HomeMy WebLinkAboutOrdinance No. 2015-2165 CITY OF THE COLONY,TEXAS
ORDINANCE NO. 2015-2165
ADOPT MUNICIPAL BUDGET FOR FISCAL YEAR 2015-2016
AN ORDINANCE OF THE CITY OF THE COLONY, APPROVING AND
ADOPTING A BUDGET FOR THE CITY FOR THE FISCAL YEAR
BEGINNING OCTOBER 1, 2015, THROUGH SEPTEMBER 30, 2016;
PROVIDING FOR THE INTRA AND INTER-DEPARTMENT FUND
TRANSFERS; PROVIDING FOR THE INVESTMENT OF CERTAIN
FUNDS; PROVIDING THAT EXPENDITURES FOR SAID FISCAL
YEAR SHALL BE MADE IN ACCORDANCE WITH SAID BUDGET;
AND DECLARING AN EFFECTIVE DATE.
WHEREAS,the Executive Director of Administration for the City of The Colony, Texas
has heretofore filed with the City Secretary, a proposed general budget for the City covering the
fiscal year 2015-2016; and
WHEREAS, a public hearing was duly held and all interested persons were given an
opportunity to be heard for or against any item therein in accordance with the Charter.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE
CITY OF THE COLONY,TEXAS:
SECTION 1: That the attached budget, presented by the City Manager and reviewed
during Council meetings and work sessions, and as amended be approved for the fiscal year
2015-2016.
SECTION 2: That the City Manager be and is hereby authorized to make intra and
Council approved inter-departmental fund transfers during the fiscal year as becomes necessary
in order to avoid over-expenditures of a particular account.
SECTION 3: That the City Manager, unless expressly prohibited by law, or unless it is
in contravention of any Depository Contract, may direct the City Finance Director to invest
funds in accordance with the City's Investment Policy.
SECTION 4: That said Budget as attached hereto as Exhibit "A" of this Ordinance, and
made a part hereof for all purposes, is hereby approved in all respects and is adopted as the
City's budget for the fiscal year beginning October 1, 2015, and ending September 30, 2016.
SECTION 5: The fact that the fiscal year begins on October 1, 2015, requires that this
Ordinance be effective upon its passage and adopted to preserve the public peace, property,
health and safety, and shall be in full force and effect from and after its passage and adoption.
DULY PASSED AND APPROVED,this the 15th day of September, 2015.
/ G t 4 � _iL _ ter'
JP- Mc on, , Mayor
ity of The Colony,Texa!
ATTEST:
/ A141dY✓
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C stie Wilson, TRMC, City Secretary
1111. Q
SEAL
TEXPM
APPROVED AS TO FORM: -,,,,,-
Ace
Jeff M••re, City Attorney
City of T Colony, Texas
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ANNUAL OPERATING BUDGET
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FISCAL YEAR 2015/2016
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Annual Operating Budget for Fiscal Year 2015/2016
This budget will raise more total property taxes
than last year's budget by $2,208,000 which is a
13% increase. $670,000 of the increased tax
revenue is from new property added to the tax
roll this year.
The proposed tax rate is $.67 per $100
valuation which is % cent less than the current
tax rate of $.6725 per $100 valuation.
TABLE OF CONTENTS
City Manager's Message 1
General Fund ...... ........... - - 2
Parks Fund •......,...........,,.o...f} s 5
UtilityFund....t.... - .......... .... .., ..........6
General Debt Service 7
Utility Tax Supported Debt 8
Revenue Bond Debt 9
Economic Development Corporation 10
Community Development Corporation . 11
TIRZ ONE PID .. - . 12
Hotel/Motel Tax Fund - 13
Special Events Fund - - 14
Capital Projects Administration Fund r • 15
Storm Water Utility Fund, - 16
Water/Sewer Impact Fees Fund 17
Child Safety Fund 18
Proposed Fee Schedule Changes...„........ ................ 19
Proposed CIP 22
Proposed CDC CIP 23
CIP .., .............................................. ...24
Debt, Financial Management, and Investment Policy . - 30
City of The Colony
Memorandum
To: Mayor and City Council Members
From: Troy Powell, City Manager
Tim Miller, Assistant City Manager
Date: September 15, 2015
Reference: Proposed FY 2015-2016 Budget
Enclosed is the proposed budget for FY 2015-16. The purpose of this memo is to
summarize significant items.
Key principles included in the budget are as follows:
• One quarter of a cent reduction in the property tax rate from .6725 to .6700
($67k).
• 3% increase in Water and Sewer Rates, 3'(1 of 5 year plan.
• Debt service costs for 11.6 million issuance in bonds to provide for residential
street and alleyway reconstruction, WWTP cost increases, sewer trunk line
replacement, and assorted street and utility equipment.
• Surplus operating revenues to provide for added personnel including six
firefighters, two dispatch officers, fire battalion chief, street hot shot crew, and a
sanitation inspector. Also, raises and assorted vehicle replacements and
equipment.
• CDC Park improvements of$1.55 million.
• Fund balances operating days will remain the same as last year's budget:
General Fund 80 days; Utility Fund 60 days; and Parks 60 days.
The proposed FY 2015-16 Budget is respectfully submitted for your approval.
t
GENERAL FUND
Revenue&Expenditure Projections
Fiscal Year 2015-2016
2012-2013 2013-2014 2014-2015 2015-2016
Actual Actual Budget Budget
TAXES
Ad Valorem Taxes
Current Property Taxes 9,925.994 10.424.020 11,898,465 15,665,606
Rendition Penalty Revenue 2.413 3,567 2,000 2,000
Ag.Roll Back Taxes (63.487) 2,650 2.000 2,000
Delinquent Property Tax 131,428 26,002 25,000 25,000
Penalties&Interest 68,100 40,140 50,000 40,000
Total 10.064,448 10,496.379 11,977,465 15.734.606
City Sales Taxes
Sales Taxes 3,982.219 4,278.859 4,600,796 5,235,000
Mixed Beverage Tax 87.095 173,815 70,000 185,000
1Qtg1 4469,314 4.452,674 4,67Q 796 5,420,000
Franchise Taxes
Electric 1,081,920 1,210,304 1,159,000 1,234,510
Natural Gas 112,108 156,042 125,000 145.000
Telephone 186,068 177.492 175,000 175,000
PEG Fees 60,843 79.167 60,000 75,000
Video Service 518,522 511,864 420,000 475,000
Sanitation-Residential 157,931 167,746 160,000 160,000
Sanitation-Commercial 88,070 112.909 89,500 100.000
Total 2,205,462 2,415524 2.188540 2.364.510
TOTAL TAXES 16.339,224 17.364,577 18,836.761 23.519.116
LICENSES a PERMITS
Building Permits-New Homes 587,306 494,055 490,000 490,000
Building Permits-Other 278,984 334.167 250,000 340,000
Commercial Permits 54,840 400,689 150,000 150,000
Certificates Of Occupancy 5.550 5,212 5,000 5,000
Zoning Foos 8,060 9,945 6,000 6,000
Fire Fees 12,668 34,452 11000 20,000
Solicitors Permits 785 5,160 1,200 1,200
Health Permits 84,866 99.534 82,000 85.000
Platting Fees 24,423 30,169 20,000 20,000
Alcohol Permits 7,730 10,480 7.000 7,000
Code Enforcement Fees 25,937 18,231 26,000 19,000
Floodplain Development Permits 1.300 800 Boo
Inspection-Developer Fees - 354.154 100,000
Grading Permit 1.300 12.072 1,000 1.000.
TOTAL LICENSES S PERMITS 1,094.549 1.808.320 1.054.000 1.245.000
CHARGES FOR SERVICES
Fire&Ambulance
Ambulance Calls 368,442 389,787 325,000 355,000
Ambulance Subscription Revenue 15,000 17,061 15,000 15,000
Service Liens 39,125 31.977 15,000 15,000
County Ambulance Funds 21,237 21,090 21,000 21,000
County Fire Funds 10,000 10,000 10,000 10,000
TO. .,r .• 91 •000 41. r,+,'
Library
County Library Funds 40,500 36.740 39,750 41.000
Total 40,500 36.740 39,750 41.000
2
GENERAL FUND
Revenue a Expenditure Projections
Fiscal Year 2015-2016
20122013 2013-2014 2014-2015 2015.2016
Actual Actual Budget Budget
Engineering Inspections
Inspection Fees 33.072 74,944 .
Total 33.072 74,944 •
TOTAL CHARGES FOR SERVICES 527.376 581,599 425,750 457,000
FINES AND FORFEITURES
Municipal Court Fines 1,167,905 1,211,987 1,120,000 900,000
Library Fees 7,673 8,400 6,000 8.400
Animal Control Fees 27,205 23,115 23,750 24,050
TOTAL FINES AND t-ORFEIIURLS 1.202383 1,245,502 1,149.750 932,450
INVESTMENT INCOME
Interest Income 11.457 10,195 10,000 5.000
TOTAL INVESTMENT INCOME 11.457 10,195_ 10,000 5.000
GRANT REVENUES
Federal Police Grant 1,000
Library Grant-ELOC 9,411 - .
LEISD Grant • 50,000
USD Grant 33.815 /7,214 /5,000 77,000
TOTAL GRANT REVENUES 43,226_ 77,214 76.000 127.000
OTHER REVENUES
Auction Proceeds 24,656 38,042 10,000 10,000
Tower Rental Fees 251.557 257,766 251,557 250,000
Insurance Reimbursement - 3,157 1,000 1,000
Miscellaneous 68,426 35,289 20,000 20.000
Police Reports 4,247 4,713 4,000 4,000
Alarm Fees 34,176 43,260 32,000 33,000
Horizon-Rentals 6,010 •
Annex Lease 101.725 15,650
TOTAL,OTHER REVENUES 389.072 483,957 334.207 318.000
TOTAL REVENUES 19,607,687 21,571.359 21,886,468 26,603,566
TRANSFER IN
Overhead Costs .
Transfer-CDC
Transfer-EDC 28,000 21.250 22,715 22,715
Transfer-Storm Water Utility 168,800 168,800 250,000 250,000
Transfer-Utility Fund 1,361,231 1,914.906 2,322,406 611.500
Transfer-Utility Fund-Tribute Ad Valorem 162.259
Transfer-Child Safety Fund 20,000 20,000 20,000 20,000
Transfer-Debt Service/Operating Surplus
Transfer-Capital Projects • 245,673
TOTAL TRANSFERS 1,740.290 2.370.629 2,615,121 904,215
TOTAL REMUES&TRANSFERS 2L347.,977 23.941.988 24.501,589 27.507781
3
GENERAL FUND
Revenue t ExpendRare Projections
fiscal Year 2015-2016
2012-2013 2013-2014 2014-2015 2015-2016
Actual Actual Widget Budget
EXPENDITURES
Non-Departmental 3,562,487 3,979,604 5,107,088 5,983.879
General Administration 804,798 773,718 775.445 820.960
City Council 29,289 37,738 37,805 29,322
Community Image 387,048 389,327 426,632 416.395
City Secretary 237,999 284,817 308,694 340,897
Human Resources 262,291 272.662 263.923 281.586
Finance 793,300 790,697 843,946 862,089
Information Technology 437,394 416,730 429,647 594,184
Municipal Court 362.359 374,175 374,615 409,951
Fire 5.350.137 5,508,411 5,559.920 6,131,273
Police 6,612,181 6.867,1 19 7,347,220 7,783,297
Library 939,424 974,439 978.108 998,495
Engineering 1,274.748 1.301,583 1.390,896 1,474.518
Facilities Maintenance: 415,R16 418,379 407,98.3 438,783
Fleet Services 502,880 512.490 532,623 686,490
2015 P&l 120yr$21M;l0yr$2M) 1,324.270
Reserved-Capital Prolects 3.478,053 2,440.710
TOTAL EXPENDITURES 21,972.151 22,901,882 29.586,868 - 29,692,829
TRANSFER OUT
Transfer-CVB 140,000 165,000 120,000 100,000
Transfer-Special Events •
100,000 100,000 80.000
Transfer-KTB 20.000 20,000 20,000 20,000
Transfer-Parks Fund 2.259.884 2.289.884 2.149,884 2.208,700
TOTAL TRANSFER OUT 2.419.884 2.574.884 2.389,884 2.408.700
TOTAL EXPENDITURES I TRANSFERS 24.392.035 25.476.766 31.976.752 32.i01.S29
OH COST ALLOCATION (3,945,663) (3,945,663) (3,945,663) (3,945.663)
BEGINNING FUND BALANCE 6,504,221 7,405,826 9,816,711 6,287,211
EXCESS/(DEFICIENCY) 901,605 2,410,885 (3,529,500) (648,085)
ENDING FUND BALANCE 7,405,826 9,816,711 6,287,211 5,639,126
RESERVE FOR HIDDEN COVE PARK (165,000) (165,000) (165,000) (165,000)
UNRESERVED FUND SALANCE 7,240,826 0.651,711 6.122.211 5.44.126
Working Days In Fund Balance 108 138 80 80
i
4
PARKS FUND
Revenue&Expenditure Projections
Fiscal Year 2015-2016
2012-2013 2013-2014 2014-2015 2015-2016
Actual Actual Budget Budget
CHARGES FOR SERVICES
Parks&Recreation
Recreation Program Revenue 131,848 138,195 132.000 132,000
Athletic Program Revenue 114,805 117.489 115,000 115,000
Athletic&Recreation Facility Revenue 141,452 143,006 141,000 141,000
Pass Revenue 23.487 20,546 23.000 20.000
Total 411592 419.234 411,000 408,000
Aquatic Parc
Swimming Lessons 110,181 132,423 110,000 110,000
Season Passes 11.031 11,200 11,000 11.000
Swimming Team 21,086 30,907 21,000 21.000
Entrance Fees 44,589 41,595 45,000 42,000
Concession Sales 1.865 1,368 1,500 1,400
Private Party Fees 34,784 32,867 33,660 33,000
Aerobic Classes 17.109 14.712 17,000 14,500
Total 240,645 265,072 239.160 232,900
Community Center
Rental Revenue 10,672 11,025 10,000 10,000
Program Revenue 3,038 1,489 3,000 1.500
Trip Revenue 41,695
Membership Fees 6.207 5.381 6.200 5,000
Total 61.612 17.895 19.200 16.500
TOTAL CHARGES FOR SERVICES 713,849 702.203 669,360 657.400
OTHER INCOME
Horizon Lease Payment 202,933 228,501 200,000 215,000
Miscellaneous 10,809 3.675 1,000 1,000
Interest Income 1,543 716 I ... 500
TOTAL OTHER INCOME 215285 232.891) 202'+r 216,500
TOTAL REVENUES 929,134 935,095 871,360 873.900
TRANSFER IN
Transfer-General Fund 2.259.884 2,289,884 2,149.884 2,244,700
Transfer-CDC Five Star Maintenance 150.000 165,000 165,000 165,000
Transfer-COC Fund Personnel 122,845 122,845 122,845 122,845
Transfer-Lake Parks Fund 35.000 35,000 35,000 35.000
TOTAL TRANSFERS 2.567.729 2612.729 2,472,729 2,569,545
TOTAL RRVRNUU i TRANSFERS 3.496.863 3347.824 3.344C€9 3 443 443
EXPENDITURES
Overhead Expenditures 1,014,192 1,014,192 1,014,396 1,014,396
Parks&Recreation 1,875.796 1.917.174 2,087,848 2,075,540
Aquatic Park 398,551 l39�jj
399,552 401,149 427,866
TOCgrnm nit ` n 3,� 422 3664
116211
BEGINNING FUND BALANCE 950,281 1,001.845 1,096,647 811,572
EXCESS(DEFICIENCY) 51,564 94,802 (285,075) (209,570)
ENDING FUND BALANCE 1.00!A45 1.096.6.47 811572 602002
Working Days in Fund Balance 106 116 82 60
5
UTILITY FUND
Revenue i Expenditure Projections
Fiscal Year 2015-2016
2012-2013 2013-2014 2014-2015 2015-2016
Actual Actual Budget Budget
CHARGES FOR SERVICES
Water Service 8,395,877 8,320,168 8,647,753 8,907,186
Wastewater Service 4,699,344 4,847.322 4,940,323 5.088,533
Reconnect Fees 21,780 24,320 20,000 20,000
Penalties 410,748 449,948 410,000 425,000
Top Connection Fees 177,685 217,560 200,000 200,000
Investment Income 5.484 2,158 4,000 2,000
Miscellaneous 30,329 73,467 28,200 35,000
Recycling BR1ng 38,765 29.906 35.000 30,000
RecvCl na EaUC0110n Cpnlrlbutlon 36.000 36.000 36.000 36,000
TOTAL REVENUES 13.816,012 14000,849 14,321,276 14,743.718
TRANSFERS IN
Transfer-Storm Water Utility Fund 290,000 350,000 350,000 350,000
burisfur-Cuuilul Prujesh-bibuie 162,259 •
Transfer-Capital Projects-Water meters 135,000 -
Irnnsfer-L:crfsitnl Projects- Streets200,000 200.000
TOTAL TRANSFERS IN 452,259 685.000 550,000 350.000
TOTAL RIVINUES b TRANSFERS 14,E 271 14.4$5649 14.871276 15.093,718
EXPENDITURES
Overhead Expenses 2.593,752 2.593,752 2,593,752 2.593.752
Non-Departmental 336,958 34.419 103.636 143.700
Water Production 2,451.029 2,855,987 2.770,034 2.808.995
Water Distribution 1,100,757 1,174,030 1.123,347 1,282,583
Wastewater 568,581 6730531 659,386 708,230
UNNiy Administration 608,433 650.500 680.785 667.852
Public Works 1,317,398 1,486.054 1.579,325 1,596.336
Storm Water-Engineering 17,640 38,243 38,400 38,400
Storm Water-Public Works 117,312 115,546 147,363 145 807
Envkortmental 140.205 154.605 154,919 163,888
TOTAL EXPENDITURES 9,252,065 9.176.761 9.850.947 10,149,543
TRANSFERS OUT
Transfer-General Fund 1,361,231 1,914,906 2,322,406 611,500
Transfer D.S.Utility Tax 2,260,000 2.275,000 2,275,000 3,650,000
transfer-D.S.Revenue bonds 1,295,630 900.000 995,000 1,100,000
Transfer-Special Projects45,000
Transfer-General Fund-Tribute 162,259 • -
Transfer-Capital Protects • . •
TOTAL TRANSFERS OUT 1.079.120 5.089.906 5.63/.406 5.361,500
TOTAL EXPENDITMu A TRANEPRES 14,331.j85 14.866.673 15.488.353 15.511,043
BEGINNING FUND BALANCE 3,815,359 3,752,445 3,571,621 2,954.544
EXCESS(DEFICIENCY) (62,914) (180,8241 (617,077) (417,325)
ENDING FUND 6AIANCE3.571.621 2.954.544 2.537.219
Working Days In Fund Balance 96 88 72 60
6
GENERAL DEBT SERVICE
Revenue a Expenditure Projections
Fiscal Year 2015-2016
2012-2013 2013-2014 2014-2015 2015-2016
Actual Actual Budget Budget
CHARGEE FOR SERVICES
Curren)Property Taxes 4,739,099 4.927.183 4,900,000 4,900,000
Delinquent Property Taxes (30,193) 10,633 30,000 10,000
Ag.Roll Back faxes 53,842 41
Penally d Interest 30047 18,629 20.000 20,000
Investment Income 2,936 941
Misc Income 124047 165,613
TOTAL REVENUES 4,917,778 5.123,040 050,000 4.930,000
TRANSFERS R4
Transfers In-General Fund 612,007
Transfers In-Engineering Inspections
Transfers In-4A-2013 Bond 152000 154,106 152.506
Transfers In-4A Jackson Shaw/Memorial 292,547 291,767 293,549 293,596
Transfers In-Hike&Bike Trail 128,938 127,150 130.200 127,400
Transfers In-Parking Lot 63,096 64,205 64,339 64,306
transfers In•Parks 48 Protects•5 51afr Debi 523.500 526,100 524,700 523.000
TOTAL TRANSFERS IN 1,008.081 1.161,222 1,778,901 1.160,808
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EXPENDITURES
Certificates of Obligation-2003:Refund 208,000
Certificates of Obligation-2004 382,606 254,188
Refunding Bonds-2005 1,162,844 1,160,406 1,161,844 1,161,969
Certificates of Obligation.2006 244.501 364,115 145,530
Certificates of Obligation 2007 516,232 547,804 520.981 546,580
Certificales of Obligation-2008 322,034 61,108 69,106 66,920
Certificates of Obligation-2010 946,624 907,610 948,400 735,856
Certificates of Obligation-20 WA 210,400 207,002 208.750 178,533
Refunding Bonds-2010/2001 523,500 526,100 524.700 523,000
Refunding Bonds-2011/2002 680.732 682,252 682,290 689,472
Refunding Bonds 2012/2003 62007 916,988 1,077,412 1.061,812 993,638
Certificates of Obligation-2013 150,606 154,106 152.506
Refunding Bonds-2013/2004 GF/U111I1y 130,120 371.120 371,890
Refunding Bonds-2014/2006 GF/Unify 23,077 82,065 226,984
Certificates of Obligation-2014 612,007 199.406
Fisc.ulAgate Fin&Litho 9/,853 394 4,000 4,QQ�
TOTAL EXFI N0iTURES 6.212.314 6,124)44 6.5471( S8304t
EXCESS(DEFICIENCY) (286,455) 158,068 182,191 240,054
BEGINNING FUND BALANCE 778,409 491,954 650,022 832,213
ENDING FUND BALANCE 491.954 630.022 832.213 1,772.267
7
UTILITY TAX SUPPORTED DEBT
Revenue fi Expenditure Projections
Fiscal Yew 2015-2016
2012-2013 2013-2014 2014-2015 2015-2016
Actual Actual Budget Budget
CHARGES FOR SERVICES
Current Property Taxes
Delinquent Property Taxes
Premium 55,167 421.454
Penalty 8.Interest
Investment Income
TOTAL REVENUES 55,167 421,454
TRANSFERS IN
Transfers In-EDC 4A 306.999 306,711 306,999 307.161
Wale►Impact Fees 100,000 101000 100,000
Revenue Bond Refunding
Transfers In-1rHMty Pun(! 2,260,000 2,275,000 7,7/5,7(X) 3.650.0(X)
TOTAL TRANSFERS IN 2.566,999 2,681,711 2,681.999 4.057.161
TOTAL REVS$J1S$Swots 2.62214 3,!03.165 2.481,9ve 4.80,161
EXPENDITURES
Certificates of Obligation-2006 1,461,051 1,969,779 893,970
Certificates of Obligation-2007 598,237 570,164 598,987 568,889
Certificates of Obligation-2010 279,400 318,890 281,200 258.544
Certificates of Obligation-2010A 37,000 42,398 36.000 36,567
General Obligation Refunding Bonds 2011 214,968 215.448 215.460 217,728
General Obligation Refunding Bonds-2013 520.480
General Obligation Refunding Bonds-2014 112,668 504,111 1,356.991
Cetificate of Obligation-2014 1.224.925
femiced el Issue/x.0 181,834
TOTAL !111,1115 2,590.456 3.931.611 2.52922B 3443.644
EXCESS(DEMCIENCY) 31,510 (828,496) 152,271 393,517
BEGINNING FUND BALANCE 277,510 309,010 1519,4861 (367,715)
ENDING Filter SALAMI_ 304.010 1512.4'861 1367.2111 26.302
8
REVENUE BOND DST SERVICE
Revenue i Expardfwe Projections
Fiscal Year 2131 S-2014
2012-2013 20134014 2014-2015 2015-7016
Actual Actual Oudoet Budost
CHARGES FOR SERVICES
Fees 401,861 407,303 400.000 400.000
kwesiment Income 2268 700 244.0 500
tOTAL REVENUES 404.129 4084003 402.000 400,500
TRANSFERS IN
transfers In-USN Fund 1,295,630 •
995,000 1,100.000
Translgrs In-knCsacl Fees - -
TOTAL TRANSFCRS IN 1295630 - 995,000 1,100.000
Tout*events aumsoiis 1.699/,59 4011.035 )i97.00D 1.500.300
EXPENDITURES
Revenue Bonds-2004 1.631,162 1,027.125
Revenue Refunding Bonds-2008
Revenue Refund(ng Bonds-2012(03.07.08) 305,663 339,082 353,938 331,213
General Obiigatlon Refunding Bonds-2013(t 1.484.480 1,487,560
Cost of Issuance
Transfer to Utility Debt Service
rix: A sir Other I
TOT AD2.1 116.207 mum_ MUD
EXCESS(DEFICNNCY) (433.051) 1958.204) 1441,418) (318,273)
BEGINNING FUND BALANCE 2.214,182 1,781,131 822,927 381,509
ENDING FUND SAIANCE 01.131 82199 giL'99 63,1
9
ECONOMIC DEVELOPMENT•TYPE A SALES TAXIS
Revenue&Expenditure Projections
Fiscal Year 2015-2016
2012-2013 7013-7014 2014-2015 2015-2016
Actual Actual Budget Budget
CITY SALES TAXES
Soles Tax Revenues 1,991,109 2,139,429 2,300,000 2,617,500
Investment Income 5,694 2,258 4,000 1.000
Miscellaneous Revenue 1�4Q7
TOTAL REVENUES 1996,803 2143,344 2.304.600 2418300
EXPENDITURES-OPERATIONAL
Personnel Services 357,856 263,742 298,392 305.304
Contractual Services 158,395 202,120 60,160 27,768
Supplies 14,398 6,373 12,140 13,390
Maintenance •
500
Capital Outlay
Overhead Costs 71,376 7L376 71.300 71.380
TOTAL EXPENDITURES 602.025 543,611 442,072 418.342
EXPINOITUEES-ECONOMIC INCENTIVES
Marketing 322.129 392,625
Economic Development Incentives 165,000 81,000 3.000,000 1,000,000
Sales Tax Rebate 246,934 251,528 275.000 300,000
Transfer Out-General Fund BPP 28,000 21,250 22,715 22.715
Transfer Out-General Fund Cap Contribution 2.000.000
Transfer Out-Debt Service 2013 151,220 154,106 152,206
Transfer Out-Gen Debi.Serv.Fund 292,547 292,547 293.549 293.621
Transfer Out-Tax Supported Debt 306,999 306,711 306,999 307,161
TOTAL EXPENDITURES 1,039,480 1.104,256 6,374.490 2,468.328
TOTAL EX►EN0061.641.505 1.647.867 6.816.370 2.866.670
EXCESS(DEFICIENCY) 355,298 495,227 (4,512,5701 (268.170)
BEGINNING FUND BALANCE 6.015.914 6.371,212 6.866,439 2,353,869
164001G PUNO EALANCE_ 6.371..212 6.866.439 2.333,869 2A85694
RESERVE FOR MARKETING (402,656) (470,8271 (470,827) (470,827)
VNERElRVID POND MIAMI 3.968556 &612 LOCUM 1,614.872
10
COMMUNITY DEVELOPMENT-TYPE B SALES TAXES
Revenue&Expenditure Projections
Fiscal Year 2015-2016
2012-2013 2013-2014 2014-2015 2015-2016
Acluol Acluol Budpel Budpel
CITY SALES TAXES
Soles Tax Revenues 1,991.109 2.139.430 2.300.000 2,617,500
investment Income 2.298 950 2.000 500
Miscellaneous
TOTAL REVENUES 1,993.407 2,140,380 2.302,000 2618.000
TRANSFERS IN
Transfer kom General Fund
Transfer from Capital Projects Fund • .
TOTAL TRANSFERS IN ,
TOTAL flVI UES I.TRAKVINO 1.993,407 1140.330 2.302.000 z610 Opp
EXPENDITURES-OPERATIONAL
Personnel Services 49,713 86,418 94.876 94,876
Contructuol Services 21,381 26.850 29.500 29,500
Supplies 3,613 1,147 4,000 4.000
Molntenance 15,483 7,468 25.100 37,100
Capltat Outlay
Overhead Costs 35.688 35,688 35,690 35.690
TOTAL EXPENDITURES 1225,878 137.871 189.166 201.166
EXPENDITURES-SPECIAL PROJECTS
Existing Park Improvements 475,000 654,500 1,215,000 1,552,500
Spurts Complex Debt Service 523.500 526,100 524.M0 523.640
TOTAL EXPENDITURES 998,500 1.180490 1,739,700 2.074.100
TRANSFERS OUT
Transfer to Parks Fund-Five Slot Maint, 150,000 165.000 165,000 165,000
Transfer 10 Gen.Debt Sao-Hike&Bike Troll 128.938 127,150 130,200 127,400
Transfer to Gen.Debt Sere.-Parking Lot 63,096 64,205 64,339 64,306
Transfer to Kirks furud•Personnel 122,845 122.845 122,845 122,845
TOTAL TRANSFERS OUT 464,879 479,200 4 ,384 479,551
TOTAL commas mUREs a& 65131.257 1,817.371 2.41 I.2sty 2 756,817
EXCESS(DEFICIENCY) 404,150 323,009 (109,2501 (138,8171
BEGINNING FUND BALANCE 1,422,115 1,826,265 2,149,274 2.040,024
ENDING Fan RALA:N&tr 1.82620 2.149,274 240.024 1.901907
11
UU ONO MD
Revenue&Expenditure Prc sdloro
Fiscal Year 2015.2016
X1.1-a11y 2.7134014 201$2013 2015 2016
Actual Actual Mart ludas!
IIVINYES
J
ia' i � . 4
EAMIDDINIES
Personnel Services 212.330 127.600
Contractual Services 122,421 647,426
Street Ughh 6 Traffic Mpmt 553,390 215,000
Mdntenance 1 UNty 08.810 329.000
getfetilliNN 11611 .1F ir+
EXCESS(DMCUN1CY)
BEGINNING FUND',MANCE
MUNE NM MANS •
12
HOTEL/MOTEL TAX FUND
Revenue S.Expenditure Projections
Fiscal Year 2015-2016
2012-2013 2013-2014 2014-2015 2015-2016
Actual Actual Budget Budget
HOTEL/MOTEL TAXES
Taxes 425,177 473,744 425,000 550,000
Miscellaneous 843 1,407
Investment Income
TOTAL REVENUES 426,020 475,151 425.000 550.000
TRANSFERS IN
Transfer from-General Fund 140,000 165,000 120.000 100,000
TOTAL TRANSFERS IN 140,000 165.000 120,000 100.000
TOTAL MINIM a 11tAbliblr S66.020 640.151 0 650.000
EXPENDITURES
Communications
Personnel Services 142,636 182,798 75,961 79,002
Contractual Services 4,566 755 4,340 840
Supplies 1,164 946 1.800 1,350
CVB
Personnel Services 78.713 85,536 207,545 214.749
Contractual Services 39,581 35,711 36.345 53,900
Supplies 3,381 4,081 4,500 5,600
Overhead 35,688 35,688 35,688 35,688
TOTAL EXPENDITURES 305,729 345,515 366,179 391,129
TRANSFERS OUT
Transfer to S•eclat Event 320 000 250,000 250.000 300,000
TOTAL TRANSFERS OUT 320.000 250.000 250.000 300.000
101AL EXFIN011111RES i MAMAS 625.729 595,515 616,179 691.129
EXCESS(DEFICIENCY) (59,708) 44,636 (71.179) (41.129)
BEGINNING FUND BALANCE 145,823 86,115 130,751 59.572
ENDING NUND MANCR 86.115_ 130.751 39,572 18A43
13
SPECIAL EVENTS FUND
Revenue&Expenditure Projections
Fiscal Year 2015-2016
2011-2012 2012-2013 2014 2015 2015-16
Actual Actual Budget Budnet
REVENUES
Donations d,Sponsorships 9.893 24,123 10,000 10.000
Investment Income
Event Revenues 50,984 58,439 40,000 50.000
TOTAL REVENUES 60.877 82,562 50,000 60.000
TRANSFERS IN
transfer from-General Fund 100.000 100,000 80,000
tmnster tram-t lote+/Motel Tax 320.000 250.000 250,000 300.000
TOTAL TRANSrERS IN 320.000 350.000 350.000 380.030
TOTALJEVINIIES A IIANSPEMS 361.877 432.562 400M 440.000
EXPENDITURES
Personnel 65,410 65.368 68.822 69,216
Supplies 91
Chllstrnas 5,000 3.766 5,000 5,000
Christmas Light Show Supplemental 14,527 13.183 17,500 17,500
Christmas Light Show Base 6.500 6,500 6.500 6,500
Liberty by the Lake 84.838 88.432 90,000 90,000
American Heroes 115.506 114,972 120,000 130,000
Pirate Days/Mail Box
Cultural Arts Board-Operating 20.993
Cultural Ads Board-Grant 10.634 98
Chalk This Way
Parent ChM Event 4,149 3,785 4,250 4.500
Halloween Campout 3.419 4,384 3,900 6,000
Easter Egg Hunt 3,230 3,116 3,300 3,500
Event Marketing 2.908 2,465 3,020 3.020
Arbor Day 2,500 2,413 2,500 2,500
Movies In The Pork 2.444 3,434 2,550 2,550
Kids Chose/Up,Up&Away(15-16) 700 495 700 2,500
Back To School 1.925 1,789 1,950 1.950
Bow Wow Pow Wow 2.04) 1,506 1,800 1,800
Colony Playhouse 6.000 6,000
Road Runners Ckrb 10,000 10,000 10,000
CMAC 20,000 20,000
Knights of Columbus Liberty Fun Run 5,000
THC-ROTC 2,000 2,000 2,000
Lakeside Communlly Theatre 10,000 15.000 12.000 12,000
Mothers Opposing Bullying 2,500
Melro Relief 6,000
OvaTOTAL 1xs�i� 3:��1[ 4iXi � 434.
EXCESS(DEFICIENCY) 1,458 29,084 (16,462) 5,294
BEGINNING FUND BALANCE 42,648 44,106 73,190 56,128
)NDINIr woo MLANCE 44.106 73.140 56.72f 62022
14
CAPITAL PROJECTS ADMINISTRATION
Revenue&Expenditure Projections
Plscal Year 2015-2016
2012-2013 2013-2014 2014-2015 2015-2016
AVIU0I Actual Budoel Ductlei
REVENUES
TXDOT
Investment income
MuceNaneous
TOTAL REVENUES
TRANSFERS IN
Transfer-Revenue Bond Protech
Transfer-Impact Fees Fund 500,000 200.000 200,000 300000
Transfer-Capital Account)2161846)
Transfer-General Obligation Bonds
Transfer utility fund Carl of Ob11g
TOTAL TRANSFERS IN 500.000 200.000 200.000 300.000
TWA L.iffillIBILIUMMIZIK 549 X14 200.440 200.040 300.000
EXPENDITURES
Personnel Services 100,454 99.354 108 420 111,555
ConiractualServices 191 190 500
Supplies 140 157 500 1,000
Maintenance
Overhead Costs 159,576 159,276 159265 159,265
TOTAL EXPENDITURES 260,361 258,977 268.685 271.820
TRANSFER OUT
Transfer-General Fund
TOTAL TRANSFERS OUT ••
TOTAL EXPENDITURES I MAWS 260.361 X927' 168485 7!1.1120
EXCESS(DERCIENCY) 102.805 158.977) (68,685) 28,180
BEGINNING FUND BALANCE 132277) 70,528 11,551 (57,134)
ENDING FUND NUKE F9.528_ I UM 27.1341 1 .9541
15
STORM WATER UTILITY FUND
Revenue L Expenditure Projections
Fiscal Year 2015-2016
2012-2013 2013-2014 2014-2015 2013-2016
Ackjo- Actual Budget Budnet
REVOMES
Storm Water UWty Fees 499,711 511.900 490,000 500.000
investment Income
TOTAL REVENUES 499311 511,900 490.000 500.000
TRANSFERS IN
Transfer-General Fund
TOTAL TRANSFERS IN -
TOTAL RIVINUI1&TRAIN& r'r 51 10 498000 SODOM
EXPENDITURES
Personnel Services
Contractual Services
Supplies
Maintenance
Capital Outlay
Contingencies
Overhead Costs
TOTAL EXPENDITURES -
TRANSFERS OUT
Transfer-General Fund 290,000 168,800 250.000 250,000
Transfer•Environmental Fund
fronsfer- turd 168,13tX) 350.s01 350L000 )50.OU0
101At 1RAN5T RSOW 458,800 S11L1100 600.000 600.000
MAI EXPENDITURES•TRANSFERS 43BBOD S1A800 6001300 100201)
EXCESS(DEFICIENCY) 40,911 16,9001 1110,0001 1100.0001
BEGINNING FUND BALANCE 261,752 302,663 295.763 185,763
ENIXNG FUND RAIANCE 302.663_ 295.763 1.763 8;769
16
WATER/SEWER IMPACT FRS FUND
Revenue&Expenditure Projections
Fiscal Year 2015-2014
2012-2013 2013-2014 2014-15 2015-16
Actual Act881 Srrt>>D I Budoet
IMPACT Pm
Water Impact Fees 408838 431,104 200,000 200,000
Sewer Impact Fees 197,581 172,598 65,000 65.000
alvilainirl au:cafl
TOJAI MENU 606.419 603102 225.000 26000
EXPENDITURES
Water Impact Fee Reimbursement
Sewer Impact Fee Reimbursement 118,924 79.837 60.000 60000
Coneoctuat Services•Water Master Pion 30130 •
TOTAL EXPENDITURES_ 118.424 110.567 60.000 60.000
TRANSFERS OUT:
Transfer-Capital Project Admin 200,000 200,000 300,000
transfer Unity Revenue Debt Service 501)000 100.000 100.000 100000
TOTAL TRANSFERS OUT =XX) _3001110 _10 LD(Xt 401000
618.924 410.367 260.000 465000
EXCESS(DWICIENCY) 112,5051 193,135 1950001 1195,0001
SEGINNNG FUND BALANCE 186,212 173,707 366,842 271,842
MINIM Flip IIATANC1 171ZO7 366.842 271.842 76.542
17
CHILD SAFETY FUND
Revenue a Expenditure Projections
Fiscal Year 2015.2016
2012-2013 2013-2014 2314-15 2015-16
Actual Actual Budget Budget
REVENUES
Child Safely Fund Revenue 14.270 1.216 8.000 8,000
Denton County Child Safely Fund 50.336 55,550 40.000 40.000
Interest Income -
TOTAL REVENUES 64.606 56.766 48.000 18,000
TRANSFERS IN
Transfer In-General Fund
TOTAL TRANSFERS IN
JOTAL RILVIYUII'S i TRANiPIR3 64.604 56.766 4810 48410
EXPENDITURES
Contractual Services
Supplies
Maintenance
Capital Outlay
Overhead Costs
C►ldAUvacacyCenter J1915 27.354 28.979 30.914
TOTAL EXPENDITURES 31.915 27.354 28,979 30.914
TRANSFER OUT
Vander Outruns,fund 20.000 20.000 20.000 20.000
TOTAL TRANSFER Out 20.000 20.000 20.000 20;000
PM,ITRNIMD11=15&RATAN W 91 r 47.534 da.97f 5E014
EXCEES(DEFICiEICY) 12,691 9,412 (9791 (2,914)
BEGINNING FUND BALANCE 30,812 43.503 52,915 51.936
ENDING FUND BALANCE 4' 503 52.911 .51.436 414.Dp
18
PROPOSED MASTER FEE SCHEDULE CHANGES FY 2015/2016
Nang Eraling Fee Proposed Fee !If Dam
ELISKLINNO
AQUATIC PARK:
Swim Lessons-Duo-Pe$v 3160/4 I r 10(01/15
SWIM Lessors-UAguard $230/27 hr $235/27 hr 10/01/15
Entrance Feel--Sr.&Adult Lap Swim $ZRtt AquaFtT Tickets 12 for$40 10/01/15
Aerobic Clegg-dally $6.00/hr $6 00/hr 10/01/15
Aerobic Classes-n40111141,bulk d?scauri! $20(T/Th)or 30(MIWIF) AquaFIT Tickets 12 for$40 10/01/15
ligAIEMLEUtilt
MNICEU.ANEOUS
-Paper-Oversized $.51Q1esari Aae ledescr,phon ft Ixt/ green bare 10101/15
-Speolalty Pepericolor maps,$1 agtt) Actual cost 10101/15
-Magnetic Tape Actual Cost Remove Fee 10/01/15
-VHS $2.501esch Remove Fee 10/01/15
-Other Electronic Media Actual Cost 10101/15
-Other eotuet cost Remove Fee 10/01/15
ALARM FEES-PERMIT $20 amuel dorm permit 125 annual residerdal,$50 business 10101/15
ANIMAL CONmOL FEES
Private Cremation Fees 311x1 Remove Fee 10101/16
Incinerator Fees $25 per animal Remove Fee 10/01/15
LIBRARY FEES
Graphic Novel 112 00,plus$5.00 proc lea $17 00,plus$500 proc fee 10/01/15
Book Club kits $60.00 plus$5 00 proc tee Remove Fee 10/01/15
Videocassette $5.00,plus$5.00 proc fee Remove Fee 10/01/15
Photocopy Fee 3.15 per copy S 10 per page 10/01/15
COMMUNITY IMAGE FESS
!Meech Card Video Deposit $75 Remove Fee 10/01/15
FIRE FEES
Mileage $7/mile $12/per mile 10/01115
Disposable supplies $10 1135 10/01/15
DEVELOPMENT SERVICES PEES
Billboard
Registration $75 Remove Fee 10/01/15
Annual Renewal $150 Remove Fee 10/01/15
Foundation Repair $26 Remove Fes 10/01/15
Newspaper Box-Annual Permit $20 Remove Foe 10/01/15
Newspaper Box-Relocation Permit 110 Remove Fee 10/01/15
Donation Box-Annual Permit $10 Remove Fee 1001/15
Donation Box-Relocaiton Permit $5 Remove Fell 10/01/15
Change descirlplion to:
Tent $50 rent,9ounceltouse,Climbing ter.:; 10/01/15
19
2014-2015
Water.Rates
Inside city Outside city
Meter size 'Meter size
(inches) _ Rate (inches) Rate
5/8 18.83 5/8 25.25
3/4 22.32 3/4 33.49
1 31.63 1 47.48
1 1/2 81.41 1 1/2 92.10
2 102.34 '2 153.53
3 158.20 3 237.24
4 246.49 4 369.74
6 554.61 6 831.89
8 1,247.88 8 1,871.81
10 2,807.75 10 4,211.61
Commodity rate per the-Galiond) Commodity rate(Perth.Gallons)
2,001-15,000 3.81 2,001-15)000 5.72
15,001-25.000 4.75 15.001-25.000 7.10
25,001-40,000 5.07 '25,001-40;000 7.57
40,001 and over 5.52 40,001 and over 8.29
2015.201.8
WaterRabss(terms a 3%increase)
Inside city Outside city
Meter size Meter size
(inches) Rate Inches) Rate
5/8 17.33 5/8 26.01
3/4 22.99 3/4 34.49
1 32.58 1 48.88
1 1/2 63.25 1 1/2 94.86
2 105.41 2 158.14
3 162.95 3 244.36
4 253.88 4 380.83
8 571.25 6 856.85
8 1285.32 8 1927.96
10 2891.98 10 4337.96
Commodity rate(per th.Gallons) Commodity rate(per th.Getions)
2,001-15,000 3.92 2,001-15,000 5.89
15.001-25.000 4.89 15,001-25,000 7.31
25,001-40,000 5.2225,001-40,000 7.80
40,001 and over 5.69 ,40,001 and over 8.54
Adopted September 15,2015
20
2014-2015
Sewer Rates
Inside city .Outside city
Meter size Meter size
(inches) Rate (inches) Rate
518 16.30 5/8 24.46
3/4 19.80 3/4 29.73
1 26.83 1 40.25
1 1/2 44.39 1 1/2 66.58
, 2 65.43 2 98.18
3 114.60 3 171.90
4 184.80 4 277.21
6 473.12 8 709.67
8 1,211.16 8 1,816.71
10 3,100.55 10 4,650.80
Commodity rate(per th.Gallons) Commodity rate(perth.Ge)loea)
Residential(over 2,000 gal). 3.42 Residendal(over 2,000 gal) 5.14
Commercial(over 2,000 gal] 4.62 Commercial(over 2,000.gal) 8.91
2015-2016
Sower ands**a 3%ase)
`inside city Outside city
Meter size Meter size
finches) Rate (inches) Rate
5/8 16.79 5/8 25.19
3/4 20.39 314 30.62
1 27.83 1 41.46
1 1/2 45.72 1 1/2 68.58
2 67.39 2 101.13
3 118.04 3 177.06
4 190.34 4 285.53
6 487.31 6 730.96
8 1247.49 8 1871.21
10 3193.57 10 4790.32
Commodity rate(per th.Gallons) Commodity rate(per th.Gallons)
Residential(over 2,000) 3.52 Residenfai(over 2,000) 5.29
Commercial(over 2,000) 4.62 _Commercial(over 2,000) 7.12
Adopted September 15,2015
21
PROPOSED CIP
2016
DEPT 2016 GENERAL DESCRIPTION
20 Y.-4r Fund
PW 5,000,000 Residential Street/Alleyway Reconstruction
WW 3,200,000 WWTP cost overages
WW 2,200,000 Trunk line for WWTP
TOTAL 10,400,000
11)Year Bond
PW 35,000 Asphalt Bed Insert
PW 100,000 8 YRD Dump Truck-replaces unit 357
PW 230,000 Street Sweeper Replacement
WW 40,000 Sewer Main Steerable Tractor for Inspection Camera.
PW 35,000 Battery Backup for Traffic lights
PW 90,000 Replace/Upgrade Traffic Light Controllers and Cameras
IT 300,000 IT Upgrades
PW 350,000 Hot Shot Equipment(BYO Dump Truck,Backhoe,Pickup,Trailer,Tools)
TOTAL 1,180,000
PM 162,000 3 Police Tahoes replacing Crown Ws.2 Tahoes purchased in current year.
FM 25,000 Pickup Replacement-Hybrid and battery is going out.
FM 55,000 Replace 2001 Dodge 3/4 Ton Pickup 121,146+Miles with 1 Ton,Utility Bed,Lift Gate&vane
PW 60,000 Replace Two 1/2 Ton Pickups
PW 80,000 Kiosks for Utility&Court Payments,2 machines-City Hall and at Court-take both payments(includes machines,software,&Install).
PW 17,500 Equipment to improve video(see list). Indudes video for Fire Dept and replace TVs outside Coundl chambers.
PW 24,000 3/4 Ton Pickup Replaces 551 in Parks.
WD 6,500 Tire machine(mount,dismount and balance).
WD 8,000 Upgrade and Maintain Optimcom Controls at Various Locations.
WD 11,000 Install Remote Optimcom Controls at Station#3
WP 60,000 Pavement Marking Maintenance for Streets and Throughfares
TOTAL i 509,000 .
Grand Total 12,089,000
2,440,710 Available Funds from Operations
1,529,800 Increased Debt Service for Bonded CIP(above)and Cash Projects(above)
900,000 Increased Personnel Costs
10,910
CDC 2015-16 CIP
2016 aP List S1.501000-S1.552.500
Additional Dog Park Funding* $110,000-$ 162,500
Skate park renovations $ 350,000
Trail/Flood Recovery(full cost unknown) $ 100,000
Ridgepointe Tot Playground $ 30,000
Aquatic Park: (Indoor filter&pump;splash zone safety surface) $ 110,000
Five Star: Bleachers&Goals $ 15,000
West Shore Park Development $ 435,000
Veterans Memorial $ 350,000
Christmas Tree $ 35,000
Image Enhancements(funding available In Fund a25) $ 0
Dog Park Landscape-$35,000
John Yates-$40,000
Taylor-$40,000
Park Loop Trail-$47,000—from remaining Park Loop Trail Funds
* In addition to the$240,000 previously budgeted
** Landscape/Irrigation projects combined for a total of$175,000
2014/2015 Image Enhancement budget balance:$190,000
Park Loop Trail balance$47,000
23
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24
COMPREHENSIVE IMPROVEMENT PLAN
2016
DEPT 20.1.6 GENERAL DESCRIPTION
HE AV Ep1,11vMEN'
TIRE 70,000•Shoo Eft for fleet rrnint•To service Ere apparatus
PD • SkywatchTrader
PARR • Mowing Tractor•Replace 572E(1998 model.recent excessive downtime with dutch and trensmiulon problems) _
PARR ! • ,Front End loader/lox Rade-Replace 567E (1993 model,deteriorating hydraulics and power issues)
PARR • Skid Steer(would he used for Val maintenance and playground fall epee material)
PW SAW MI et P wn(wtwe INIPINRNOGINAIIIMmiselleNNNItsT1ua.
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PW • Tandem Axel 16 YbD Dump Trudc(For hating of concrete•sweeper debrkt?
PW • Asphalt lay Down Machine&Trailer(asphalt overlays and improved asphalt patches)
PW 15ton asphalt roper(replace 319E 2E07 model)
PW • i YRO Dump Truck replace unit 354(replace worn out truck) —PW Crackseal machine replace 394E
PW • Loader box blade tractor(replace unit 368E)
Ire i wae gerwa.Mob i1onillelime tar iliu :emcees&tilrr7e *arsspIN N11M111tN#t11Rillmem•wee ewer AP1r OwitArg/b!t
WD 360,000 Vactruck/Hydro Excavator.Existing unit doesn't allow us to properly maintain lines and prevent major problems_
_ WD 70.000 IPintle Hitch Low Soy Trailer(haul excavator)
avator)
WO • Small Dump buck 8 Yrd.
WO Mini Excavator(Traddoe) [V
WD D Ditch Witch
WO Tandem Axle Dump Truck 16yd
WD —— ,John Deere(410G)backhoe and front loader/fortes/jackhammer!li'Rudaat
FLEET - Heavy Duty independent mobile 6 Efts
SUSTOTA4 905.000
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29
CITY OF THE COLONY
DEBT MANAGEMENT POLICIES
September 15th, 2015
Prepared by the Finance Department
Approved by the City Manager
Confirmed by the City Council on September 15th, 2015
30
DEBT MANAGEMENT POLICIES
Table of Contents
Pane No.
I. Purpose Statement 1
II. Responsibility }
A. Bond Counsel Involvement
B. Financial Advisor Involvement
III. Short Term Debt 2
A. General
B. Commercial Paper
C. Line of Credit
IV. Long Term Debt 3
A. General
B. Bonds
C. Certificates of Obligation
D. Public Property Finance Contractual Obligation
E. Anticipation Notes
F. Negotiated versus Competitive Sale versus Private Placement
G. Bidding Parameters
H. Bond Elections
V. Refunding 6
VI. Capital Leasing 6
VII. Other Types of Financing 7
VIII. Ratios and Reserves 7
IX. Official Statement 7
A. Responsibility
B. liming
C. Auditor's Involvement
D. Printing
X. Ratings 8
PURPOSE
The Debt Management Policies set forth comprehensive guidelines for the financing of
capital expenditures. It is the objective of the policies that:
1. The City obtains financing only when necessary.
2. The process for identifying the timing and amount of debt or other
financing is as efficient as possible.
3. The most favorable interest rates and lowest costs of issuance are
obtained.
4. The City strives to maintain flexibility for future debt issuances.
ll. RESPONSIBILITY
The primary responsibility for developing financing recommendations rests with the City
Manager. In developing the recommendations, the City Manager shall be assisted by
the Assistant City Manager and the Finance Director and their responsibilities shall be to:
1. Meet periodically to consider the need for financing and assess progress on
the Capital Improvement Program.
2. Meet as necessary in preparation for financing.
3. Review changes in state and federal legislation.
4. Review annually the provisions of ordinances authorizing issuance of
obligations.
5. Annually review services provided by the Financial Advisor, Bond Counsel,
Paying Agent and other service providers to evaluate the extent and
effectiveness of services provided.
Every February, under the direction of the Assistant City Manager, Departments will
submit Capital Projects for the Capital Improvement Program. The report shall be
prepared by the Finance Director and be based in part on information from the
department directors in the City and shall include a projection of near term financing
needs compared to available resources, an analysis of the impact of contemplated
financings on the property tax rate and user charges, and a financing
recommendation.
In developing financing recommendations, city management shall consider the
following:
1. The amount of time proceeds of obligations are expected to remain on hand
and the related carrying cost.
2. The options for interim financing including short term and interfund borrowing,
taking into consideration federal and state reimbursement regulations.
3. The effect of proposed action on the tax rate and user charges.
4. Trends in interest rates.
5. Other factors as appropriate.
A. Bond Counsel Involvement
The Bond Counsel will issue an opinion as to the legality and tax-exempt status of
any obligations. The City will also seek the advice of Bond Counsel on all other
types of financings and on any other questions involving federal tax or arbitrage
law.
The Bond Counsel is also responsible for the preparation of the ordinance
authorizing issuance of obligations, and all of the closing documents to
complete their sale and delivery, and will perform other services as defined by
the contract approved by the City Council.
B. Financial Advisor involvement
The City will seek the advice of the Financial Advisor when necessary. The
Financial Advisor will advise on the structuring of obligations to be issued, informs
the City of various options, advise the City as to how choices will impact the
marketability of City obligations and will provide other services as defined by
contract approved by the City Council. Financial Advisor will be able to bid on
any City competitive debt issues if approval is given by the City. The Financial
Advisor will inform the City Manager of significant issues.
Ill. SHORT TERM DEBT
A. General
When appropriate, the city may consider short-term obligations. Some forms of
short-term obligations can be obtained quicker than long-term obligations and
thus can be used in emergencies until long-term financing can be obtained. In
some cases when the amount of financing required in the immediate future is
relatively small, it may be cheaper for the City to issue a small amount of short-
term obligations to provide for its immediate needs, than to issue a larger
amount of long-term obligations to provide financing for both immediate, and
future needs when the carrying costs of issuing obligations, which are not
immediately needed are taken into account.
The amount of short-term obligations due to mature in a year shall not exceed
5%of the aggregate principal amount of outstanding long-term debt.
IV. LONG TERM DEBT
A. General
Long-term obligations will not be used for operating purposes, and the life of the
obligations will not exceed the useful life of the projects financed.
A resolution of intent to issue bonds or other debt obligations authorizing staff to
proceed with preparations shall be presented for the consideration of the City
Council when capital projects are identified. This provision may be waived in the
event of emergencies or other good cause.
Debt service structure will approximate level debt service unless operational
matters dictate otherwise.
The cost of issuance of private activity bonds is usually higher than for
governmental purpose bonds. Consequently, private activity bonds will be
issued only when they will economically benefit the City.
The cost of taxable debt is higher than the cost of tax-exempt debt. However,
the issuance of taxable debt is mandated in some circumstances, and may
allow valuable flexibility in subsequent contracts with users or managers of the
improvement constructed with the bond proceeds. Therefore, the City will
usually issue obligations tax-exempt, but may occasionally issue taxable
obligations.
B. Bonds
Long-term general obligation or revenue bonds may be issued to finance
significant capital improvements. If required by state law or charter, an election
will be held to authorize such obligations.
Bonds will have a maximum repayment term of 25 years or less. When
cost/beneficial, and when permitted under applicable ordinances,the City may
consider the use of surety bonds, lines of credit, or similar instruments to satisfy
reserve requirements.
C. Certificates of Obligation
Certificates of Obligation may be issued to finance permanent improvements,
land acquisition, and other public purposes. The life of certificates of obligation
issued to finance equipment shall match to the extent possible the useful life of
the equipment,which is usually three to five years.
Certificate of Obligations will be secured by a tax pledge and/or a revenue
pledge, as required by law and as determined to be in the best interest of the
City. Some revenues are restricted as to the uses for which they may be
pledged. Water and wastewater revenues may be pledged without limit.
D. Public Property Finance Contractual Obligation
Public property finance contractual obligations may be issued to finance the
acquisition of personal property. The life of the contractual obligations issued to
finance personal property shall match the useful life of the personal property.
E. Anticipation Notes
Anticipation Notes may be used to finance projects or acquisition that could also
be financed with Certificates of Obligation.
Anticipation Notes may be secured and repaid by a pledge of revenue,taxes, a
combination of revenue and taxes or the proceeds of a future debt issue.
Anticipation Notes are authorized by an ordinance adopted by the City.
Anticipation Notes have several restrictions,which include:
1. Anticipation Notes issued for general purposes must mature before the
seventh anniversary of the date the Attorney General approves the
issue.
2. A governing body may not issue Anticipation Notes that are payable
from bond proceeds unless the proposition authorizing the issuance
of the bonds has already been approved by the voters and the
proposition states that anticipation notes may be issued.
F. Negotiated versus Competitive Sale versus Private Placement
When feasible and economical, obligations shall be issued by competitive sale
rather than negotiated sale. A sale may be negotiated when the issue is
predominantly a refunding issue or in other non-routine situations, which require
more flexibility than a competitive sale allows. In addition, market volatility may
necessitate a negotiated sale. Whenever the option exists to offer an issue either
for competitive sale or for negotiated sale, analysis of the options shall be
performed to aid in the decision making process. When a sale is not
competitively bid, the City will participate with the Financial Advisor in the
selection of the underwriter or direct purchaser.
The criteria used to select a winning bidder in a competitive sale shall be the true
interest cost. In a negotiated sale, the underwriter may be selected through a
request for proposals (RFP). The criteria used to select an underwriter in a
negotiated sale should include the following:
1. Overall experience
2. Marketing philosophy
3. Capability
4. Previous experience with the City as managing or co-managing
underwriter
5. Financial Statement
6. Public Finance team and resources
7. Breakdown of underwriter's discount
a. Management fee - compensation to the underwriter for their
work in structuring the issue.
b. Underwriting fee - compensation to the underwriter for using
their capital to underwrite the bonds.
c. Average takedown - the portion of the underwriter's discount
used to pay the sales force.
d. Expenses - administrative costs such as underwriter's counsel.
and administrative fees.
In a negotiated underwriting, the sale will be, to the extent appropriate,
negotiated with a consortium of underwriting firms, to preserve some of the
benefits of competition.
When cost/beneficial, the City may privately place its debt. Since no
underwriter participates in a private placement, it may result in lower cost of
Issuance. Private placement is sometimes an option for small issues. The
opportunity may be identified by the Financial Advisor.
G. Bidding Parameters
The notice of sale will be carefully constructed to ensure the best possible bid for
the City, in light of existing market conditions and other prevailing factors.
Parameters to be examined include:
1. Limits between lowest and highest coupons
2. Coupon requirements relative to the yield curve
3. Method of underwriter compensation, discount or
premium coupons
4. Use of true interest cost (TIC) versus net interest cost(NIC)
5. Use of bond insurance
6. Deep discount bonds
7. Variable rate bonds
8. Call provisions
H. Bond Elections
Before a bond election, the City Manager and City Councilmembers will be
provided with competent debt capacity analyses, tax and user fee impact
projections and other information as directed by the City Manager's Office. The
Bond Counsel and Financial Advisor will provide support during the process.
V. REFUNDING
The City shall consider refunding debt whenever an analysis indicates the potential for
present value savings or the city's needs to restructure its debt payments.
As a general rule, private activity bonds may be refunded in a current refunding only,
VI. CAPITAL LEASING
Capital leasing is an option for the acquisition of a piece or package of equipment
costing less than$1,000,000.
Leasing shall not be considered when funds are on hand for the acquisition unless the
interest expense associated with the lease is less than the interest that can be earned
by investing the funds on hand or when other factors such as budget constraints or
vendor responsiveness override the economic consideration.
Whenever a lease is arranged with a private sector entity, a tax-exempt rate shall be
sought. Whenever a lease is arranged with a government or other tax-exempt entity,
the City shall strive to obtain an explicitly defined taxable rate so that the lease will not
be counted in the City's total annual borrowings subject to arbitrage rebate.
The lease agreements shall permit the City to refinance the lease at no more than
reasonable cost should the City decide to do so. A lease,which can be called at will,is
preferable to one,which can merely be accelerated.
Since the market for lease financings is relatively inefficient, the interest rates available
at any one time may vary widely. Therefore, the City shall attempt to obtain at least
three competitive proposals for any major lease financing. The net present value of
competitive bids shall be compared; taking into account whether payments are in
advance or in arrears,and how frequently, payments are made. The purchase price of
equipment shall be competitively bid as well as the financing cost.
The advice of the City's Bond Counsel shall be sought in any leasing arrangement and
when federal tax forms 8038 are prepared to ensure that all federal tax laws are
obeyed.
The City may consider issuing certificates of participation to finance a very large
project. Care should be taken because financing costs may be greater than for other
types of financing. When possible, the lease agreement will be backed with a tax
pledge.
If the City is obligated to make payment, more than a year in the future then the
agreement will probably be considered debt by the State. However, if the payments
are subject to annual appropriation by the City Council,then they may not.
VII. OTHER TYPES OF FINANCING
From time to time, other types of financing may become available. Examples of these
options are debt pools with other entities and low-interest loans from State Agencies
such as the Texas Water Development Board. The Finance Director will prepare a
written analysis of an option, with the advice of the City's Bond Counsel and Financial
Advisor.
VIII. RATIOS AND RESERVES
The portion of the City's property tax levied for debt service shall not exceed 40%of the
total tax rate levied each year even though the Texas Attorney General's Office, in its
review of bonds or other obligations secured by Ad Valorem Taxes, generally imposes a
limit of$1.50 for debt service for cities with a$2.50 maximum tax rate. However, the City
is obligated to levy an Ad Valorem Tax sufficient to provide for the timely payments of
its debt obligations secured by Ad Valorem Taxes.
The City will maintain net revenues equaling to at least 1.10 times the maximum annual
principal and interest requirement and 1.25 times the average annual principal and
interest requirements of all parity bonds outstanding in the Water and Wastewater Fund.
For water and sewer, and other types of revenue bonds, the bond documents will
designate the reserve fund amount if a reserve fund is to be established.
When revenue supported debt is issued, a debt service reserve or similar alternative
may be established. The requirements for and source of the reserve will be determined
on a case-by-case basis.
IX. OFFICIAL STATEMENT
The Official Statement is the disclosure document prepared by or on behalf of the City
for an offering of securities.
A. Responsibility
The preparation of the Official Statement is the responsibility of the Finance
Director with the help of the Financial Advisor. Information for the Official
Statement is gathered from departments/divisions throughout the City.
B. Timing
The Finance Director will begin assembling the information needed to update
the Official Statement before the offering of debt. Audited financial statement
information is expected in March. As soon as it is available, audited financial
statement information and capital budget information will be incorporated.
If the next anticipated bond sale is expected to be more than twelve months
after fiscal year end, then the prior year's audited financial statement
information may be updated using unaudited figures.
The Financial Advisor shall begin preparing the Official Statement at least eight
weeks prior to an anticipated bond issuance. Subsequent timing will generally
be as follows:
1. The first draft of the preliminary Official Statement takes approximately
2 weeks to create.
2. Copies of the first draft are provided to the City's Bond Counsel and
City Staff, who will review it for 2 weeks. In the case of a negotiated
sale, the underwriter's counsel will also be asked for comments.
3. Comments from reviewers should be submitted during the two-week
review period. About 1 week will be required to make the requested
changes. Aller they have been made, the Official Statement is either
sent to print or subjected to a second review.
4. During the printing process or the second review, a copy of the draft
Official Statement is sent to the rating agencies for their review.
5. The preliminary Official Statement should be completed and mailed or
electronically distributed to underwriters 2 weeks prior to the bond sale
date. The preliminary document will be titled "preliminary" with red
printed disclosure language and will be called a "red herring".
6. After interest rates have been accepted by the City Council, the final
Official Statement must be prepared and distributed to the underwriter
within seven business days of the date of sale.
C. Auditor's Involvement
The City will include a review of its Official Statement in the contract for services
with its external auditor if required.
D. Printing
The Financial Advisor may print the Official Statement for the City.
X. RATINGS
The City's goal is to maintain or improve its bond ratings. To that end, prudent financial
management policies will be adhered to in all areas.
Full disclosure of operations will be made to the bond rating agencies. The City staff,
with the assistance of the Financial Advisor and Bond Counsel, will prepare the
necessary materials for presentation to the rating agencies.
The City may choose to use Fitch Ratings, Moody's or Standard and Poor's. The City
shall maintain a line of communications with those rating agencies (Moody's, Standard
and Poor's, or Fitch), informing them of major financial events in the City as they occur.
The Comprehensive Annual Financial Report shall be distributed to the rating agencies
after it has been accepted by the City Council.
The rating agencies will also be notified either by telephone or through written
correspondence when the City begins preparation for a debt issuance. After the initial
contact, a formal ratings application will be prepared and sent along with the draft of
the Official Statement relating to the bond sale to the rating agencies. This application
and related documentation should be sent several weeks prior to the bond sale to give
the rating agencies sufficient time to perform their review.
A personal meeting with representatives of the rating agencies will be scheduled every
few years or whenever a major project is initiated.
Xl. CREDIT ENHANCEMENTS
Credit enhancements are mechanisms that guarantee principal and interest payments.
They include bond insurance and a line or letter of credit. Credit enhancement will
usually bring a lower interest rate on debt and a higher rating from the rating agencies,
thus lowering overall costs.
During debt issuance planning, the Financial Advisor will advise the City whether or not
a credit enhancement is cost effective under the circumstances and what type of
credit enhancement, if any, should be purchased. In a negotiated sale, bids will be
taken during the period prior to the pricing of the sale. In a competitive sale, the bidder
may purchase bond insurance if the issue qualifies for bond insurance.
XII. SECONDARY MARKET DISCLOSURE
SEC 15c2-12 regulations became effective July 3, 1995. The new regulation requires
municipal debt issuers to provide specified financial and operating information for fiscal
years beginning on January 1, 1996, or later. The information provided should mirror the
information provided in an official statement at the time of a primary offering.
The annual financial information is to be sent to all Nationally Recognized Municipal
Information Depositories (NRMSIRs) designated by the SEC. Additionally, issuers must
notify the State Information Depositories (SIDs) if one exists.
In addition to the financial and operating information, any material event must be
provided to all NRMSIRs, Municipal Securities Rulemaking Board (MSRB) and to the state
SID's. Municipal debt issuers will be obligated to provide ongoing disclosure on the
status of the following material events:
1. Principal and interest payment delinquencies
2. Non-payment-related defaults
3. Unscheduled draws on reserves
4. Unscheduled draws on credit enhancements
5. Substitution of credit or liquidity providers, or the failure to perform
6. Adverse tax opinions or events affecting the tax-exempt status of the
security
7. Modifications to rights of security holders
8. Bond calls
9. Defeasances
10. Matters affecting collateral
11. Rating changes
The Finance Director will be designated "Compliance Officer" for disclosure
requirements. Levels of reporting will include:
1. Notification by certified mail to NRMSIRs, and SID's of material events, with
copies to the City Council
2. Copies of CAFR and updated tables from the Official Statement to
NRMSIRs and SIDs within six months of fiscal year end.
XIII. ARBITRAGE LIABILITY MANAGEMENT
It is the City's policy to minimize the cost of arbitrage rebate and yield restrictions while
strictly complying with the law.
A. General
Federal arbitrage legislation is intended to discourage entities from issuing tax-
exempt obligations unnecessarily. In compliance with the spirit of this legislation,
the City will
not issue obligations except for identifiable projects with very good prospects of
timely initiation. Obligations will be issued as closely in time as feasible to the
time contracts are expected to be awarded so that they will be spent quickly.
B. Responsibility
•
Because of the complexity of arbitrage rebate regulations and the severity of
non-compliance penalties, the advice of Bond Counsel and other qualified
experts will be sought whenever questions about arbitrage rebate regulations
arise. The City contracts outside consultants for arbitrage rebate services.
The Accounting Manager will be responsible for identifying the amount of
unspent debt proceeds including interest which is on hand and will be
responsible for ensuring that, to the extent feasible, the oldest proceeds on hand
are spent first.
The consultants will maintain a system for computing and tracking the arbitrage
rebate liability. The consultants will notify the City within 60 days of year-end of
the amount of accrued liability. The consultants will also be responsible for
notifying the City two months in advance of when a rebate of excess arbitrage
earnings is due to the Internal Revenue Service.
The City's Bond Counsel and Financial Advisor may be requested to review in
advance any arbitrage rebate payments and forms sent to the Internal Revenue
Service.
The expenditure of obligation proceeds will be tracked in the financial
accounting system by type of issue. Investments will be pooled for financial
accounting purposes and may, at the discretion of the Finance Director, be
pooled for investment purposes. When investments of bond proceeds are co-
mingled with other investments, the City shall adhere to the Internal Revenue
Service rules on accounting allocations.
Arbitrage rebate costs shall be charged as negative interest revenue to the
funds in which the related obligation proceeds were originally deposited.
C. Internal Interim Financing
In order to defer the issuance of obligations, when sufficient non-restricted
reserve funds are on hand, consideration shall be given to appropriating them to
provide interim financing for large construction contracts or parts of contracts.
When the appropriations are subsequently re-financed with proceeds of
obligations or other resources,the non-restricted reserve funds shall be repaid.
When expenditures are reimbursed from debt issuances, applicable state law
and the Internal Revenue Service rules on reimbursements will be complied with
so that the reimbursements may be considered expenditures for arbitrage
purposes. Requirements are in general:
1. The City shall declare its intention to reimburse expenditure with debt
proceeds before paying the expenditure, and will exclude cost of
issuance.
2. Reimbursement bonds must be issued and the reimbursement made
within eighteen months after the expenditure was made or the
property financed by the expenditure was placed in service,
whichever is later.
3. The expenditure to be reimbursed must be a capital expenditure.
D. Spend-out Exceptions For Federal Rebate
Arbitrage rebate regulations provide certain spending exceptions to the
imposition of Federal rebate obligations. One such safe harbor applies to
obligations issued for construction if certain rules are adhered to and the
proceeds are spent within two years. Other such exceptions apply to
expenditures of proceeds within 6 months or eighteen months. These options
should be considered when circumstances indicate the City will with certainty
be successful in achieving a spend-out goal. Such circumstances may include,
but are not limited to the following:
1. Obligations are issued to finance a variety of small construction
projects, not large projects that might be unexpectedly delayed after
the issuance. In addition, project management understands the
requirements and is firmly committed to achieving the spend-out goal.
2. Obligations are issued for a single, large high priority project with a
relatively short construction period and there is a high level of
commitment to speedy completion.
When the two-year spend-out option is elected, debt will be issued for an
estimated one year of expenditures to provide for unexpected delays of up to a
year without incurring penalties.
The exercise of the spend-out options will always be coordinated with Bond
Counsel and the Financial Advisor. The city shall coordinate with Bond Counsel
and the Financial Advisor regarding the proper elections to be made in
connection therewith.
XIV. MODIFICATIONS TO POLICIES
Management staff will review these policies annually and significant changes may be
made with the approval of the City Manager. Significant policy changes will be
presented to the City Council for confirmation.
CITY OF THE COLONY
FINANCIAL MANAGEMENT POLICIES
SEPTEMBER, 2015
Prepared by the Finance Department
Confirmed by the City Council on September 15th, 2015
FINANCIAL MANAGEMENT POUCIES
Table of Contents
Page No•
I. Purpose Statement i
II. Accounting,Auditing and Financial Reporting i
A. Accounting
B. Funds
C. External Auditing
D. External Auditors Responsible to City Council
E. Fxtemal Auditors Rotation
F. External Financial Reporting
G. Internal Financial Reporting
III Internal Controls 2
A. Written Procedures
B. Department Managers Responsible
IV. Operating Budget 3
A. Preparation
B. Balanced Budget
C. Planning
D. Reporting
E. Control
F. Performance Measures and Productivity Indicators
V. Capital Improvement Program 3
A. Preparation
B. Control
C. Program Planning
D. Alternate Resources
E. Debt Financing
F. Street Maintenance
G. Water/Wastewater Main Rehabilitation and Replacement
H. Water and Wastewater Special Projects
I. Reporting
FINANCIAL MANAGEMENT POLICIES
Table of Contents
Page No.
VL Revenue Management 5
A. Simplicity
B. Certainty
C. Equity
D. Administration
E. Revenue Adequacy
F. Cost/Benefit of Abatement
G. Diversification and Stability
H. Non-recurring Revenues
I. Property Tax Revenues
J. User-Based Fees
K. Impact Fees
L. General and Administrative Charges
M. Utility Rates
N. Interest Income
O. Revenue Monitoring
VII. Expenditure Control 6
A. Appropriations
B. Contingency Account Expenditures
C. Purchasing
D. Professional Services
E. Prompt Payment
F. Equipment Financing
G. Information Technology
VIII. Asset Management 7
A. Investments
B. Cash Management
C. Fixed Assets and Inventory
FINANCIAL MANAGEMENT POLICIES
Table of Contents
Page No.
IX. Financial Condition and Reserves 7
A. No Operating Deficits
B. Interfund Loans
C. Operating Reserves
D. Risk Management Program
E. Loss Finuncirrg
F. Enterprise Fund Self-Sufficiency
X. Debt Management 9
A. General
B. Self-Supporting-Debt
C. Analysis of Financing Alternatives
D. Voter Authorization
XI. Staffing and Training 10
A. Adequate Staffing
B. Training
C. Awards,Credentials
XII. Grants Financial Management 10
A. Grant Solicitation
B. Responsibility
XIII. Annual Review& Reporting 10
PURPOSE STATEMENT
These policies are developed by the City Manager to guide the Finance Director, and
staff in financial matters. The overriding goal of the Financial Management Policies is to
enable the City to achieve a long-term stable and positive financial condition while
conducting its operations consistent with the council-manager form of government
established in the City Charter. The watchwords of the City's financial management
include integrity, prudent stewardship, planning,accountability,and full disclosure.
The purpose of the Financial Management Policies is to provide guidelines for the
financial management staff in planning and directing the City's day-to-day financial
affairs and in developing recommendations to the City Manager.
The scope of the policies spans accounting, auditing, financial reporting, internal
controls, operating and capital budgeting, revenue management, cash management,
expenditure control,and debt management.
II. ACCOUNTING,AUDITING,AND FINANCIAL REPORTING
A. ACCOUNTING-The City's Assistant Finance Director is responsible for establishing
the chart of accounts,and for properly recording financial transactions.
B. FUNDS - Self-balancing groups of accounts are used to account for City financial
transactions in accordance with generally accepted accounting principles. Each
fund is created for a specific purpose except for the General Fund, which is used
to account for all transactions not accounted for in other funds. Funds are
created and fund names are changed by City Council approval through
resolution either during the year or in the City Council's approval of the annual
operating budget ordinances.
C. EXTERNAL AUDITING - The City will be audited annually by outside independent
auditors. The auditors must be a CPA firm capable to demonstrate that they have
the breadth and depth of staff to conduct the City's audit in accordance with
generally accepted auditing standards, generally accepted government auditing
standards, and contractual requirements. The auditors' report on the City's
financial statements including federal grants single audit when required, will be
completed within 120 days of the City's fiscal year end, and the auditors'
management letter will be presented to the City staff within 150 days after the
City's fiscal year end. An interim management letter will be issued prior to this
date if any materially significant internal control weaknesses are discovered. The
City staff and auditors will jointly review the management letter with the City
Council within 60 days of its receipt by the staff.
D. EXTERNAL AUDITORS RESPONSIBLE TO CITY COUNCIL - The external auditors are
accountable to the City Council and will have access to direct communication
with the City Council if the City staff is unresponsive to auditor recommendations
or if the auditors consider such communication necessary to fulfill their legal and
professional responsibilities.
The City Council may conduct closed session annually with the auditors present
without the presence of City staff. Such meeting shall be conducted in
accordance with the Open Meetings Act.
E. EXTERNAL AUDITOR ROTATION - The City will not require external auditor rotation,
but will circulate requests for proposal for audit services periodically, normally at
five-year intervals.
F. EXTERNAL FINANCIAL REPORTING - The City will prepare and publish a
Comprehensive Annual Financial Report (CAFR). The CAFR will be prepared in
accordance with generally accepted accounting principles, and will be
presented nnnl,nlly to the Government Finance Officers Association (GFOA) for
evaluation and awarding of the Certification of Achievement for Excellence in
Financial Reporting. The CAFR will be published and presented to the City Council
within 120 days after the end of the fiscal year. City staffing limitations may
preclude such timely reporting. In such case, the Finance Director will inform the
City Manager and the City Manager will inform the City Council of the delay and
the reasons therefore.
G. INTERNAL FINANCIAL REPORTING - The Finance Department will prepare internal
financial reports sufficient for management to plan, monitor, and control the City's
financial affairs. Internal financial reporting objectives are addressed throughout
the policies.
III. INTERNAL CONTROLS
A. WRITTEN PROCEDURES - The Finance Director is responsible for
developing citywide written guidelines on accounting, cash handling, and other
financial matters,which will be approved by the City Manager.
The Finance Department will assist department directors as needed in tailoring
these guidelines into detailed written procedures to fit each department's
requirements.
B. DEPARTMENT MANAGERS RESPONSIBLE - Each department director p is
responsible to the City Manager to ensure that good internal controls are followed
g
throughout his or her department, that all guidelines on accounting and internal
controls are implemented, and that all independent auditor internal control
recommendations are addressed.
IV. OPERATING BUDGET
A. PREPARATION - The City's "Operating Budget" is the City's annual financial
operating plan. It consists of governmental and proprietary funds, including the
general obligation and revenue supported Debt Service Funds, but excluding
Capital Projects Funds. The budget is prepared by the Finance Department With
the cooperation of all City departments, and is submitted to the City Manager
who makes any necessary changes and transmits the document to the City
Council.
The preliminary budget should be filed with the City Secretary's office on or before
July 31 each fiscal year, and presented to the City Council. Thereafter, the final
budget should be enacted by the City Council prior to fiscal year end. The
operating budget shall be submitted to the GFOA annually for evaluation and
awarding of the Award for Distinguished Budget Presentation.
B. BALANCED BUDGET - The operating budgets will be balanced, with current
revenues, and prior year surpluses greater than or equal to current
expenditures/expenses except a rainy day fund reserve of sixty (60) days.
C. PLANNING-The budget process will be coordinated to identify major policy issues
for City Council's consideration several months prior to the budget
approval date.
D. REPORTING-Periodic financial reports will be prepared to enable the department
directors to manage their budgets and to enable the Finance Department to
monitor and control the budget as authorized by the City Council. Summary
financial reports will be presented to the City Council each month within four
weeks after the month end. Such reports will include current year revenue and
expenditures in comparison to budget and prior year actual revenues and
expenditures.
E. CONTROL - Operating Expenditure Control is addressed in another section of the
Policies.
F. PERFORMANCE MEASURES AND PRODUCTIVITY INDICATORS - Where appropriate,
performance measures and productivity indicators will be used as guidelines and
reviewed for efficiency and effectiveness. This information will be included in the
annual budgeting process.
G.
V. CAPITAL IMPROVEMENT PROGRAM
A. PREPARATION - The City's Capital Improvement Program will include all capital
projects. The Capital Improvement Plan will be prepared annually on a fiscal year
basis. The Capital Improvement Plan will be reviewed annually by the City
Council.
The Capital Improvement Plan will be prepared by the Finance Department with
the involvement of all City departments.
B. CONTROL - All capital project expenditures must be approved by City Council.
The Finance Department must ensure the availability of resources before a capital
project contract is presented by the City Manager to the City Council for
approval.
C. PROGRAM PLANNING - The Capital Improvement Plan will include capital
improvements program plans for future years. The planning time frame should
normally be at least five years. The replacement and maintenance for capital
items should also be projected for the next 5 years. Future maintenance and
operations will be fully costed, so that these costs can be considered in the
operating budget.
D. ALTERNATE RESOURCES - Where applicable, assessments, impact fees, or other
user-based fees should be used to fund capital projects, which have a primary
benefit to certain property owners.
E. DEBT FINANCING - Recognizing that debt is usually a more expensive financing
method, alternative financing sources will be explored before debt is issued.
When debt is issued, it will be used to acquire major assets with expected lives,
which equal or exceed the average life of the debt issued. The exceptions to this
requirement are the traditional costs of marketing and issuing the debt,
capitalized labor for design and construction of capital projects, and small
component parts which are attached to major equipment purchases.
F. STREET MAINTENANCE - The City recognizes that deferred street maintenance
increases future capital costs by an estimated 5 to 10 times. Therefore, a portion
of the General Fund Budget and/or debt issuances may be set aside each year to
maintain the quality of streets. The amount will be established annually so that
repairs will be made.
G. WATER/WASTEWATER MAIN REHABIUTATION AND REPLACEMENT - The City
recognizes that deferred water/wastewater main rehabilitation and replacement
increases future costs due to loss of potable water from water mains and inflow
and infiltration into wastewater mains. Therefore, to ensure that the rehabilitation
and replacement program is adequately funded, the City may annually
appropriate an amount to provide for a water and wastewater main repair and
replacement program.
H. WATER AND WASTEWATER SPECIAL PROJECTS - A special fund will be maintained
for water and wastewater capital projects. The fund will be funded with operating
surpluses, interest earnings, and transfers from water and wastewater operations.
As soon as practicable, after each fiscal year end when annual operating results
are known, any Water/Wastewater Fund operating surplus in excess of budget
which is not required to meet ending resources requirements, may be transferred
to the Special Projects Fund with the approval of the City Council. The fund will be
used for funding water/wastewater main rehabilitation and replacement, for
major capital outlay,and for unplanned projects.
REPORTING-Periodic financial reports will be prepared to enable the department
managers to manage their capital budgets and to enable the Finance
Department to monitor the capital budget as authorized by the City Council.
VI. REVENUE MANAGEMENT
A. SIMPLICITY-The City will strive to keep the revenue system simple, which will result
in a decrease of compliance costs for the taxpayer or service recipient and a
corresponding decrease in avoidance to pay. The City will avoid nuisance taxes,
fees, or charges as revenue sources.
B. CERTAINTY - An understanding of the revenue source increases the reliability of
the revenue system. The City will enact consistent collection policies for its
revenues so that assurances can be provided that the revenue base will
materialize according to budgets and plans.
C. EQUITY-The City will strive to maintain equity in the revenue system structure. That
is, the City will seek to minimize or eliminate all forms for subsidization between
entities, funds, services, utilities, and customers. However, it is recognized that
public policy decisions may lead to subsidies in certain circumstances, e.g., senior
citizen property tax exemptions or partial property tax abatement.
D, ADMINISTRATION -The benefits of revenue will exceed the cost of producing the
revenue. The cost of collection will be reviewed annually for cost effectiveness.
Where appropriate, the City will use the administrative processes of State or
Federal collection agencies in order to reduce administrative costs.
E. REVENUE ADEQUACY-The City will require that there be a balance in the revenue
system. That is, the revenue base will have the characteristic of fairness and
neutrality as it applies to cost of service,willingness to pay,and ability to pay.
F. COST/BENEFIT OF ABATEMENT-The City will use due caution in the analysis of any
tax, fee, or water and wastewater incentives that are used to encourage
development. Ideally, a cost/benefit (fiscal impact) analysis will be performed as
a part of such analysis.
G. DIVERSIFICATION AND STABILITY - In order to protect the government from
fluctuations in revenue source due to fluctuations in the economy, and variations
in weather, (in the case of water and wastewater), a diversified revenue system
will be maintained.
H, NON-RECURRING REVENUES - One-time revenues will not be used for ongoing
operations. Non-recurring revenues will be used only for non-recurring
expenditures. Care will be taken not to use these revenues for budget balancing
purposes.
PROPERTY TAX REVENUES - Property shall be assessed at 100% of the fair market
value as appraised by the Denton Central Appraisal District. Reappraisal and
reassessment shall be done regularly as required by State law.
All delinquent taxes will be aggressively pursued, with delinquents greater than 150
days being turned over to the City Attorney or a private attorney, and a penalty
assessed to compensate the attorney as allowed by state law, and in
accordance with the attorney's contract.
J. USER-BASED FEES - For services associated with a user fee or charge, the direct
and indirect costs of that service will be offset by a fee where possible. There will
be a periodic review of fees and charges to ensure that fees provide adequate
coverage of costs of services. User charges may be classified as "full cost
recovery," "partial cost recovery," and "minimal cost recovery," based upon City
Council policy.
K. IMPACT FEES-Impact fees are currently imposed for water,wastewater, roadway,
and drainage in accordance with applicable city ordinances and State Law.
Impact fees will be re-evaluated at least every five years as required by law.
L. GENERAL AND ADMINISTRATIVE CHARGES-A method will be maintained whereby
the General Fund can impose a charge to the enterprise funds or special revenue
funds for general and administrative services (indirect costs), performed on their
behalf. The details will be documented in the annual budget process in the form
of transfers between funds.
M. UTIUTY RATES-The City will review utility rates periodically, and if necessary, adopt
new rates that will generate revenues required to fully cover operating
expenditures, meet the legal restrictions of all applicable bond covenants,
provide for an adequate level of working capital needs and debt service
requirements. This policy does not preclude drawing down cash balance to
finance current operations. However, it is best that any extra cash balance be
used instead to finance capital projects.
N. INTEREST INCOME - Interest earned from investment of available monies, whether
pooled or not, will be distributed to the funds in accordance with the average
monthly cash balances.
0. REVENUE MONITORING - Revenues actually received will be regularly compared
to budgeted revenues and variances will be investigated. This process will be
summarized in the appropriate budget report.
VII. EXPENDITURE CONTROL
A. APPROPRIATIONS - The level of budgetary control is the department level in the
General Fund, Parks Fund, and Utility Fund and the fund level in all other funds.
When budget adjustments (i.e., amendments) between departments and/or
funds are necessary, these must be approved by the City Council. Budget
appropriation amendments at lower levels of control shall be made in
accordance with the applicable administrative procedures.
B. CONTINGENCY ACCOUNT EXPENDITURES - The City Council must approve all
contingency account expenditures of $50,000 or more, as discussed under
Purchasing.
C. PURCHASING - All purchases shall be in accordance with the City's Purchasing
Policies.
D. PROFESSIONAL SERVICES - Professional services will generally be processed
through a request for proposal process, except for smaller contracts. The City
Manager may execute any professional services contract for less than $50,000
provided there is an appropriation for such contract.
E. PROMPT PAYMENT-All invoices will be paid within 30 days of receipt of goods and
services or receipt of invoices, whichever is later in accordance with the prompt
payment requirements of state law. Procedures will be used to take advantage
of all purchase discounts where considered cost effective. However, payments
will also be reasonably delayed in order to maximize the City's investable cash,
where such delay does not violate the agreed upon payment terms.
F, EQUIPMENT FINANCING - Equipment may be financed when the useful life is at
least three years. Vehicles to be replaced are identified and evaluated every
year during the budget process. Depending on available resources, financing
may be made by debt issuance rather than from the General Fund and Utility
Fund accounts.
G. INFORMATION TECHNOLOGY -Certain information technology acquisitions will be
funded in the Information Technology Department's budget or by debt issuance.
Acquisitions may include all related professional services costs for researching
and/or implementing an information technology project. Lease cost is also an
eligible expense.
VIII. ASSET MANAGEMENT
A. INVESTMENTS-The City's investment practices will be conducted in accordance
with the City Council approved Investment Policies.
B. CASH MANAGEMENT-The City's cash flow will be managed to maximize the cash
available to invest. A monthly report is provided by the Finance Director to the
ASsistant City Manager for presentation to the City Council.
C. FIXED ASSETS AND INVENTORY -These assets will be reasonably safeguarded and
properly accounted for,and prudently insured.
IX. FINANCIAL CONDITION AND RESERVES
A. NO OPERATING DEFICITS-Current expenditures will be paid with current revenues
and prior year surplus. Deferrals, short-term loans, or one-time sources will be
avoided as budget balance techniques. Reserves will be used only for
emergencies or non-recurring expenditures, except when balances can be
reduced because their levels exceed guideline minimums.
B. INTERFUND LOANS - Non-routine interfund loans shall be made only in
emergencies where other temporary sources of working capital are not available
and with the approval of the City Council. At the time an interfund loan is
considered, a plan to repay it prior to fiscal year end shall also be considered.
A fund will only lend money that it will not need to spend in the immediate future.
A loan may be made from a fund only if the fund has ending resources in excess
of the minimum requirement for the fund. Total interfund loans outstanding from a
fund shall not exceed 15% of the target fund balance for the fund. If any
interfund loan is to be repaid from the proceeds of a future debt issue, a proper
reimbursement resolution will be approved at the time the loan is authorized.
C. OPERATING RESERVES- in accordance with GASB-54, it is the policy of the City of
The Colony to classify fund balances as Non-spendable, Restricted, Committed,
Assigned, or Unassigned and develop policy for establishment and activity of
each classification. Non-spendable fund balance is (a) not in a spendable form
such as prepaid items or (b) legally or contractually required to be maintained
intact as an endowment. Restricted fund balance consists of amounts that can
be spent only on the specific purposes stipulated by law or by the external
providers of those resources. Committed fund balances are self-imposed
limitations set in place prior to the end of the fiscal year. These amounts can be
used only for specific purposes determined by a formal action of the City Council
and require the same level of formal action to remove the constraint. Assigned
fund balance consists of amounts that are subject to a purpose constraint that
represents an intended use established by the City Council. The purpose of the
assignment must be narrower than the purpose of the General Fund. Additionally,
this category is used to reflect the appropriation of a portion of existing fund
balance to eliminate a projected deficit in the subsequent year's budget.
Unassigned fund balance represents the residual classification of fund balance
and includes all spendable amounts not contained within other classifications.
Restricted, Committed, and Assigned fund balance expenditures require prior
Council approval.
(1) Policy on Committing Funds:
It is the policy of the City of The Colony that fund balance amounts will be
reported as "Committed Fund Balance" only after formal action and approval
by City Council.The action to constrain amounts in such a manner must occur
prior to year end; however, the actual dollar amount may be determined in a
subsequent period. After approval by the City Council, the amount reported a
Committed Fund Balance cannot be reversed without Council approval.
(2) Policy of Assigning Funds:
Funds that are intended to be used for a specific purpose but have not
received the formal approval by Council may be recorded as Assigned Fund
Balance. It is the policy of the City of The Colony that fund balance amounts
will be reported as "Assigned Fund Balance" only after the City Manager has
assigned those amounts based on intentions for use of the City Council.
(3) Policy on Unassigned General, Parks, and Utility Fund balances:
It is the goal of the City to achieve and maintain an unassigned General Fund,
Parks Fund, and Utility Fund balance equal to 60 days of expenditures. The
required minimum fund balance of 60 days of expenditures is to provide
working capital needs in emergencies. The 60 days fund balance is
considered as committed fund balance in the General Fund and is approved
by the City Council via the resolution adopting this policy. To the extent
reasonably possible, in the event that the General fund balance is drawn
down below the target level,it will be replenished by the following fiscal year.
(4) Order of fund expenditure
When multiple categories of fund balance are available for expenditure, the
City will first spend the most restricted category of funds.Normally, this will result
in the use of committed, then restricted, and lastly, unassigned fund balances.
Failure to meet these standards will be disclosed to the City Council as soon as the
situation is recognized and a plan to replenish the ending resources over a
reasonable time frame shall be adopted.
D. RISK MANAGEMENT PROGRAM-The City will aggressively pursue every opportunity
to provide for the public's and City employees' safety and to manage its risks.
D. LOSS FINANCING - All reasonable options will be investigated to finance losses.
Such options may include risk transfer,insurance, and risk retention.
E. ENTERPRISE FUND SELF-SUFFICIENCY -The City's enterprise funds resources will
be sufficient to fund operating and capital expenditures. The enterprise funds will
pay (where applicable) their fair share of general and administrative expenses in
lieu of property taxes and/or franchise fees. If an enterprise fund is temporarily
unable to pay all expenses, then the City Council may waive general and
administrative expenses in lieu of property taxes and/or franchise fees until the
fund is able to pay them.
X. DEBT MANAGEMENT
A. GENERAL-The City's borrowing practices will be conducted in accordance with
the City Council approved Debt Management Policies.
B. SELF-SUPPORTING DEBT- When appropriate,self-supporting revenues will pay debt
services in lieu of tax revenues.
C. ANALYSIS OF FINANCING ALTERNATIVES-The City will explore all financing
alternatives in addition to long-term debt including leasing,grants and other aid,
developer contributions,impact fees, and use of reserves or current monies.
D. VOTER AUTHORIZATION - The City shall obtain voter authorization before issuing
General Obligation Bonds as required by law. In general, voter authorization is not
required for the issuance of Revenue Bonds and Certificates of Obligation.
XI. STAFFING AND TRAINING
A. ADEQUATE STAFFING - Staffing levels will be adequate for the fiscal functions of
the City to function effectively. Workload shedding alternatives will be explored
before adding staff.
B. TRAINING - The City will support the continuing education efforts of all financial
staff including the investment in time and materials for maintaining a current
perspective concerning financial issues. Staff will be held accountable for
communicating, teaching, and sharing with other staff members all information
and training materials acquired from seminars, conferences, and related
education efforts.
C. AWARDS,CREDENTIALS-The City will support efforts and involvements which result
in meeting standards and receiving exemplary recitations on behalf of any of the
City's fiscal policies, practices, processes, products, and personnel. Staff
certifications may include Certified Public Accountant, Certified Management
Accountant, Certified Internal Auditor, Certified Payroll Professional, Certified
Government Finance Officer, Professional Public Buyer, Certified Cash Manager,
and others as approved by the City Manager upon recommendation of the
Finance Director.
XII. GRANTS FINANCIAL MANAGEMENT
A. GRANT SOLICITATION -The City will stay informed about available grants and will
apply for any,which would be cost/beneficial and meet the City's objectives.
B. RESPONSIBILITY - Departments will oversee the day to day operations of grant
programs, will monitor performance and compliance, and will also keep Finance
Department contacts informed of significant grant-related plans and activities.
Departments will also report re-estimated annual grant revenues and expenses to
the Finance Department after the second quarter of each year. Finance
Department staff members will serve as liaisons with grantor financial
management personnel,and will keep the book of accounts for all grants.
XIII. ANNUAL REVIEW& REPORTING
A. These Policies will be reviewed administratively by the City Manager at least
annually, and will be presented to the City Council for confirmation of any
significant changes.
B. The Finance Director will report annually to the City Council on compliance with
these policies.
CITY OF THE COLONY
THE COLONY ECONOMIC DEVELOPMENT CORPORATION
THE COLONY COMMUNITY DEVELOPMENT CORPORATION
INVESTMENT POLICY
September 15, 2015
Prepared by the Finance Department
THE COLONY INVESTMENT POLICY
TABLE OF CONTENTS
PAGE
SCOPE OF POLICY 1
A. Funds Included 1
B. Funds Excluded 1
C. Pooling of Funds
D. Additional Requirements
II. PRUDENCE 1
III. OBJECTIVES OF POLICY 2
A. Safety 2
B. Liquidity 2
C. Public Trust/Transparency 2
D. Yield 2
IV. RESPONSIBILITY AND CONTROL 3
A. Delegation 3
B. Investment Officers 3
C. Conflicts of Interest 3
D. Disclosure 3
E. Investment Training 3
V. AUTHORIZED ORIZED INVESTMENTS 4
VI. INVESTMENT REPORTS 4
VII. PORTFOUO AND INVESTMENT ASSET PARAMETERS 4
A. Bidding Process for Investments 4
B. Maximum Maturities 5
C. Maximum Dollar-Weighted Maturity 5
D. Diversification 5
E. Performance Standards 5
VIII. SELECTION OF DEPOSITORY, BROKER/DEALERS,AND
INVESTMENT ADVISORS 6
A. Depository Solicitation Process 6
B. Insurability 6
C. Investment Advisors 6
IX. COLLATERAUZATION 6
A. Insurance or Collateral Pledged 6
B. Collateral Defined 6
C. Audit of Pledged Collateral 7
PAGE
X. SAFEKEEPING AND CUSTODY OF INVESTMENT ASSETS 7
XI. MANAGEMENT AND INTERNAL CONTROLS 7
XII. INVESTMENT POLICY ADOPTION 8
XIII. INVESTMENT STRATEGY 8
A. Operating Funds 9
APPENDIX A Authorized Government Pools 9
THE COLONY INVESTMENT POLICY
I.SCOPE OF POLICY
This Investment Policy shall govern the investment activities of all funds of the City of The Colony,
The Colony Economic Development Corporation, and The Colony Community Development
Corporation (collectively herein referred to as "THE COLONY"), excluding any specific funds
cited hereafter. This Policy serves to satisfy the state statutory requirement to define and adopt
a formal investment policy.
A. FUNDS INCLUDED:
All financial assets of all current funds of THE COLONY and any new funds created in the future,
unless specifically exempted, will be administered in accordance with this Policy. These funds
are accounted for in the City's Annual Financial Report and may include: General Fund,
Enterprise Funds, Capital Project Funds,Special Revenue Funds,Trust and Agency Funds.
B. FUNDS EXCLUDED:
This Policy excludes Employee Retirement and Pension Funds administered or sponsored by THE
COLONY and excludes bond funds held in trust escrow accounts. THE COLONY will maintain
responsibility for these funds as required by Federal and State law and Charters and Codes.
C. POOLING OF FUNDS:
Except for cash in certain restricted and special funds, THE COLONY will consolidate cash
balances from all funds to optimize potential investment earnings. Investment income will be
allocated to the various funds based on their respective percentage participation and in
accordance with the generally accepted accounting principles.
D. ADDITIONAL REQUIREMENTS:
In addition to this Policy, bond funds (to include capital project, debt service, and reserve
funds) will be managed by the governing debt ordinance and the provisions of the Internal
Revenue Code applicable to the issuance of tax-exempt obligations and the investment of
debt proceeds.
II. PRUDENCE
Investments shall be made with judgment and care, under circumstances then prevailing,
which persons of prudence, discretion and intelligence exercise in the management of their
own affairs, not for speculation, but for investment, considering the probable safety of the
capital as well as the probable income to be derived.The standard of prudence to be used by
Investment Officers shall be the "prudent person" standard and shall be applied in the context
of managing an overall portfolio of funds, rather than a consideration as to the prudence of a
single investment. Investment Officers acting in accordance with written procedures and this
Investment Policy and exercising due diligence shall be relieved of personal responsibility for an
individual security's credit risk or market price changes, provided deviations from expectations
are reported in a timely fashion to the City Manager, and the City Council, and appropriate
action is taken by the Investment Officers and their oversight managers to control adverse
developments in accordance with the terms of this Policy.
III.OBJECrTIVES OF POLICY
The primary objectives of THE COLONY's investment program in order of priority shall be
preservation and safety of principal, liquidity,public trust, and yield.
A. SAFETY:
The foremost and primary objective of THE COLONY's investment program is the preservation
and safety of capital. Each investment transaction will seek first to ensure that capital losses are
avoided, whether the loss occurs from the default of a security or from erosion of market value.
The objectives will be to mitigate credit risk and interest rate risk. To control credit risk,
investments should be limited to the safest types of investments. Financial institutions,
broker/dealers and advisors who serve as intermediaries, shall be pre-qualified by THE COLONY.
The credit ratings of investment pools and individual securities will be monitored to assure
compliance with this Policy and State law.
To control interest rate risk, THE COLONY will structure the investment portfolio so that
investments mature to meet cash requirements for ongoing operations and will regularly
monitor marketable securities.Should an issuer experience a downgrade of its credit rating by a
nationally recognized credit rating agency below the required minimum rating, all prudent
measures will be taken to liquidate the investment.
B. LIQUIDITY:
THE COLONY's investment portfolio will remain sufficiently liquid to enable THE COLONY to meet
operating requirements that might be reasonably anticipated. Liquidity will be achieved by
maintaining adequate cash equivalent balances, matching investment maturities with
forecasted cash flow funding requirements,and by diversifying maturities. Furthermore, since all
possible cash demands cannot be anticipated, the portfolio, or portions thereof may be
placed in bank accounts, money market mutual funds or local government investment pools,
which offer same day liquidity.
C. PUBLIC TRUST/TRANSPARENCY:
Investment Officers shall seek to act responsibly as the custodians of public trust.Investment
Officers shall avoid any transaction that might impair public confidence in THE COLONY's ability
to govern effectively.To increase public trust and transparency, the Investment Policy will limit
investments to those easily understood. Investments are limited to money market accounts of
the Depository Bank and local governmental investment pools,and certificates of deposit of up
to 1 year in maturity as described below in section V. Authorized Investments.
D. YIELD:
THE COLONY's investment portfolio will be designed with the objective of regularly meeting or
exceeding the optimum rate of return of a reasonable benchmark considering the risk, liquidity,
and transparency constraints. Investment Officers will seek to preserve principal, maintain
liquidity levels needed, maintain as much transparency as possible and optimize the yield of
these funds. However, it is understood that if the yield achieved by THE COLONY is higher than
the arbitrage yield, positive arbitrage income will be rebated to the federal government as
required by current federal regulations.
IV. RESPONSIBILITY AND CONTROL
A. DELEGATION:
The Director of Finance has oversight management responsibility to establish written procedures
and controls for the operation of the investment program, consistent with this Investment Policy.
Such procedures shall include explicit delegation of authority to persons responsible for the daily
cash management operation, execution of investment transactions, overall portfolio
management, and investment reporting. The Director of Finance shall be responsible for all
transactions undertaken, and shall establish a system of controls to regulate the activities of the
Investment Officers.
B. INVESTMENT OFFICERS:
The Director of Finance and Assistant Finance Director are the "Investment Officers" of THE
COLONY. No person shall engage in an investment transaction except as provided under the
terms of this Policy and the procedures established by the Director of Finance.
C. CONFLICTS OF INTEREST:
Investment Officers and employees involved in the investment process will refrain from personal
business activity that could conflict with proper execution and management of the investment
program, or which could impair their ability to make impartial investment decisions. Investment
Officers and employees involved in the investment process shall refrain from undertaking
personal investment transactions with the same individual with whom business is conducted on
behalf of THE COLONY.
D. DISCLOSURE:
Investment Officers shall disclose to the City Manager, City Council, Boards of Directors, and the
Texas Ethics Commission any financial interests in financial institutions or any relationship within
the second degree by affinity or consanguinity to an individual that conducts business with THE
COLONY. All Investment Officers shall further disclose any large personal financial investment
positions that could be related to the performance of THE COLONY's portfolio. Investment
Officers shall subordinate their personal investment transactions to those of this jurisdiction,
particularly with regard to the timing of purchases and sales.
E. INVESTMENT TRAINING:
In order to ensure qualified and capable investment management, the Director of Finance, the
Assistant Finance Director, and any other Investment Officers shall have a finance, accounting,
or related degree and knowledge of treasury functions. Additionally, Investment Officers must
attend investment training not less than once in a two-year period that begins on the first day of
the fiscal year and consists of two consecutive fiscal years after that date and receive not less
than 10 hours of instruction relating to investment responsibilities.This investment training may be
from educational seminars held by Government Finance Officers Association (GFOA),
Government Treasurers Organization of Texas (GTOT), Government Finance Officers Association
of Texas (GFOAT), American Institute of Certified Public Accountants (AICPA), University of North
Texas (UNT), North Central Texas Council of Governments (NCTCOG), and Texas Municipal
League (TML). All Investment Officers of THE COLONY shall attend at least one training session
relating to their cash management and investment responsibilities within 12 months after
assuming these duties for THE COLONY. Training must include education in investment controls,
security risks, strategy risks, market risks,and compliance with state investment statutes.
V.AUTHORIZED INVESTMENTS
Funds of THE COLONY may be invested in the following investments, as authorized by Chapter
2256 of the Government Code of the State of Texas, known as the "Public Funds Investment
Act", and as authorized by this Investment Policy. Investments not specifically listed below are
not authorized:
A. Money Market Mutual Funds of Local Government Joint Investment Pools established
and operating in compliance with the Public Funds Investment Act, and are continuously
rated no lower than AAA-m or an equivalent rating by at least one nationally recognized
rating service, have a dollar-weighted average maturity of 60 days or less, and invest
only in obligations listed in the Public Funds Investment Act.
B. Money Market Deposit accounts with bank depository.
C. Certificates of Deposits that are issued by a state or national bank that has its main office
or branch office in the State of Texas and that a) which are guaranteed or insured by the
Federal Deposit Insurance Corporation, b) are secured in compliance with Section IX
Collateralization, or c) are executed through a depository institution that has its main
office or a branch office in this State that participates in the Certificate of Deposit
Account Registry Service (CDARS) and meet the requirements of the Public Funds
Investment Act.
D. Insured Cash Shelter Accounts executed through a trustee bank that has its main office
or a branch office in this State.
Only those investments specifically listed in this Policy are authorized.
VI. INVESTMENT REPORT
The Director of Finance shall submit quarterly an investment report in compliance with the
Public Funds Investment Act. This report will be prepared in a manner, which will allow THE
COLONY to ascertain whether investment activifies during the reporting period have
conformed to the Investment Policy. The report should be provided to the City Council, Boards
of Directors, and the City Manager. The reports shall be formally reviewed at least annually by
an independent auditor in conjunction with the annual audit. The result of the review shall be
reported to the City Council and Boards of Directors by that auditor. The quarterly investment
report must be presented within 90 days of the end of the quarter reporting period.
The Director of Finance is responsible for the recording of investment transactions and the
maintenance of the investment records with reconciliation of the accounting records of
investments carried out by the Assistant Finance Director. Information to maintain the
investment program and the reporting requirements is derived from various sources such as
broker/dealer research reports, newspapers, financial on-line market quotes, communication
with broker/dealers, government investment pools, and financial consulting services.
VII. PORTFOLIO AND INVESTMENT ASSET PARAMETERS
A. BIDDING PROCESS FOR INVESTMENTS:
Investment Officers for THE COLONY shall solicit bids or quotes for certificates of deposit,or other
financial institution deposit accounts either orally, in writing, electronically, or in any
combination of these methods. The Investment Officers will strive to create a competitive
pricing environment for all portfolio transactions.
B. MAXIMUM MATURITIES:
THE COLONY will manage its investments to meet anticipated cash flow requirements. THE
COLONY will not directly invest in certificate of deposits maturing more than one year from the
date of purchase.
C. MAXIMUM DOLLAR-WEIGHTED AVERAGE MATURITY:
The maximum dollar-weighted average maturity based on the stated final maturity, authorized
by this Investment Policy for the composite portfolio of THE COLONY,shall be 9 months.
D. DIVERSIFICATION:
It is the Policy of THE COLONY to diversify its investment portfolios.Assets held in each investment
portfolio shall be diversified to eliminate the risk of loss resulting from concentration of assets in a
specific maturity or specific issuer.
In establishing specific diversification strategies, the following general policies and constraints
shall apply:
1) CD maturities and shall be staggered in a way that protects interest income from the
volatility of interest rates and that avoids undue concentration of assets in a specific
maturity or Institution. Investments shall be selected which provide for stability of income
and adequate liquidity.
E. PERFORMANCE STANDARDS:
The investment portfolio will be managed in accordance with the objectives specified within
this Policy.
VIII.SELECTION OF DEPOSITORY. BROKER/DEALERS. AND INVESTMENT ADVISORS
A. DEPOSITORY SOLICITATION PROCESS:
Primary depositories shall be selected through THE COLONY's banking services procurement
process, which shall include a formal request for proposal (RFP) issued not less than every five
years. In selecting primary depositories, the credit worthiness of institutions shall be considered.
No public deposit shall be made except in a qualified public depository as established by state
depository laws.
THE COLONY may also establish agreements with other financial institutions under separate
contract for additional services which are necessary in the administration, collection,
investment, and transfer of municipal funds. Such deposits will only be made after the financial
institution has completed and returned the required written instruments and depository pledge
agreements.
B. INSURABILITY:
Banks seeking to establish eligibility for THE COLONY's deposits, shall submit financial statements,
evidence of federal insurance, and other information as required by the Investment Officers of
THE COLONY.
C. INVESTMENT ADVISORS:
D ISORS:
Investment Advisors shall adhere to the spirit, philosophy and specific term of this Policy and
shall advise within the same "Standard of Care". Selected Investment Advisors must be
registered under the Investment Advisors Act of 1940 or with the State Securities Board. A
contract with an Investment Advisor may not be for a term longer than two years and must be
approved by the City Council,including any renewals or extensions.
IX. COLLATERALIZATION
A. INSURANCE OR COLLATERAL PLEDGED:
Collateralization shall be required on depository bank deposits and certificates of deposit, in
accordance with the "Public Funds Collateral Act" and depository laws. With the exception of
deposits secured with irrevocable letters of credit at 100% of amount, the collateralization level
will not be less than 102% of market value of principal and accrued interest, less any FDIC
insurance. Evidence of the pledged collateral shall be documented by a tri-party custodial or a
master repurchase agreement with the eligible collateral pledged clearly listed in the
agreement. Collateral shall be monitored at least monthly to ensure that the market value of
the securities pledged equals or exceeds the related deposit or investment balance.
B. COLLATERAL DEFINED:
THE COLONY shall only accept, as depository or investment collateral, letters of credit issued by
the FHLB or investments stipulated by the Federal Treasury Office of the Comptroller Of The
Currency,Title 12- Banks and Banking, Paragraph 9.11.
C. AUDIT OF PLEDGED COLLATERAL:
All collateral shall be subject to verification and audit by the Director of Finance.
X. SAFEKEEPING AND CUSTODY OF INVESTMENT ASSETS
All security transactions, including collateral for repurchase agreements, entered into by THE
COLONY shall be conducted using the delivery vs. payment (DVP) basis. That is, funds shall not
be wired or paid until verification has been made that the correct security has been received
by the safekeeping bank. The safekeeping bank is responsible for matching up instructions from
THE COLONY's Investment Officers on an investment settlement with what is wired from the
broker/dealer, prior to releasing THE COLONY's designated funds for a given purchase. The
security shall be held in the name of THE COLONY or held on behalf of THE COLONY in a bank
nominee name. Securities will be held by a third party custodian designated by the Director of
Finance and evidenced by safekeeping receipts. The safekeeping bank's records shall assure
the notation of THE COLONY's ownership of or explicit claim on the securities.The original copy
of all safekeeping receipts shall be delivered to THE COLONY. A safekeeping agreement must
be in place, which clearly defines the responsibilities of the safekeeping bank. Wires or ACH
transactions to and from government investment pools,financial institution deposits,and money
market mutual funds are the only exceptions to the DVP method of settlement.
XI.MANAGEMENT AND INTERNAL CONTROLS
The Director of Finance shall establish a system of internal controls which shall be designed to
prevent losses of public funds arising from fraud, employee error, misrepresentation by third
parties, unanticipated changes in financial markets, or imprudent actions by employees or
Investment Officers of THE COLONY.
Controls and managerial emphasis deemed most important that shall be employed where
practical are:
A. Control of collusion.
B. Separation of duties.
C. Separation of transaction authority from accounting and record keeping.
D. Custodian safekeeping receipts records management.
E. Avoidance of bearer-form securities.
F. Clear delegation of authority.
G. Documentation of investment bidding events.
H. Written confirmations from broker/dealers and financial institutions.
Reconcilements and comparisons of security receipts with the investment records.
J. Compliance with investment policies.
K. Accurate and timely investment reports as required by law and this Policy.
L. Validation of investment maturity decisions with supporting cash flow data.
M. Adequate training and development of Investment Officers.
N. Verification of all investment income and security purchase and sell computations.
O. Review of financial condition of all broker/dealers, and depository institutions.
P. Information about market conditions, changes, and trends that require adjustments in
investment strategies.
The above list of internal controls represents only a partial list of a system of internal controls. In
conjunction with the annual audit, a process of independent review by an external auditor shall
be established.
XII.INVESTMENT POLICY ADOPTION
THE COLONY's Investment Policy shall be adopted by resolution of the City Council and Boards
of Directors. The Policy and general investment strategy statements shall be reviewed on an
annual basis by the City Council and Boards of Directors, and any modifications made thereto
must be approved by them.
XIII.INVESTMENT STRATEGY
Effective investment strategy development coordinates the primary objectives of THE
COLONY's Investment Policy and cash management procedures. Cash management to
increase the available "investment period" will be employed when necessary to enhance the
ability of THE COLONY to earn interest income. Maturity selections shall be based on cash flow
and market conditions to take advantage of interest rate cycles. THE COLONY's portfolio shall
be designed and managed in a manner responsive to the public trust and consistent with the
Investment Policy.
Each major fund type has varying cash flow requirements and liquidity needs.Therefore specific
strategies shall be implemented considering the Fund's unique requirements. THE COLONY
funds shall be analyzed and invested according to the following major fund types:
A. Operating Fund
B. Capital Project Funds and Special Purpose Funds
C. Debt Service Funds
D. Bond Reserve Funds
OVERALL STRATEGY:
THE COLONY's basic investment strategy is to utilize investment options that represent suitable
risk/return alternatives for excess operating reserves which are easily understood by the public.
Therefore, investment of excess operating funds shall seek to preserve principal and promote
transparency by restricting authorized investment instruments to those investments which are
easily understood with suitable and limited credit and market risk.
Liquidity will be maintained by utilizing projected cash flow needs to limit investment maturities
and targeting minimum cash balances. Investment marketability will be maintained based on
the fund-type strategies to sufficiently and reasonably assure that investments could be
liquidated prior to the maturity, if cash needs dictate.
THE COLONY shall also diversify its investment portfolio. Whenever practical, assets held in the
investment portfolio shall minimize the risk of loss resulting from concentration of assets in a
specific maturity or specific issuer. THE COLONY will group investment instruments into "fund-
type investment groups." These groups will reflect similar needs as to maturity limits, diversity,
and liquidity.
THE COLONY funds shall seek to achieve a competitive yield appropriate for each strategy.
Yield objectives shall at all times be subordinate to the objectives of safety, liquidity and
transparency. Tax-exempt debt proceeds shall be invested to optimize the interest earnings
retained by THE COLONY,while at the same time fully complying with all applicable State laws
and federal regulations,including the arbitrage rebate regulations.
A. OPERATING FUNDS:
Operating Funds shall have as their primary objective to assure safety of principal. The
secondary objective is to assure that anticipated cash outflows are matched with adequate
investment liquidity. The secondary objective is to create a portfolio structure, which will
experience minimal volatility during changing economic cycles. Objectives may be
accomplished by investing in money market accounts of the depository bank or government
investment pools or bank certificates of deposits.
APPENDIX A
AUTHORIZED LOCAL GOVERNMENT INVESTMENT POOLS
TEXPOOL/TEXPOOL PRIME (Texas Local Government Investment Pools)
LOGIC (Local Government Investment Cooperative)
TEXASTERM/TEXASDAILY (Local Government Investment Pools)