Page 123 - Mansfieldr FY20 Approved Budget
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future  revenue sources, operating expenses and projected capital  improvement projects for all  of  the
               City’s activities: Governmental Funds and Enterprise Funds.  This Strategic Plan measures the  City’s
               ability to authorize and issue additional debt over the next ten years.  Each year, the plan is revised to
               reflect growth, population estimates and current operating revenues.

                     The City shall use an objective, analytical approach to determine whether it can afford to incur
                       new debt beyond what it retires each year.   This  process  shall compare generally accepted
                       standards of affordability to the current values for the City.

                       General Obligation Bonds:

                         -   Debt per capita
                         -   Debt as a percent of taxable value
                         -   Debt service as a percent of current revenues and current expenditures
                         -   Debt tax rate as a percent of the City’s tax rate

                       Revenue Bonds:

                         -   Pledged revenues shall be a minimum of 110% of annual debt service
                         -   Pledged revenues shall be a minimum of 125% of average annual debt service
                         -   Pledged revenues shall be 130% of maximum annual debt service for financial planning
                             purposes
                         -   Annual adjustments to the City’s rate structures will be made as necessary to maintain a
                             130% coverage factor

                     The City will keep outstanding debt within the limits prescribed by State Statute, which does not
                       prescribe a legal debt limit.  However, Article XI, Section 5 of the Texas Constitution, applicable
                       to cities with a population of more than 5,000, limits the ad valorem tax rate to $2.50 per $100
                       assessed valuation.

               Types of Debt and Criteria for Issuance of Types of Debt
               The  City  may choose to  issue  debt under  any  provision allowed for and  permitted  by  State  Statute.
               Although debt is an obligation to be repaid, it can assume many forms.  The form and character of debt is
               typically determined by the nature of the funding source and nature of the asset  to be purchased or
               improved.  However, debt can  generally  be  categorized  into two types,  as  determined by the  Federal
               Income Tax Code:  Governmental Bonds and Private Activity Bonds, either of which may be taxable or
               tax-exempt.  In determining the type of security for financing an improvement or purchasing of a capital
               asset, the City may consider the following, and is not limited to the following:

               Debt Form

               General Obligation Facility:

               General Obligation Bonds (“GOs”)             Tax levy as security for the bonds
                                                            Voter’s Approval
                                                            Specific Public Purpose

               Certificates of Obligation (“COs”)           Tax levy and/or revenue pledge as security
                                                            Specific public purpose
                                                            Public Notice; hearings and advertisement


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