Page 40 - City of Fort Worth Budget Book

Processes and Policies Financial Policies

Debt Planning Guidelines
Debt financing, to include general obligation bonds, revenue bonds, certificates of obligation, certificates of
participation, commercial paper, tax notes, lease/purchase agreements, and other obligations permitted to be
issued or incurred under Texas law, shall only be used to purchase capital assets and equipment that cannot be
prudently acquired from either current revenues, assigned fund balance, or net position, and to fund infrastructure
improvements and additions. The useful life of the asset or project shall exceed the payout schedule of any debt
the city assumes.

The city shall not assume more tax-supported general purpose debt than it retires each year without conducting
an objective analysis as to the city’s ability to assume and support additional debt service payments. When
appropriate, self- supporting revenue bonds shall be considered before general obligation bonds.
Debt Service Guidelines

Generally, the city shall issue bonds with an average life of approximately 10.5 years for general obligation bonds
and approximately 17-18 years for revenue bonds. The structure should approximate level principal on general
obligation bonds and level debt service for revenue bonds. Concerning the issuance of revenue bonds for a
stand- alone or self- supporting project, the term of the debt and debt service structure shall be consistent with the
useful life of the project and the revenue-generating capability of the project.

There shall be no debt structures, which include increasing debt service levels in subsequent years, except for the
first and second year of a payment schedule. There shall be no "balloon" bond repayment schedules, which
consist of low annual payments and one large payment of the balance due at the end of the term. There shall
always be at least interest paid in the first fiscal year after a bond sale and principal starting generally no later
than the second fiscal year after the bond issue. In the case of a revenue-generating project, principal repayment
should begin no later than the first full year after the project has been placed in service. Normally, there shall be
no capitalized interest included in the debt structure unless there are no historical reserves upon which to draw.
User Fee Policy

For services that benefit specific users, the city shall establish and collect fees to recover the costs of those
services. The City Council shall determine the appropriate cost recovery level and establish the fees. Where
feasible and desirable, the city shall seek to recover full direct and indirect costs. User fees shall be reviewed
regularly to calculate their full cost recovery levels, to compare them to the current fee structure, and to
recommend adjustments where necessary.

It is the intention of the city that all utilities and enterprise funds be self-supporting. As a result, utility rates and
enterprise user fees shall be set at levels sufficient to cover operating expenditures, meet debt obligations,
provide additional funding for capital improvements, and provide adequate levels of working capital. The city shall
seek to eliminate all forms of subsidization to utility/enterprise funds from the General Fund.

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