Page 288 - FY 2023-24 ADOPTED BUDGET

DEBT SERVICE

The City of Benbrook Debt Service Fund was created by Ordinance 404, which was adopted August 25, 1975.

The ordinance authorizes a tax to be levied on all real and personal property with the proceeds from said tax
used to retire the principal and interest on all general purpose indebtedness. The Debt Service Fund accounts
for the accumulation of resources, and the payment of general long-term principal and interest.

As of October 1, 2022, the City of Benbrook has debt issues outstanding for a total Debt Service Fund balance of
$21,680,000 in general obligation and refunding bonds. Of that amount $20,920,000 is new debt issued at the end
of FY 2020-21.

The City of Benbrook maintains its bond rating by Standard & Poor’s. Standard & Poor’s recently upgraded the
City's bond rating to AA+ based on the City's outstanding general obligation debt. The rating upgrade was based
on the City's strong liquidity, consistently well-managed financial operations, and strong economy.

The City's Operating Fund's 2023-24 projected ending balance of $19,572,540 is 76.0 percent of budgeted operating
expenditures; this level of reserves provides for a more-than-satisfactory financial cushion. This level is in keeping

with City management's goal of maintaining a minimum of three months of operating expenditures in reserve.
General operations are primarily funded from property, franchise, and sales taxes. Annual debt service
expenditures claim only 5.0 percent of expenditures in 2023-24; this relatively low percentage reflects the City's
above average bond payout schedule. The City's debt position is characterized by modest debt levels and an above-
average rate of bond payout.

In September 2021 the City issued $22,000,000 in General Obligation Bonds for the construction of a new municipal
complex. The municipal complex will house City administration, Police Department, and Senior Center. The existing

buildings will be demolished, and one new building built in place of the other buildings. The municipal complex will
serve as an anchor to a new downtown. Construction began in FY 2021-22 and should be completed the end of
2023.

After the 2013-14 Budget was adopted, the City’s bond counsel recommended refinancing general obligation bonds
issued in 2005; these general obligation bonds were refinanced in November 2013.

Under current Texas statutes, the City has no legal limit on bonded debt. State statutes do, however, limit the total

amount of ad valorem taxes the City can impose. This limit is $2.50 per $100 of assessed valuation The City's total
tax rate of $0.5650 (for both the General Fund and the Debt Service Fund) and the tax rate for retirement of debt
service of $0.0390 are considerably below this limit.

Debt Service expenses financed through property tax revenue total $1,190,344 in 2023-24. Included in this total is
$630,000 for general obligation bond principal retirements, $560,344 for general obligation bond interest expenses,
and $3,800 for agent fees. Also, $338,485 is for Drainage and Stormwater debt.

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