Page 97 - CityofHaltomFY24Budget

City Of Haltom City Annual Budget, Fy2024 Debt Service Fund

DEBT SERVICE FUND DESCRIPTION

The Debt Service Fund administers the government fund’s finances as established by ordinances
authorizing the issuance of general obligation bonds, certificates of obligation and tax notes. The
purpose of the fund is to provide for the payment of bond principal and interest as they become due
and payable. The debt service tax rate and levy are computed and collected to provide sufficient
funds to pay principal and interest as they become due.

The issuance of debt finances the City’s purchase of land, buildings, building improvements, street
reconstruction, parks, and capital equipment. Other types of capital projects supporting the Water
and Sewer fund or the Drainage fund, such as sewer system rehabilitation and drainage facilities,
can also be financed by the issuance of debt but is serviced through the enterprise funds. Current
projects are described in the Capital Funds Section of the budget.

Retirement of the notes, bonds, certificates of obligation and contractual obligations in General
Long-Term Debt is provided from taxes allocated for debt service together with transfers from
other resources and interest earned within the Debt Service Fund. Certificates of obligation issued

This Page Intentionally Left Blank for water and sewer improvements are retired from net revenues of the Water and Sewer Fund.
Certificates of obligation issued for drainage improvements are retired with net revenues of the
Drainage Utility.

Debt Management

The City issues debt only for the purpose of acquiring or constructing capital assets for the general
benefit of its citizens. Capital assets must have a value of at least $5,000 and a useful life of at
least two years by policy. In practice, the majority of assets financed through debt are structured
to align their useful life with the entire repayment period, with few exceptions, but never less than
three years. Debt may be issued for land acquisition, right-of-way purchase, improvements to land,
construction projects, and purchase of capital equipment.

The ordinances authorizing the issuance of the Combination Tax and Revenue Refunding Bonds
and the Public Property Finance Contractual Obligations require that the City’s ad valorem tax
revenues and charges for services be enough to generate revenues sufficient to provide for the
payment of the debt service requirements of the bonds issued.

While City policy does not prohibit the issuance of variable rate debt, the City has no variable rate
debt and no plans to issue variable rate debt in the near future.