Page 516 - Southlake FY22 Budget

APPEnDIX

FInAnCIAL POLICIES

• The selection of an underwriter or group of underwriters for a negotiated sale shall be based on the following factors:
• Participation in the City’s competitive sales;

• Submission of unique or creative proposals;
• Qualifications of firm; and,
• Size and geographic distribution of their sales staff.
• All professional service providers selected in connection with the City’s debt issuance and management program shall
be chosen through a competitive process such as request for proposals (RFP’s) on an as needed basis.
• An advance or current refunding of outstanding debt shall only be considered when present value savings of at least
4.25% of the principal amount of the refunded bonds are produced, unless a debt restructuring or bond covenant
revisions are necessary. Savings from refunding will be distributed evenly over the life of the refunded bonds.
• An analysis of the risks and potential rewards of a derivative product for debt management must be prepared before
the structure is selected. The City’s Bond Counsel must opine that the City is authorized to enter into the necessary
agreements under all existing statutes.
• The use of reimbursement resolutions shall be encouraged as a cash management tool for debt funded projects.
Reimbursement resolutions may be used for any project that has been approved in the City’s Capital Budget.
Reimbursement resolutions may be used for other projects if the projects are revenue supported or funded within
the departments’ operating budget.

• The City shall obtain a clear opinion from qualified legal counsel that the City is not liable for the payment of principal
and/or interest in the event of default by a conduit borrower. If no such opinion can be obtained, the conduit borrower
will be required to purchase insurance or a letter of credit in the City’s name in the event of default. Examples of
a conduit issuer are special authorities, tax increment finance districts, public improvement districts, or industrial
development issuers.

Debt Management-Ratio Targets
• The ratio of net debt (total outstanding tax-supported general obligation debt less debt service fund balance) to
total taxable assessed valuation shall not exceed 2.0%. This excludes debt of overlapping jurisdictions. The City shall
structure its bond issuance to achieve and maintain a debt-to-assessed value of 2.0% or less.
• The ratio of debt service expenditures to total expenditures (General Fund operating expenditures and debt service
combined) shall not exceed 20%.
• The Finance Department shall prepare an analysis of the impact of adopted tax-supported debt prior to the issuance
of the additional debt. The analysis shall project the debt ratios described above as well as any other applicable debt
ratios.

Debt Management-Certificates of Obligations
• It is the City’s priority to fund capital expenditures with cash or voter approved debt. However, non-voter approved
debt may be used for capital expenditures as an alternative to lease/purchase or other financing options if the capital
expenditure is:
• Urgent;
• Necessary to prevent an economic loss to the City;
• Revenue generating and expected to cover debt service out of the revenue source; and,
• Non-voter approved debt is the most cost effective financing option available.
• The average maturity of non-voter approved debt shall not exceed the average life of the capital items financed.
• Capital items financed with non-voter approved debt shall have an expected economic life of at least three years.
BUDGET BOOK | FY 2022 City of Southlake 515
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