Page 263 - ArlingtonFY24AdoptedBudget

Appendices

FINANCIAL POLICIES (CONTINUED)

7. The fund balance in the debt service fund shall be maintained at a minimum level of 4.0% of annual debt service
expenditures and a maximum level of 10%.

In Compliance: Yes Comments: Fund balance was 6.8% of expenditures in FY 2022.

8. The fund balance in the Water Utility Interest and Sinking Fund and Storm Water Interest and Sinking Fund shall be
maintained to ensure debt service payments.

In Compliance: Yes Comments: Both Funds had cash above the FY 2022 debt service. Water has 2.96x coverage in
net revenues / debt service. Stormwater has 4.16x coverage in total revenues / debt service.

9. The Water Utility Debt Service Reserve and Storm Water Debt Service Reserve shall be maintained in accordance with the
covenants of the outstanding debt issues.

In Compliance: Yes Comments: Water DS Reserve met bond covenants with 4.82x revenues / annual debt service.
Storm Water had a coverage of 4.16x revenues vs maximum debt service expenditures greater
than the required 1.25x by the bond covenants that require a DS Reserve.

Debt Management

1. Debt financing which includes permanent improvement bonds, revenue bonds, certificates of obligation, lease/purchase
agreements and other obligations allowed under Texas law shall be used to acquire or construct land and improvements
that cannot be funded by current revenues. The term of debt shall not exceed the expected useful life of the capital asset
being financed and in no case shall it exceed 30 years. An exception will be made if refunding Section 334 debt (venue) to
the State maximum is determined to be necessary or advantageous.

In Compliance: Yes Comments: All debt financings have met this standard

2. Interest earned on bond funds will be determined on an allocation basis and deposited to its respective fund to be used for
approved projects. Interest earnings are considered appropriated when allocated.

In Compliance: Yes Comments: Interest is calculated and appropriated on a monthly basis.

3. Debt will not be used to fund current operating expenditures.

In Compliance: Yes Comments: No debt was used for current operating expenditures.

4. Each year the City will adopt a capital improvement plan. The plan will recommend specific funding of projects for the
current fiscal year and will identify projects for further consideration in years two through five.

In Compliance: Yes Comments: The most recent CIP was adopted June 27, 2023

5. The City will obtain a rating from at least one nationally recognized bond-rating agency on all issues being sold on the public
market. Required information will be presented to the rating agency(s) at least annually to maintain ratings on outstanding
debt.

In Compliance: Yes Comments: The City met with Moody’s (Aa1), S&P (AAA), and Fitch (AAA) in April 2023.

6. All professional service providers shall be selected in accordance with the City’s Procurement policy.

In Compliance: Yes Comments: All providers selected were in accordance with the policy.

FY 2024 Adopted Budget and Business Plan 254 City of Arlington, Texas