Page 438 - FortWorthFY23AdoptedBudget

2. Revenue Bonds

Revenue bonds are secured solely by the revenues of an operating
fund. As a result, the credit markets look at the type of and history
of collections and volatility on revenue securing the payment of
debt service on the bonds to determine the level of security
necessary for the purchase of the bonds.

Whether revenue bonds can be secured with gross revenues of the
operating fund or net revenues (i.e., those revenues remaining after
paying costs of operation and maintenance) is often determined by
state law. Coverage requirements, and the need for and level of
reserve funds to provide additional security in support of revenue
bonds, are subject to rating agency review and market standards.

Generally, for the City to issue additional water and sewer revenue
bonds, net revenues, as defined in the ordinance authorizing the
revenue bonds, shall be a minimum of 125% of the average annual
debt service and 110% of the debt service for the year in which
requirements are scheduled to be the greatest, but should be at least
150% of the annual debt service for financial planning purposes.
Annual adjustments to the City's rate structures will be made as
necessary to maintain a minimum 150% coverage factor.
Exceptions to these standards must be fully explained and justified.

Generally, for the City to issue additional stormwater revenue
bonds, gross revenues, as defined in the ordinance authorizing the
revenue bonds, shall be at least of 150% of the maximum annual
debt service, however net revenues (after operations and
maintenance expenses) should be at least 150% of the annual debt
service for financial planning purposes. Annual adjustments to the
City's rate structures will be made as necessary to maintain a
minimum 150% coverage factor using net revenues.

Revenue bonds that may be issued to finance improvements for
other activities (e.g., airports or convention center facilities) will
necessitate the consideration of coverage and reserve fund
requirements unique to the operating fund, such that the revenue
bonds will be creditworthy and marketable.

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