Page 230 - ArlingtonFY24AdoptedBudget

Capital Improvement Program

Arlington’s Capital Budget cycle spans from October to March, when the Capital Budget is adopted. This process begins with
the City’s Capital Budget Executive Committee. The Committee last met in October 2022 to discuss a priority project list for the
use of the remaining City’s 2018 Bonds and the 2023 New Bond authorization. In developing the capital budget, the Capital
Budget Executive Committee considered a variety of factors on the decision-making process, including:

• City Council Priorities
• Neighborhood Needs
• Infrastructure Investment
• Financial Policies
• Debt Ratio Targets
• Sector Plan Strategy
• Master Plan, Thoroughfare Plan, etc.
• Appropriate timing of the project
• Projected O&M costs
• Efficient use of bond funds

Once the Committee has prioritized its capital projects for the coming fiscal year, City staff prepares the capital budget for
Council to adopt.

Bond Sales

A bond sale occurs annually, the amount of which dictates the appropriation approval of the Capital Budget. In this action, the
City sells bonds on the open market and incurs debt to finance the cost of building the capital projects as identified on the Capital
Budget. Voter-approved general obligation bonds and non-voter-approved certificates of obligation serve as the primary sources
of funding for general capital projects. These include capital initiatives such as parks construction and improvements, land
acquisition, public works projects, building construction for public safety, and airport improvements, among others. The City’s
ability to sell bonds depends on the remaining authorization from bond elections, the City’s tax rate and property values that
support the bonds, and the ability for the City to meet its stated debt management ratio targets, found in the financial policies
section of this document. The City most recently sold bonds to fund capital projects in June of 2023 for $129 million, utilizing
authorization from 2018 bond elections. The City also amended the FY 2023 Capital Budget to include the most recent 2023
May Bond Election projects.

Debt Service

As the City incurs debt for the acquisition and construction of capital projects, the City also makes annual payments to repay
the bonds previously issued. General obligation bonds are funded wholly through a designated portion of the City’s property tax
rate, while certificates of obligation incorporate other various funding sources as well as ad valorem taxes. Of the City’s total FY
2024 tax rate of $0.5898 per $100 in assessed valuation, $0.1818 will be used to retire general obligation bonds and certificates
of obligation.

Debt Retired

Each year, the City satisfies a portion its debt obligations. This means that the City has completely repaid a portion of its debt
from general obligation bonds and certificates of obligation. Currently, the City has a financial policy that requires debt obligations
to be repaid on a conservative schedule (level principle) so as not to burden future taxpayers. In general, the City issues twenty-
year debt with an average life of nine years. On average, the City retires approximately $26 million in general obligation and
certificates of obligation debt principle annually. As this debt is retired, it allows the City the capacity to issue more bonds to fund
new capital projects for future bond elections.

FY 2024 Adopted Budget and Business Plan 221 City of Arlington, Texas