Page 97 - Haltom City FY 22 Budget

CITY OF HALTOM CITY ANNUAL BUDGET, FY2022 DEBT SERVICE FUND

DEBT SERVICE FUND DESCRIPTION

The Debt Service Fund is established by ordinances authorizing the issuance of general obligation
bonds, certificates of obligation and tax notes. The purpose of the fund is to provide for the payment
of bond principal and interest as they become due and payable. The debt service tax rate and levy
are required to be computed and collected to provide sufficient funds to pay principal and interest
as they become due.

The issuance of debt finances the City’s purchase of land, buildings, building improvements, street
reconstruction, sewer system rehabilitation, capital equipment, and drainage facilities. Current
projects are described in the Capital Projects Funds section of the budget.

Retirement of the notes, bonds, certificates of obligation and contractual obligations in General
Long-Term Debt is provided from taxes allocated for debt service together with transfers from
other resources and interest earned within the Debt Service Fund. Certificates of obligation issued
for water and sewer improvements are retired from net revenues of the Water and Sewer Fund.
Certificates of obligation issued for drainage improvements are retired with net revenues of the
Drainage Utility.

Debt Management

The City issues debt only for the purpose of acquiring or constructing capital assets for the general
benefit of its citizens and to allow the City to fulfill its various missions as a local government unit.
Capital assets must have a value of at least $5,000 and a useful life of at least two years by policy.
In practice, assets financed with debt needs to have a useful life of more than three years. Debt
may be issued for land acquisition, right-of-way purchase, improvements to land, construction
projects, and purchase of capital equipment.

The ordinances authorizing the issuance of the Combination Tax and Revenue Refunding Bonds
and the Public Property Finance Contractual Obligations require that the City’s ad valorem tax
revenues and charges for services be enough to generate net revenues sufficient to provide for the
payment of the debt service requirements of the bonds issued. The City is in compliance with all
requirements of the ordinances for the year ended September 30, 2021.

While City policy does not prohibit the issuance of variable rate debt the City has no variable rate
debt and no plans to issue variable rate debt in the near future.