Page 57 - Benbrook FY2021

DEBT SERVICE

OPERATING FUNDS – DEBT SERVICE

As of October 1, 2020, the City of Benbrook has debt issues outstanding for a total Debt Service Fund balance of $2,750,000 in general
obligation and refunding bonds. The original amount of debt issued was $23,929,259; $21,179,259 has been retired in prior years.

The City of Benbrook maintains its bond rating by Moody's Investor Services. Moody's Investor Service upgraded the City's bond rating to Aa3
based on the City's outstanding general obligation debt. The rating upgrade was based on the City's moderate tax base growth, consistently
well-managed financial operations, and low level of aggressively retired debt. Moody's stated that Benbrook's conservative budgeting
practices and tight expenditure controls continue to produce well-managed financial operations with satisfactory reserve levels.

In 2012, Standard and Poor’s raised its rating on the City of Benbrook’s general obligation debt one notch from A+ to AA- based upon the
stable economic outlook. Standard and Poor’s began a review of the City’s rating in 2013 and informed the City that the rating increased from
AA- to AA+ based on the City’s superlative financial management.

The City's Operating Fund's 2020-21 projected ending balance of $8,954,197 is 40.0 percent of budgeted operating expenditures; this level
of reserves provides for a more-than-satisfactory financial cushion. This level is in keeping with City management's goal of maintaining a
minimum of three months of operating expenditures in reserve. General operations are primarily funded from property, franchise, and sales
taxes; property taxes and franchise fees have increased favorably in recent years; sales tax is increasing significantly. Annual debt service
expenditures claim only 7.2 percent of expenditures in 2020-21; this relatively low percentage reflects the City's above average bond payout
schedule. The City's debt position is characterized by modest debt levels and an above-average rate of bond payout.

The City’s last bond election, held in February 2004, was for the City to obtain voter approval on the sale of bonds to finance capital
improvement projects. The issuance of $2,800,000 in street improvement bonds and the issuance of $3,215,000 in park improvement bonds
were not approved by Benbrook’s voters. Voters did approve the issuance of $3,700,000 in bonds for drainage projects and $281,250 to
acquire a site for building a fire substation in the Whitestone area of Benbrook. Bonds were sold in May 2004 in the amount of $3,700,000
for drainage projects; the first interest payment was in September 2005. Bids for the acquisition of land for the fire substation came in at
$110,000 - much lower than anticipated; the City Council approved purchasing the property with General Fund reserves in 2003-04.

The City’s bond counsel advised the City to re-finance existing debt (general obligation bonds) in order to reduce future interest payments. The
re-financing of this existing debt was also approved by Council in 2004-05. General obligation bonds were re-financed in 2011. After the
2013-14 Budget was adopted, the City’s bond counsel recommended refinancing general obligation bonds issued in 2005; these general
obligation bonds were refinanced in November 2013.

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