Page 53 - CityofGrapevineFY26AdoptedBudget

¹Represents principal only.
Source: Texas Bond Review Board.

DEBT SERVICE POLICY
The City has no direct debt limitation. A fund balance reserve policy is maintained to ensure fund availability for unforeseen emergencies that would
severely impact the City's ability to pay for basic operations and guarantee the payment of debt obligations. Any exceptions are to be noted at the time
the budget is approved. The emergency reserve for the Debt Service Fund is established as a minimum level of 20% (72 days) of total current budgeted
net debt service expenditures. Bond proceeds are intended for capital expenditure only and such revenues are never to be used to fund normal
operations. Proceeds are allowed to be invested by the City's authorized investment officer only to the extent of the law in accordance with the Public
Funds Investment Act (PFIA), the statutory provisions of the issuance, and the City's investment policy.

DEBT LIMITATIONS
All potential debt issuances are evaluated for ad valorem tax collection rates and changes in assessed value, current market interest rates, self-
supporting capacity, and fund balance. Revenues are generated by the collection of property taxes dedicated to interest and sinking fund requirements,
interest income, and transfers from various funds to supplement the tax rate. The maximum rate for property tax under the Texas Constitution for
Home Rule Charter Cities is $2.50 per $100 of assessed valuation. While there is no constitutional or statutory limitation of that maximum rate's
allocation to interest and sinking purposes, the Texas Attorney General has adopted an administrative policy that allows for a maximum of $1.50 per
$100 valuation to be used for debt service. Currently, the taxable value of $11.4 billion provides a maximum debt ceiling of $171 million of which the City
is raising revenue at 8% of its debt capacity at an Interest & Sinking rate of $0.102797 per $100 levied for a budgeted revenue of $13,025,590.

Of the $0.237228 tax rate for Fiscal Year 2026, the Interest & Sinking portion is $0.102797 per $100 levied for an anticipated budgeted revenue of
$13,025,590.

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