Page 353 - City of Bedford FY21 Budget

GENERAL DEBT SERVICE FUND

The General Debt Service Fund is used for the accumulation of resources for payment of general
long-term debt principal and interest. Resources include an applicable portion of the ad valorem
tax levy and related interest income usable from debt service. Funding of the General Debt
Service Fund is made on a conservative basis of estimating the collectable portion of the tax
levy. From this collectable portion, an allocation of available funds is made between General
Fund operating revenue and General Debt Service Fund.

DEBT MANAGEMENT

A. Debt Issuance. The City will issue debt only for the purpose of constructing
capital assets or purchase of capital equipment for the general benefit of its
citizens and to allow it to fulfill its various missions as a city. Debt may be issued
for the purposes of purchasing land or rights-of-way and/or improvements to land,
for construction projects to provide for the general good, or for capital equipment.

B. Types of Debt.

1. General Obligation Bonds (GO). General obligation bonds are not to be
used to fund operation needs of the City. GOs may be used only to fund
capital assets of the general government and are backed by the full faith
and credit of the City as well as the ad valorem tax authority of the City.
General obligation bonds must be authorized by a vote of the citizens of
the City of Bedford.

2. Revenue Bonds (RB). Revenue bonds may be issued to provide for the
capital needs of any activities where the capital requirements are necessary
for continuation or expansion of service which produces revenue and for
which the asset may reasonably be expected to provide for a revenue
stream to fund the debt service requirements.

3. Certificates of Obligation (CO). Certificates of obligation may be used
in order to fund capital requirements that are not otherwise covered under
either revenue Bonds or General Obligation bonds. Debt service for CO
debt is backed ad valorem taxes levied on all taxable property within the
City, and a limited pledge of net revenues from a specific source, such as
Water and Sewer revenues. Generally, COs are used to fund capital assets
where full bond issues are not warranted because of the cost of the asset(s)
to be funded by the instrument.

4. Contractual Obligations (KO). These are designed as a low-cost
alternative to lease/purchase of equipment. They may be used solely for

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