Page 140 - ClearGov | Documents

City of Mansfield Annual Budget and Service Program Fiscal Year 2025-2026 Table of Contents

City of Mansfield Debt Management Policy

Purpose

The City recognizes that effective management of the public’s funds is an investment of the public’s funds within the
community in which it serves. It is with this understanding that the City of Mansfield establishes its debt policy to guide
decision makers in investing the public’s money within the City of Mansfield, Texas.
“Tax-exempt financing is used by state and local governments to raise capital to finance public capital improvements
and other projects, including infrastructure facilities that are vitally important to sustained economic growth.”
- Tax-Exempt Financing, a Primer
It is upon this principle that the City of Mansfield, Texas determines the necessity to incur debt in order to finance the
Capital Improvement Program (CIP) of the City. The management of the City’s debt is vital for maintaining the expected
cost of services and the continued infrastructure development within this community. With the issuance of additional
debt, the City is able to pay for the infrastructure needs of the community without overly burdening the constituency in
any given period by increasing or decreasing the fee structure necessary to support the capital improvement. As a result,
the management of the City’s debt portfolio is designed to minimize the impact on its constituency.

Authorization

The Constitution of the State of Texas and the general laws of the State of Texas allow for and permit Texas cities, as
authorized by the City, to issue direct obligations or bonds for the purpose of financing improvements and capital assets.

Although the Federal Government does not govern local spending authority, it closely regulates and monitors the types of
issuances and the authority for issuance through the Federal Income Tax Code, Sections 141 through 150. The Federal
Income Tax Code restricts the nature and character of Bond Interest in how it is treated as income for income tax
reporting, thereby controlling and creating markets for tax-exempt instruments.

Uses of Debt Financing and Capital Improvements

Debt financing shall be used to fund infrastructure improvements and the purchasing of capital assets as long as the
asset life of the improvement or capital asset is beyond the cost of financing the improvement or the capital asset.

Debt financing shall be used as a funding source when the improvements or the purchase of capital assets cannot
be acquired from current revenue sources or direct fees like impact fees. In addition, if the purchase of capital assets
and construction of infrastructure improvements can be funded through available resources (fund balance, current
revenue or any other recurring revenue), then the cost of money should be considered against the value of available
resources in determining pay-as-you-go financing.

Page 139