Page 111 - Hurst Adopted FY22 Budget

Debt Service Funds

City of Hurst Bond Ratings

The City of Hurst current bond ratings are Aa2 from Moody's Investor Services and AA from
Standard & Poors.

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, voters 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
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 & Poors). 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.

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