Page 144 - ClearGov | Documents

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

Qualify statutorily
Immediate need for financing
Line of Credit Borrowings retired with bond proceeds
Fulfill bond reserve covenants
Borrowings repaid from current resources

Revenue pledge as security
Commercial Paper Demand from the market for small issuer
Commercial paper

Minimize risk of market
Reduced costs versus fixed costs
Derivatives
Create flexibility
Understood risk warrants the savings

Debt service is less than cost of insurance
Surety Bond & Bond Insurance Double AA rated insurer
Competitive offers from two insurers

Debt Structure

Historically, the City of Mansfield’s debt structures have been designed to coincide with the fiscal
policies of the City of Mansfield, Texas, essentially allowing growth to pay for growth by properly
setting the maturities of the debt to equal or less than the usefulness of the improvement or asset.
Typical debt structure of a bond issuance:

Term or serial bonds structured for annual payments
Traditional call feature that does not influence the price of the bonds
Average bond life of 10.5 years to 12.0 years
Level payments for 20 years
Pricing structured to allow for premiums and discounts
First year payment to begin in second year of construction
Bond insurance
Surety bond if warranted

The City of Mansfield has sought non-traditional avenues of capital improvement financing;
however, the City is considered a “small issuer” under the law. It has been more economical for the
City to maintain this type of debt structure for its bond sales. This does not preclude the City from
considering different structures or structuring its issuance differently from its typical debt structure.
The purpose of the structure is to provide the City with the lowest possible costs under market
conditions at the time of issuance.

Methods of Sale

Competitive Sale: The City shall seek to issue its debt obligations in a competitive bidding
environment. Bids shall be awarded on a True Interest Cost, providing the bidders meet other
bidding requirements. In some instances, the City may award the sale to the lowest Net Interest
Cost bidder depending on the economic substance of the transaction. If the competitive bidding
process is not conducive to soliciting the lowest cost of financing a bond issuance, the City may
choose to negotiate the sale.

Negotiated Sale: The City shall seek to weigh the selection of an underwriter before negotiating a
bond sale. The selection of the underwriter shall encourage the best economic environment in
which the City will benefit from selling its bonds. Typically, negotiated sales will occur when the

Page 143