Page 449 - Southlake FY20 Budget

Appendix

FInAnCIAL POLICIES

Tax Collection
• The City shall encourage the Tax-Assessor-Collector to follow an aggressive policy of collecting
property tax revenues. An average collection rate of at least 98% of current levy shall be maintained.

Reserves
• The City’s General Fund unreserved ending balance may only be used for one-time purchases such as capital
equipment.
• The General Fund unreserved/undesignated balance shall be maintained at a minimum of 15% up to an optimum
balance of 25% of annual General Fund expenditures.

• The fund balance in the debt service fund shall be maintained at a minimum level of 4.0% of annual debt service
expenditures.

• Utility Fund unreserved/undesignated retained earnings balance shall be maintained at a minimum of 60 up to an
optimum balance of 90 days of working capital.

Debt management
• Debt financing which includes permanent improvements bonds, revenue bonds, certificates of obligation, lease/
purchase agreements and other obligations allowed under Texas law shall be used to acquire or construct land and
improvements that cannot be funded by current revenues. The term of debt shall not exceed the expected useful
life of the capital asset being financed and in no case shall it exceed 25 years.
• Debt will not be used to fund current expenditures.
• Permanent Improvement Bonds shall normally be issued with a level principal structure. This structure equates to
an average life of 11 years or less for a 20-year issue. Interest shall be paid in the first fiscal year after a bond sale
and principal must be paid no later than the second fiscal year after the bond sale.
• Each year the City will adopt a Capital Improvements Program (CIP). The plan will recommend specific funding of
projects for the following fiscal year and will identify projects for further consideration in years two through five.
• The City is committed to providing continuing disclosure of certain financial and operating data and material event
notices as required by Securities and Exchange Commission (SEC) Rule 15c2-12. The Finance Department shall be
responsible for the preparation of all disclosure documents and releases required under Rule 15c2-12.
• The City will obtain a rating from at least two nationally-recognized bond-rating agencies on all issues being sold
on the public market. Required information will be presented to the rating agencies at least annually in order to
maintain ratings on outstanding debt.

• The City shall comply with the Internal Revenue Code Section 148-Arbitrage Regulations for all tax-exempt debt
issued. An annual estimate of arbitrage liabilities shall be obtained by the City and recorded on the financial
statements.
• A good faith deposit of 2.0% of the par amount of the bond sale shall be presented by the underwriter in the form
of a check or surety acceptable to the City and Bond Counsel prior to the approval of the bonds by the Mayor and
City Council.
• The City shall use a competitive bidding process in the sale of the debt unless the use of a negotiated process
is warranted due to market timing requirements (refunding), or a unique pledge or debt structure. The City will
award competitively-issued debt on a true interest cost (TIC) basis.
• The City welcomes ideas and proposals from investment bankers and will seek to give first consideration to those
firms that submit unique and innovative ideas that benefit the City. Unsolicited proposals should be submitted to

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