Page 288 - Hurst Budget FY21

Debt Service Fund Summary

Moody’s Investor Services Standard & Poors

General Obligation Bonds Aa2 AA
Water & Sewer Obligations Aa2 AA
Half-Cent Sales Tax Bonds Aa3 AA

Debt Management

The Hurst Charter sets a limitation on the maximum total tax rate at $1.50 per $100 of valuation.
Any increase in the debt component will decrease the funds available for maintenance and
operations. Currently, one cent on the tax rate generates approximately $220,000 in revenue
equating to $33 million at the City’s maximum tax rate. Several factors influence debt management,
such as property values, the tax rate, the amount of debt, and the timing of issuance. In May 2012,
approved a $16.5 million General Bond Election for the construction of a new Justice Center and
related parking area. The issuance of this debt resulted in a tax rate increase of 3 cents Savings
associated with several bond refunding’s, as listed on the previous page, have provided the
opportunity to lower the debt rate by about 2 cents. The net result of bond issuance and refunding
over the past ten years is an increase in the debt rate of approximately 3 cents.

The City’s debt management policy is conservative.

1. The City diligently monitors its compliance with bond covenants.
2. The City will maintain appropriate communications with bond rating agencies and the
Municipal Securities Rating Board (MSRB) regarding its financial condition. The City’s
present ratings are Aa2 (Moody’s) and AA (Standard & Poor). Due to a recalibration by
Moody’s the City’s rating was upgraded from an Aa3 to an Aa2 in 2009-2010.
3. An analysis will be prepared for each long term financing activity that shows the impact
on current and future budgets for debt service and General Fund operations.
4. Issues are evaluated each year to prioritize projects and ensure sound debt capacity.
The debt issuance policy will continue to be addressed in the City Council’s annual
Strategic Planning Process held in February each year.

Debt Issuance

The following summarizes the City’s debt issuances and refunding’s for 2010 through 2020.

• During 2011-2012, $2.7 million of General Obligation bonds were refunded. The 2012 Bond
Election was approved by voters and $16.5 million in General Obligation Bonds were also
issued for the construction of a Justice Center and related parking facilities.
• In 2012-2013 $7.83 million of General Obligation bonds were refunded resulting in
approximately $226,000 in savings for the General Debt Service Fund.
• During 2014-2015, $4.915 million of General Obligation bonds were refunded resulting in
approximately $261,674 in savings for the General Debt Service Fund. The City issued a
total of $3 million in debt for Public Works projects such as the continual widening and
development of Pipeline Road, as well as, miscellaneous Water and Sanitary Sewer
Replacements.
• During 2015-2016, most of the 2008 debt issued was refunded in the amount of $12.555
million were refunded resulting in approximately $2.1 million in savings for the General Debt
Service Fund, Enterprise Fund, Hotel/Motel Fund, and Half-Cent Community Services Fund.
The City issued a total of $5.4 million in debt for Community Services projects such as the
renovation of Central Aquatics Center and the Roof Repair at the Recreation Center.
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