Page 123 - Mansfieldr FY20 Approved Budget

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

123