate net revenues
sufficient to provide for the payment of the debt service requirements of the bonds issued.
The City is in compliance with all requirements of the ordinances for the year ended
September 30, 2018.

While City policy does not prohibit the issuance of variable rate debt the City has no
variable rate debt and no plans to issue variable rate debt in the near future.

Page 77