Page 246 - FY 2025 Adopted Operating Budget and Business Plan

Capital Improvement Program Return to Table of Contents

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 2023 to discuss a priority project list for
using 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 in 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 the
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 funding
sources for general capital projects. These include capital initiatives such as park 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 of 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 May of 2024 for $181.7 million, utilizing
authorization from 2018 and 2023 bond elections.

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 and ad valorem taxes. Of the City’s total FY 2025
tax rate of $0.5998 per $100 in assessed valuation, $0.1852 will be used to retire general obligation bonds and certificates of
obligation.

Debt Retired

Each year, the City satisfies a portion of 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) not to burden future taxpayers. The City generally 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 principal annually. As this debt is retired, the City will have the capacity to issue more bonds to
fund new capital projects for future bond elections.

FY 2025 Adopted Budget and Business Plan 237 City of Arlington, Texas