Page 323 - Southlake FY24 Budget

- The City shall obtain a clear opinion from qualified legal counsel that the City is not liable for the pay-
ment of principal and/or interest in the event of default by a conduit borrower. If no such opinion can be
obtained, the conduit borrower will be required to purchase insurance or a letter of credit in the City’s
name in the event of default. Examples of a conduit issuer are special authorities, tax increment finance
districts, public improvement districts, or industrial development issuers.

Debt Management-Ratio Targets
- The ratio of net debt (total outstanding tax-supported general obligation debt less debt service fund
balance) to total taxable assessed valuation shall not exceed 2.0%. This excludes debt of overlapping Appendix
jurisdictions. The City shall structure its bond issuance to achieve and maintain a debt-to-assessed value
of 2.0% or less.

- The ratio of debt service expenditures to total expenditures (General Fund operating expenditures and
debt service combined) shall not exceed 20%.

- The Finance Department shall prepare an analysis of the impact of adopted tax-supported debt prior to
the issuance of the additional debt. The analysis shall project the debt ratios described above as well as
any other applicable debt ratios.

Debt Management-Certificates of Obligations
It is the City’s priority to fund capital expenditures with cash or voter approved debt. However, non-voter
approved debt may be used for capital expenditures as an alternative to lease/purchase or other financ-
ing options if the capital expenditure is:
- Urgent;

- Necessary to prevent an economic loss to the City;
- Revenue generating and expected to cover debt service out of the revenue source; and,

- Non-voter approved debt is the most cost effective financing option available.
- The average maturity of non-voter approved debt shall not exceed the average life of the capital
items financed.

- Capital items financed with non-voter approved debt shall have an expected economic life of at
least three years.

FY 2024 City of Southlake | Budget Book 323