HomeMy WebLinkAboutOrdinance No. 2024-2577Proposed Budget
2024/2025
September 3, 2024
Notice of 2024 Tax Year Proposed Tax Rate
The governing body of the City of The Colony has proposed a tax rate of $.6350 per $100
valuation for adoption.
TABLE OF CONTENTS
City Manager’s Message ..................................................................................... 1
General Fund ....................................................................................................... 4
Parks Fund .......................................................................................................... 7
Utility Fund ........................................................................................................... 8
General Debt Service .......................................................................................... 9
Utility Tax Supported Debt ................................................................................. 10
Economic Development Corporation ................................................................. 11
Community Development Corporation ............................................................... 12
TIRZ ONE PID ................................................................................................... 13
Court Security Fund ............................................................................................ 14
Court Technology Fund ...................................................................................... 15
Juvenile Case Manager Fund ............................................................................. 16
Commercial Vehicle Fund .................................................................................. 17
Court Time Payment Fund ................................................................................. 18
Storm Water Utility Fund ..................................................................................... 19
Water/Sewer Impact Fees Fund ........................................................................ 20
Hotel/Motel Tax Fund .......................................................................................... 21
Lake Parks Fund ................................................................................................. 22
Special Events Fund .......................................................................................... 23
Citizen Donation Fund ........................................................................................ 24
Child Safety Fund .............................................................................................. 25
Keep the Colony Beautiful Fund ........................................................................ 26
SLFRF (State and Local Fiscal Recovery Fund)………………………………….. 27
Park Improvements Fund……………………………………………………………..28
Capital Outlay and Comprehensive Improvement Plan (CIP) Summary ............. 29
Debt Management Policies ................................................................................. 34
Financial Management Policies .......................................................................... 50
Investment Policy ............................................................................................... 64
Letter to Mayor and Council
The Honorable Mayor and City Council,
In accordance with Civil Statues of Texas and the City Charter, the annual budget, for the fiscal year
October 1, 2024 through September 30, 2025, is presented for your consideration. The Budget is an
important policy document because it presents in financial terms the overall plan to accomplish the City’s
program of services during the upcoming fiscal year.
2024-2025 budget highlights:
Ad Valorem Taxes are the City’s major revenue source. Total current Ad Valorem Taxes budgeted this year
are approximately $46 million which is a 3% increase from the prior year. Approximately $207 million of
the increase in tax base came from new construction equating to approximately $1.32 million in increased
revenue. Of the $46 million in property taxes budgeted, approximately $34.8 million is in the General
Fund and the remaining $11.1 million in General Fund Debt Service.
Sales Tax receipts budgeted at $23.5 million, is an increase of $807k or 3.5% above the prior year’s budget.
Franchise fees budgeted at $3.3 million, increased $525k or 19% in comparison to prior year.
This budget includes about $48.5 million in proposed supplemental requests and capital projects. Projects
included are $15.96 million in street, alleyway, drainage, and sidewalk reconstruction. $15.15 million in
facility upgrades, $6.19 million vehicle/heavy equipment replacements, $8.76 million in
Water/Wastewater with ($5.5 million) of outside funding from ARPA, and $2.45 million for Parks/Lake
Parks/CDC.
Also included in this budget and supported by operating revenues are 19 employee additions costing $1.3
million. Included in the position additions are Division Chief – Fire and Rescue Training, Registered
Sanitarian, Assistant Building Official, Facilities (7) – Janitors, Maintenance Worker, Supervisor, Fleet (2)
Techs, Human Resources Assistant, GIS Analyst P/T to F/T, Librarian, P/T Librarian, (2) Senior Center Rec
Leaders and P/T Rental Specialist.
The budget also includes blended COLA raises of 4%, costing an estimated $1.6 million. Both employee
additions and raises are supported by operating revenues.
Ending Fund balance in the General Fund is maintained at 80 operating days in reserves. 60 operating days
are maintained in Utility and Parks Funds.
Economic incentives have been budgeted in the Economic Development (Type A) Fund to promote new
enterprises and to retain existing business.
To assure a quality community, cultural and leisure activities, and park improvements, funding has been
provided in Special Events, Lake Parks, and CDC (Type B) budgets.
1
The total adopted operating budget is $169,059,642, a 17.5% increase from the 23-24 total operating
budget.
Economic Development
The Nebraska Furniture Mart Tax Increment Reinvestment Zone (TIRZ) was established in November of
2011 for a 433-acre $1.5 billion Grandscape development. The Nebraska Furniture Mart store, the
anchor store of the development, opened in early March 2015. In June 2020, Scheels All Sports opened
the largest sporting goods store in the world offering 85 specialty shops and provided our second anchor
store for the development. Numerous restaurants and hotels have also located in the Zone. Fireside
Surf, PopStroke, 151 Coffee, Fritz’s Adventures, Rome, World of Beer, Worldsprings and Simply Unwine
and COSM opened this past year. North of SH 121 in The Colony, Live Oak Logistics Business Park is
nearing completion and currently leasing space. This development is approximately one-million square
feet of industrial and office space. In addition, you will find RifleGear, Texas Road House and Bubba’s 33
in this same location. Further down 121, also on the North side and across from the Grandscape
development, is Rooms to Go, Chair King and many other restaurants and retailers as well as Topgolf,
numerous hotels, medical office buildings and shopping centers. Business activity in The Colony has also
brought numerous jobs for our residents. The Nebraska Furniture Mart store alone employs around
1,800 people.
The widening of FM 423 (Main Street) from a 4 lane to a 6 lane and 8 lane divided street was completed
in late 2017 and has significantly increased redevelopment along this vital corridor.
The Tribute, the only remaining sizeable residential development in The Colony, continues to increase
the number of buildable lots. Housing permits have remained strong and are expected to do so for the
next several years.
Quality of Life
The City values quality of life for all its residents. The City’s continued funding of Library and Parks and
Recreation services help to ensure quality programming remains available to the community. Also of high
value is funding for beautification projects to continue to improve the overall aesthetic standard of
landscaped areas.
The City remains committed to the upkeep and preservation of trees and recently celebrated its
16th anniversary as a “Tree City USA.” Additionally, the City strives to provide high caliber events that
showcase a commitment to family friendly activities such as Liberty by the Lake, the American Heroes
Festival, and The Colony Summer Kickoff. Looking ahead, the focus will be on further improvements to
public spaces, including development of new pickleball courts, Library expansion, and relocation of
recreation facilities into a multi-generational center.
2
Future
The City Council and management team want to keep the items below on its radar.
•Continually reduce the property tax rate.
•Maintain street, alleyway, and sidewalk improvement programs.
•Facility growth and physical reallocation of departments.
•Adding staff for internal and external service departments to accommodate exponential
growth while continuing to serve citizens’ needs.
•Preparing for the next steps of the Water and Wastewater infrastructure expansions.
•Facilitate funding partnerships between CDC and Parks.
Strategic Plans
The budget process provides a road map for short-term and long-term needs and aids in the allocation of
limited resources to prioritized services and needs. Each year a Capital Improvement Program is
developed which helps gauge future funding priorities and is the foundation on which annual budgets are
built. Capital needs are projected for each of the five following years to identify service needs and
financing available. Staff helps Council with the challenge of prioritizing and providing efficient and
effective services to the community with current and future available funds.
As a combined effort, the City Manager’s Office, Finance Director, and all departments monitor revenues
and expenditures throughout the year. Appropriate actions are taken to control expenditures, and to
make adjustments when revenues fall short of expectations.
Conclusions
The 2024-2025 budget has been prepared with the assistance of devoted and dedicated employees who
stand ready to accomplish the goals outlined and adopted by the City Council. Under the prudent
leadership of the City Council, we commit our best efforts to ensure that the needs of our citizens are met
and exceeded!
Troy Powell, City Manager
3
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
Current Property Taxes 29,959,076 37,228,090 37,502,544 34,829,684
Rendition Penalty Revenue 9,985 28,424 5,000 16,000
Ag. Roll Back Taxes - 170431 - -
Delinquent Property Tax 105,371 117,117 50,000 100,000
Penalties & Interest 81,191 126,143 50,000 100,000
Total 30,155,623 37,670,205 37,607,544 35,045,684
Sales Taxes 10,653,520 10,968,877 12,000,000 23,549,328
Mixed Beverage Tax 773,049 843,265 750,000 750,000
Total 11,426,569 11,812,142 12,750,000 24,299,328
Electric 1,727,856 1,747,182 1,600,000 1,800,000
Natural Gas 267,560 328,868 250,000 400,000
Telephone 151,257 107,321 150,000 150,000
PEG Fees 69,549 45,875 75,000 150,000
Video 167,914 149,953 250,000 250,000
Sanitation-Residential 216,671 246,458 200,000 250,000
Sanitation-Commercial 272,612 286,061 250,000 300,000
Total 2,873,417 2,911,718 2,775,000 3,300,000
TOTAL TAXES 44,455,610 52,394,065 53,132,544 62,645,012
Building Permits-New Homes 727,918 283,296 800,000 850,000
Building Permits-Other 724,085 674,555 750,000 750,000
Commercial Permits 635,639 263,159 700,000 500,000
Certificates Of Occupancy 5,450 4,425 7,500 7,500
Zoning Fees 7,715 14,918 10,000 10,000
Fire Fees 33,430 36,536 20,000 30,000
Solicitors Permits 1,354 876 2,000 2,000
Health Permits 135,920 136,722 200,000 200,000
Platting Fees 15,138 3,246 20,000 20,000
Alcohol Permits 23,095 23,900 25,000 25,000
Code Enforcement Fees 16,841 24,199 25,000 25,000
Eng Inspection Overtime Fee 7,440 10,560 2,500 8,000
Inspection Fees 429,437 476,831 500,000 500,000
Grading Permit 8,311 1,960 1,000 1,000
TOTAL LICENSES & PERMITS 2,771,773 1,955,183 3,063,000 2,928,500
Ambulance Calls 761,886 901,887 800,000 900,000
Ambulance Subscription Revenue 25,266 25,357 25,000 25,000
Service Liens 16,612 18,113 25,000 25,000
Denton County Engine Response - - 1,500 1,500
County Ambulance Funds - 21,344 22,000 22,000
County Fire Funds - 10,000 10,000 10,000
Total 803,764 976,702 883,500 983,500
County Library Funds 46,402 36,670 39,000 55,000
Total 46,402 36,670 39,000 55,000
TOTAL CHARGES FOR SERVICES 850,166 1,023,104 922,500 1,038,500
CHARGES FOR SERVICES
TAXES
Ad Valorem Taxes
City Sales Taxes
Fire & Ambulance
Library
Revenue & Expenditure Projections
Fiscal Year 2024-2025
Franchise Taxes
LICENSES & PERMITS
GENERAL FUND
4
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
Revenue & Expenditure Projections
Fiscal Year 2024-2025
GENERAL FUND
Municipal Court Fines 1,081,908 835,929 1,100,000 1,100,000
Library Fees 5,947 6,790 10,000 10,000
Animal Control Fees 23,851 19,970 30,000 30,000
TOTAL FINES AND FORFEITURES 1,111,706 862,689 1,140,000 1,140,000
Interest Income 348,704 3,339,920 25,000 2,200,000
TOTAL INVESTMENT INCOME 348,704 3,339,920 25,000 2,200,000
Auction Proceeds 23,610 5,650 10,000 10,000
Tower Rental Fees 53,218 3,714 350,000 350,000
Insurance Reimbursement - - 1,000 1,000
LEISD SRO Reimbursement 142,496 275,586 95,000 160,000
LISD SRO Reimbursement 263,769 443,784 256,000 430,000
Miscellaneous 94,374 94,882 65,000 75,000
Misc Revenue - Grants 5,105 120,949 - -
Police Reports 5,602 4,671 4,000 5,000
Alarm Fees 30,941 32,133 30,000 30,000
Lease Interest Revenue 37,469 44,268 - -
Rent Income 56,530 - - -
Other Financing Sources - Lease 97,920 - - -
Lease Income 263,982 263,982 - -
TOTAL OTHER REVENUES 1,075,016 1,289,619 811,000 1,061,000
TOTAL REVENUES 50,612,974 60,864,580 59,094,044 71,013,012
Transfer - Storm Water Utility 50,000 50,000 50,000 50,000
Transfer In-GDSF - - - 1,600,000
Transfer - Child Safety Fund 10,000 10,000 10,000 10,000
153,356 155,031 151,031 152,531
244,432 244,718 244,503 244,682
49,671 50,233 49,985 -
131,288 881,000 - -
Transfers In - Parking Lot (CDC)65,265 123,000 - -
Transfers In - CARES Fund (2,440,350) - - -
Transfer In - CDC - - - -
Transfers in - KTKB - - - -
TOTAL TRANSFERS (1,736,338) 1,513,982 505,519 2,057,213
48,876,636 62,378,562 59,599,563 73,070,225
Transfers In - EDC S. Colony Conn-Ph2
Transfers In - EDC - Cascades
Transfers In - EDC - Memorial Drive
Transfers In - Hike & Bike Trail (CDC)
FINES AND FORFEITURES
OTHER REVENUES
TRANSFER IN
TOTAL REVENUES & TRANSFERS
INVESTMENT INCOME
5
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
Revenue & Expenditure Projections
Fiscal Year 2024-2025
GENERAL FUND
Non-Departmental 8,599,777 9,574,724 11,694,579 35,716,401
General Administration 1,362,011 1,791,881 2,490,832 2,728,000
City Council 43,253 73,708 147,420 287,112
Community Image 639,704 599,156 621,940 753,093
City Secretary 386,859 516,141 511,352 586,996
Human Resources 848,729 768,140 1,013,392 993,349
Finance 1,369,485 1,308,477 1,393,716 1,676,638
Information Technology 1,044,043 1,048,094 1,185,886 1,479,602
Planning & Development 3,886 300,751 316,875 373,575
Municipal Court 475,779 521,073 522,040 573,695
Public Safety Dispatch 1,595,965 1,614,765 1,976,081 2,180,381
Fire 12,161,032 13,715,451 13,959,064 15,305,089
Police 12,379,860 14,084,554 14,673,747 16,111,962
Animal Control 627,041 698,224 660,483 771,890
Library 1,222,303 1,312,510 1,334,172 1,570,158
Engineering 2,245,272 2,080,129 2,235,870 2,438,831
Facilities Maintenance 1,282,198 1,398,871 1,360,008 1,347,276
Fleet Services 1,371,088 1,436,993 1,348,113 1,633,359
Personnel Additions/Benefits/Equipment - - 600,000 978,387
Salary Increases/Cert - - 2,600,000 59,603
Non-Capital items - - 2,500,000 -
TOTAL EXPENDITURES 47,658,286 52,843,641 63,145,570 87,565,397
Transfer - CVB 115,000 400,000 800,000 0
Transfer - Special Events 345,000 400,000 444,000 0
Transfer - KTB 10,000 10,000 10,000 10,000
Transfer - EDC - 17,605 100,000 -
Transfer - Storm Water - 1,102,000 - -
Transfer - Utility - - - -
Transfer - Parks Fund 2,946,823 3,201,823 2,810,000 2,510,000
Transfer - Tax Supported Debt Service - - 4,300,000
Transfer - GDS - - -
Transfer - Trinity North - - - -
Transfer - G.F. Special Cap - - - -
TOTAL TRANSFER OUT 3,416,823 5,131,428 8,464,000 2,520,000
51,075,109 57,975,069 71,609,570 90,085,397
OH COST ALLOCATION (6,691,461) (5,661,461) (5,661,461) (5,711,461)
21,507,222 26,000,210 36,065,164 29,716,619
4,492,988 10,064,955 (6,348,546) (11,303,711)
26,000,210 36,065,164 29,716,619 18,412,907
26,000,210 36,065,164 29,716,619 18,412,907
214 252 164 80
EXCESS/(DEFICIENCY)
ENDING FUND BALANCE
UNRESERVED FUND BALANCE
Working Days in Fund Balance
BEGINNING FUND BALANCE
EXPENDITURES
TRANSFER OUT
TOTAL EXPENDITURES & TRANSFERS
6
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
Recreation Program Revenue 246,142 299,242 225,000 275,000
Athletic Program Revenue 102,469 87,645 65,000 85,000
Athletic & Recreation Facility Revenue 308,547 274,748 200,000 175,400
Pass Revenue 26,346 26,038 20,000 20,000
Total 683,505 687,674 510,000 555,400
Swimming Lessons 206,994 224,763 180,000 190,000
Entrance Fees 28,458 40,383 27,000 30,000
Concession Sales 1,829 1,318 1,000 1,100
Private Party Fees 88,407 84,728 90,000 85,000
Total 325,688 351,192 298,000 306,100
Rental Revenue 18,970 20,389 10,000 15,000
Program Revenue 1,719 1,571 2,000 2,000
Travel Commissions 12,867 - -
Trip Revenue - 8,236 8,000 10,000
Membership Fees 8,392 14,027 7,500 10,000
Total 41,948 44,223 27,500 37,000
TOTAL CHARGES FOR SERVICES 1,051,141 1,083,088 835,500 898,500
Hawaiian Water 217,723 534,706 150,000 150,000
Athletic Club - 34,815 - 75,000
Miscellaneous 7,064 5,622 6,500
Interest Income 25,628 202,036 1,000 1,000
TOTAL OTHER INCOME 250,415 777,179 157,500 226,000
TOTAL REVENUES 1,301,556 1,860,267 993,000 1,124,500
Transfer - General Fund 2,946,823 3,201,823 2,810,000 2,510,000
Transfer - CDC - 0 - 850,000
Transfer - CDC Five Star Maintenance 165,000 165,000 - 0
Transfer - CDC Fund Personnel 134,845 134,845 134,845 0
Transfer - Lake Parks Fund 35,000 35,000 50,000 50,000
TOTAL TRANSFERS 3,281,668 3,536,668 2,994,845 3,410,000
4,583,224 5,396,935 3,987,845 4,534,500
Non-Departmental 48,564 -
Parks & Recreation 2,558,287 2,560,237 2,909,278 3,451,124
Aquatic Park 548,616 480,189 499,840 561,687
Community Center 294,733 272,451 271,919 303,017
Capital - - - -
TOTAL EXPENDITURES 3,450,200 3,312,878 3,681,037 4,315,828
OH COST 1,014,398 1,014,398 1,014,398 1,014,398
1,184,563 1,303,189 2,372,848 1,665,258
118,626 1,069,659 (707,590) (795,726)
1,303,189 2,372,848 1,665,258 869,532
107 200 129 60
TOTAL REVENUES & TRANSFERS
EXPENDITURES
CHARGES FOR SERVICES
Parks & Recreation
Aquatic Park
Community Center
EXCESS (DEFICIENCY)
OTHER INCOME
Working Days in Fund Balance
ENDING FUND BALANCE
BEGINNING FUND BALANCE
TRANSFER IN
PARKS FUND
Revenue & Expenditure Projections
Fiscal Year 2024-2025
7
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
CHARGES FOR SERVICES
15,875,716 17,176,512 16,000,000 17,500,000
8,289,562 8,816,615 9,000,441 9,500,000
5,940 4,880 8,000 8,000
486,114 598,743 425,000 475,000
267,425 125,500 180,000 250,000
128,754 910,400 18,000 900,000
85,425 81,699 125,000 125,000
Solid Waste / Recycling 80,690 91,547 - -
Recycling Education Contribution 36,000 36,000 36,000 36,000
25,255,627 27,841,897 25,792,441 28,794,000
TRANSFERS IN
100,000 100,000 100,000 100,000
- - -
- - - -
Transfer - Capital Projects - Water meters - - - -
- - - -
100,000 100,000 100,000 100,000
TOTAL REVENUES & TRANSFERS 25,355,627 27,941,897 25,892,441 28,894,000
EXPENDITURES
1,508,530 1,586,185 1,716,329 2,060,038
Environmental 112,260 110,890 138,500 146,500
Storm Water - Engineering 21,764 9,050 63,503 63,500
Storm Water - Streets & Drainage 149,381 115,229 193,377 219,854
2,723,809 2,742,457 4,043,283 3,910,602
1,064,141 1,036,801 1,342,594 1,612,099
4,789,875 5,409,155 4,698,074 4,732,526
2,125,639 2,255,176 1,773,376 2,391,752
85,693 108,223 327,000 275,500
Capital - - - -
12,581,092 13,373,167 14,296,036 15,412,371
TRANSFERS OUT
- - - -
6,000,000 6,000,000 8,550,000 8,550,000
- - - -
- - -
TOTAL TRANSFERS OUT 6,000,000 6,000,000 8,550,000 8,550,000
18,581,092 19,373,167 22,846,036 23,962,371
OH COST 5,498,630 4,448,630 4,448,630 4,498,630
4,527,733 5,803,638 9,923,738 8,521,513
1,275,905 4,120,099 (1,402,225) 432,999
5,803,638 - 9,923,738 8,521,513 8,954,512
88 152 114 115
TOTAL REVENUES
Water Service
Wastewater Service
UTILITY FUND
Revenue & Expenditure Projections
Fiscal Year 2024-2025
Reconnect Fees
Penalties
Tap Connection Fees
Interest Income
Miscellaneous
Waste Water
Customer Service - Administration
Streets & Drainage
TOTAL EXPENDITURES
Transfer - Storm Water Utility Fund
TOTAL TRANSFERS IN
Non-Departmental
Water Production
Water Distribution
Transfer - CIP
Transfer - Capital Projects - Streets
Transfer - General Fund
Transfer - General Fund
Transfer - Utility Debt Service
Transfer - D. S. Revenue bonds
Transfer - Special Projects
Transfer - Capital Projects Admin
TOTAL EXPENDITURES & TRANSFERS
BEGINNING FUND BALANCE
EXCESS (DEFICIENCY)
ENDING FUND BALANCE
Working Days in Fund Balance
8
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
Revenues
9,485,693 7,073,578 7,444,325 11,133,040
34,719 28,384 25,000 25,000
- 55,216 -
25,735 26,388 25,000 25,000
65,249 557,392 40,000 500,000
Bond Proceeds 12,225,000 - --
Bond Premiums 817,990 - - -
- - --
22,654,385 7,740,958 7,534,325 11,683,040
TRANSFERS IN
- - -
- - - -
TOTAL REVENUES & TRANSFERS 22,654,385 7,740,958 7,534,325 11,683,040
EXPENDITURES
Refunding Bonds - 2011/2002 703,456 - - -
Refunding Bonds - 2012/2003 &2007 222,825 224,025 - -
153,356 155,031 151,531 152,531
Refunding Bonds - 2013/2004 GF/Utility 371,750 373,700 372,750 -
Refunding Bonds - 2014/2006 GF/Utility 268,893 269,361 268,447 268,728
Refunding Bonds - 2015/2005 &2007 GF/Utility 688,398 685,950 688,602 687,242
Refunding Bonds - 2020/2010 &2010A 815,681 811,912 807,012 808,519
Certificates of Obligation - 2014 221,476 221,467 221,502 221,869
Certificates of Obligation - 2016 1,131,913 947,726 948,513 947,726
Certificates of Obligation - 2018 1,085,085 1,085,310 913,860 913,365
Certificates of Obligation - 2019 992,717 991,709 992,329 864,454
Certificates of Obligation - 2020 253,938 253,500 252,813 253,125
Certificates of Obligation - 2021 492,860 491,625 491,738 491,175
Certificates of Obligation - 2022 - 935,530 933,975 934,800
Governmental Capital 10 year note (2)112,165 112,165 112,165 -
Equipment Capital Lease 10 year Oshkosh 135,693 135,693 135,693 135,693
Governmental Capital 3 year note (1) 220,279 - - -
250,245 4,157 200,000 4,000
TOTAL EXPENDITURES 8,120,729 7,698,861 7,490,930 6,683,227
Transfer - General Fund - - - 1,600,000
Transfer - CIP 12,780,000 - - -
TOTAL EXPENDITURES & TRANSFERS 20,900,729 7,698,861 7,490,930 8,283,227
1,753,656 42,098 43,395 3,399,813
10,070,241 11,823,897 11,865,995 11,909,390
11,823,897 11,865,995 11,909,390 15,309,203
BEGINNING FUND BALANCE
ENDING FUND BALANCE
Certificates of Obligation - 2013
Fiscal Agent Fees & Other
TOTAL TRANSFERS IN
TRANSFER OUT
EXCESS (DEFICIENCY)
Transfers In - General Fund
GENERAL DEBT SERVICE
Revenue & Expenditure Projections
Fiscal Year 2024-2025
Ag. Roll Back Taxes
TOTAL REVENUES
Current Property Taxes
Delinquent Property Taxes
Penalty & Interest
Investment Income
Misc Income
9
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
CHARGES FOR SERVICES
1,084 6,346
- - --
1,040,825 535,986 -400,000
---
Fees- SRF Revenue 482,372 488,591 450,000 450,000
Gain on Refunding - - - -
133,296 272,803 - 200,000
1,657,577 1,303,725 450,000 1,050,000
TRANSFERS IN
Transfers In - EDC 4A 305,759 306,118 305,849 306,073
Water/Sewer Impact Fees 750,000 750,000 750,000 750,000
SLFRF Fund Transfer - - 11,032,945
Revenue Supported Debt Balance Transfer - - - -
Transfers In - Utility Fund 6,000,000 6,000,000 8,550,000 8,550,000
Transfer In - General Fund 4,300,000
Premium - - -
7,055,759 7,056,118 24,938,794 9,606,073
TOTAL REVENUES & TRANSFERS 8,713,336 8,359,843 25,388,794 10,656,073
EXPENDITURES
General Obligation Refunding Bonds - 2011 222,144 - - -
Revenue Refunding Bonds 2012 (03,07,08)74,275 74,675 - -
General Obligation Refunding Bonds - 2013 1,487,000 1,494,800 1,491,000 -
General Obligation Refunding Bonds - 2014 1,312,832 1,315,144 1,310,653 1,312,023
General Obligation Refunding Bonds - 2020 266,319 265,088 263,488 263,981
Cetificate of Obligation - 2014 1,360,493 1,360,439 1,360,654 1,362,912
Cetificate of Obligation - 2015 820,450 817,850 817,425 829,125
Cetificate of Obligation - 2015 Refunding 323,952 322,800 324,048 323,408
Cetificate of Obligation - 2016 485,106 406,168 406,506 406,168
Cetificate of Obligation - 2018 120,565 120,590 101,540 101,485
Cetificate of Obligation - 2019 608,439 607,822 608,202 529,827
Cetificate of Obligation - 2020 761,813 760,500 758,438 759,375
Cetificate of Obligation - 2021 54,762 54,625 54,638 54,575
Cetificate of Obligation - 2022 - 623,687 622,650 623,200
Fees/Cost of Issuance 178,392 3,456 20,000 21,500
Transfer - CIP 8,520,000 -
TOTAL EXPENDITURES 16,596,542 8,227,644 8,139,242 6,587,579
(7,883,206) 132,199 17,249,552 4,068,494
5,163,648 (2,719,558) (2,587,359) 14,662,193
(2,719,558) (2,587,359) 14,662,193 18,730,687
Current Property Taxes
Delinquent Property Taxes
UTILITY TAX SUPPORTED DEBT
Revenue & Expenditure Projections
Fiscal Year 2024-2025
EXCESS (DEFICIENCY)
BEGINNING FUND BALANCE
ENDING FUND BALANCE
Amortization of Premium
Penalty & Interest
Investment Income
TOTAL REVENUES
TOTAL TRANSFERS IN
TRANSFER OUT
10
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
CITY SALES TAXES
Gross Sales Tax Revenues 5,326,704 5,483,439 6,000,000 11,774,664
Investment Income 92,091 724,017 50,000 1,012,356
Bond Proceeds - - - -
Miscellaneous Revenue 2,163 2,145 - -
TOTAL REVENUES 5,420,958 6,209,600 6,050,000 12,787,020
EXPENDITURES
Personnel Services 456,714 531,709 540,322 587,001
Contractual Services 34,171 50,676 261,500 297,000
Marketing 270,982 301,681 425,000 425,000
Supplies 14,617 18,328 20,000 24,000
Maintenance 368 1,579 1,500 1,500
Building Roof Maintenance 136,799 118,580 - -
Economic Development Incentives 193,604 103,520 3,130,000 7,693,000
Grant Program 3,264 13,302 75,000 500,000
Debt Service - Land 607,968 607,920 607,344 611,152
Capital SUV - 65,000 - -
Capital Outlay-Vehicles 121,414 -
Captial Outlay - Parking Lot Improvements - - 1,000,000
Capital Outlay-Generator - 15,440 225,000
Capital Outlay-Fiber Loop - 276,295 623,705 -
Capital Outlay - Other Equipment - - 40,000
Sales Tax Rebate 214,940 248,657 290,000 7,635,000
TOTAL EXPENDITURES 1,933,427 2,474,101 7,239,371 17,773,653
TRANSFERS OUT
Transfer Out - General Fund BPP - - - -
Transfer Out - GF Cap Contribution - - - -
Transfer Out - GF -(S.Colony Conn-Ph2)153,356 155,031 151,031 152,531
Transfer Out - GDSF - Cascades 244,432 244,718 244,503 244,682
Transfer Out - GDSF 49,671 50,233 49,985 *01 0
Transfer Out - UFDS 305,759 306,118 305,849 306,073
TOTAL TRANSFERS OUT 753,218 - 756,100 751,368 703,286
TOTAL EXPENDITURES 2,686,645 3,230,201 7,990,739 18,476,939
OH COST 71,376 91,380 91,380 91,380
EXCESS (DEFICIENCY) 2,662,937 2,888,019 (2,032,119) (5,781,299)
BEGINNING FUND BALANCE 12,312,252 14,975,189 17,863,208 15,831,089
ENDING FUND BALANCE 14,975,189 17,863,208 - 15,831,089 - 10,049,790
*01
ECONOMIC DEVELOPMENT - TYPE A SALES TAXES
Revenue & Expenditure Projections
Fiscal Year 2024-2025
This is the final payment for this debt series
11
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
CITY SALES TAXES
5,326,704 5,483,439 6,000,000 11,774,664
69,569 541,828 50,000 50,000
Miscellaneous 1,200 -
5,397,472 6,025,267 6,050,000 11,824,664
TRANSFERS IN
Transfer from General Fund - -
Transfer from Capital Projects Fund - -
TOTAL TRANSFERS IN - - - - - -
TOTAL REVENUES & TRANSFERS 5,397,472 6,025,267 6,050,000 11,824,664
EXPENDITURES-OPERATIONAL
156,672 150,017 185,425 2,915
54,324 51,353 90,000 4,000
2,630 8,436 8,750 5,700
49,903 49,470 57,936 53,590
Sales Tax Rebate 214,940 248,657 241,500 7,186,228
- - - -
478,468 507,932 583,611 7,252,433
TRANSFERS OUT
Trnsfr Out - GDSF (Complex Debt)- - -
Trnsfr Out - Parks Fd (Five Star Maint.)165,000 165,000 165,000
Trnsfr Out - Parks Fd - 0 0 850,000
Trnsfr Out - GDSF (Hike & Bike Trail)131,288 881,000 *01 - -
Trnsfr Out GDSF (Parking Lot)65,265 123,000 *01
Trnsfr Out - Parks Fund (Personnel)134,845 134,845 134,845
Trnsfr Out - Park Improvement - 7,083,340 4,000,000 - 3,500,000
TOTAL TRANSFERS OUT 496,398 - 8,387,185 4,299,845 4,350,000
TOTAL EXPENDITURES & TRANSFERS 974,866 - 8,895,117 4,883,456 11,602,433
OH COST 35,688 35,692 35,692 35,692
4,386,918 (2,905,542) 1,130,852 186,539
6,281,803 10,668,721 7,763,179 8,894,031
10,668,721 7,763,179 8,894,031 9,080,570
*01 This debt was paid off in FY 22/23
Sales Tax Revenues
Investment Income
COMMUNITY DEVELOPMENT - TYPE B SALES TAXES
Revenue & Expenditure Projections
Fiscal Year 2024-2025
TOTAL EXPENDITURES
EXCESS (DEFICIENCY)
BEGINNING FUND BALANCE
ENDING FUND BALANCE
TOTAL REVENUES
Personnel Services
Capital Outlay
Contractual Services
Supplies
Maintenance
12
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
REVENUES
Assessment 902,327 1,304,422 1,335,447 1,335,447
Interest Income 16,553 103,011 - -
Misc - - - -
TOTAL REVENUES 918,880 1,407,433 1,335,447 1,335,447
EXPENDITURES
Personnel Services 703,813 285,166 288,533 301,250
Contractual Services 693,080 750,823 701,000 711,000
Supplies 974 1,147 1,000 1,200
Maintenance & Utility 163,600 76,171 197,000 139,000
Inspections - - - -
Capital Outlay - - - -
TOTAL EXPENDITURES 1,561,467 1,113,307 1,187,533 1,152,450
ADDED SUPPLEMENTAL SERVICES - - 78,903
(642,586) 294,125 69,011 182,997
1,371,329 728,743 286,290 *01 355,301
728,743 1,022,868 355,301 538,298
*01 Starting with 2023-2024 version of this document, the method in which the ending fund balance is derived for this item is changing to a more dynamic
calculation to bring that number in line with the amount detailed in the City of The Colony Public Improvement District No. 1 Annual Service and Assessment
Plan Update. Prior to FY 23 this calculation was originally calculated as 90/365 day operating balance. Starting in FY 24, the calculation will be based off of a
dynamic snapshot of current expenditures at the start of the budget process and real-time forecasting of expenses that will occur between the snapshot and
the end of the fiscal year. These Changes are reflected in both the 22/23 and the 23/24 budget columns
BEGINNING FUND BALANCE
ENDING FUND BALANCE
TIRZ ONE PIDRevenue & Expenditure ProjectionsFiscal Year 2024-2025
EXCESS (DEFICIENCY)
13
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
REVENUES
Court Security Revenue 28,970 22,090 20,000 20,000
Investment Income
TOTAL REVENUES 28,970 22,090 20,000 20,000
EXPENDITURES
Personnel Services - - - -
Contractual Services 600 2,000 - -
Supplies - 2,921 4,000 5,000
Maintenance - - - 1,000
Capital Outlay 10,761 - - -
TOTAL EXPENDITURES 11,361 4,921 4,000 6,000
17,608 17,169 16,000 14,000
284,408 302,016 319,185 335,185
302,016 319,185 335,185 349,185
BEGINNING FUND BALANCE
ENDING FUND BALANCE
EXCESS (DEFICIENCY)
COURT SECURITYRevenue & Expenditure ProjectionsFiscal Year 2024-2025
14
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
REVENUES
Court Technology Revenue 23,910 18,124 16,000 16,000
Investment Income - - - -
TOTAL REVENUES 23,910 18,124 16,000 16,000
EXPENDITURES
Contractual Services - - - -
Supplies/ copiers/Telephone - 516 1,000 300
Maintenance - Tyler/Duncan Parking Tech 13,497 - 20,000 15,000
Non-Capital
Capital Outlay - - - -
Overhead Costs
TOTAL EXPENDITURES 13,497 516 21,000 15,300
10,413 17,609 (5,000) 700
35,406 45,819 63,428 58,428
45,819 63,428 58,428 59,128 ENDING FUND BALANCE
EXCESS (DEFICIENCY)
BEGINNING FUND BALANCE
COURT TECHNOLOGYRevenue & Expenditure ProjectionsFiscal Year 2024-2025
15
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
REVENUES
Juvenile Case Manager Fee 42,407 23,021 40,000 40,000
Investment Income - -
TOTAL REVENUES 42,407 23,021 40,000 40,000
EXPENDITURES
Personnel Services - - - -
TOTAL EXPENDITURES - - - -
42,407 23,021 40,000 40,000
53,474 95,881 118,903 158,903
95,881 118,903 158,903 198,903 ENDING FUND BALANCE
JUVENILE CASE MANAGER FUNDRevenue & Expenditure ProjectionsFiscal Year 2024-2025
EXCESS (DEFICIENCY)
BEGINNING FUND BALANCE
16
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
REVENUES
Commercial Vehicle Fee/Weight 9,454 2,059 5,000 5,000
Investment Income
TOTAL REVENUES 9,454 2,059 5,000 5,000
EXPENDITURES
Personnel Services - 3,054 - 4,200
Contractual Services - 500 300
Supplies 953 262 - 500
Maintenance - - -
Capital Outlay - - -
TOTAL EXPENDITURES 953 3,316 500 5,000
8,501 (1,257) 4,500 -
4,360 12,861 11,604 16,104
12,861 11,604 16,104 16,104 ENDING FUND BALANCE
COMMERCIAL VEHICLE FUNDRevenue & Expenditure ProjectionsFiscal Year 2024-2025
EXCESS (DEFICIENCY)
BEGINNING FUND BALANCE
17
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
REVENUES
Court Time Payment Fee 4,806 6,152 3,000 3,000
Investment Income - - - -
Transfer In - General Fund - - - -
TOTAL REVENUES 4,806 6,152 3,000 3,000
EXPENDITURES
Personnel Services - - - -
Contractual Services - - - -
Supplies - - - -
Maintenance 6,954 - -
Capital Outlay - - - -
TOTAL EXPENDITURES 6,954 - - -
(2,148) 6,152 3,000 3,000
29,113 26,965 33,116 36,116
26,965 33,116 36,116 39,116 ENDING FUND BALANCE
COURT TIME PAYMENT FUNDRevenue & Expenditure ProjectionsFiscal Year 2024-2025
EXCESS (DEFICIENCY)
BEGINNING FUND BALANCE
18
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
REVENUES
Municipal Jury Fee - - - -
TOTAL REVENUES - - - -
EXPENDITURES
Personnel Services - - -
Contractual Services - - - -
Supplies - - - -
Maintenance - - - -
Capital Outlay - - - -
TOTAL EXPENDITURES - - - -
- - - -
- - -
- - - - ENDING FUND BALANCE
MUNICIPAL JURY FUNDRevenue & Expenditure ProjectionsFiscal Year 2024-2025
EXCESS (DEFICIENCY)
BEGINNING FUND BALANCE
19
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
REVENUES
1,256,518 1,275,523 1,000,000 1,300,000
Reimbursement Tribute PTNRS - -
- - - -
1,256,518 1,275,523 1,000,000 1,300,000
Transfer In - General Fund - 1,102,000 -
TOTAL REVENUES & TRANSFERS 1,256,518 2,377,523 1,000,000 1,300,000
EXPENDITURES
Contractual Servics - - - -
Maintenance 695,313 370,758 - -
Capital Outlay 115,350 520,467 1,000,000 -
TOTAL EXPENDITURES 810,663 891,226 - 1,000,000 - -
TRANSFERS OUT
50,000 50,000 50,000 50,000
- 203,925 - -
Projects to be determined - - -
100,000 100,000 100,000 100,000
TOTAL TRANSFERS OUT 150,000 353,925 150,000 150,000
960,663 1,245,151 1,150,000 150,000
295,855 1,132,373 (150,000) 1,150,000
953,416 1,249,271 2,381,644 2,231,644
1,249,271 2,381,644 2,231,644 3,381,644
Storm Water Utility Fees
Investment Income
STORM WATER UTILITY FUNDRevenue & Expenditure ProjectionsFiscal Year 2024-2025
TOTAL EXPENDITURES & TRANSFERS
EXCESS (DEFICIENCY)
BEGINNING FUND BALANCE
ENDING FUND BALANCE
TOTAL REVENUES
Transfer - General Fund
Transfer - Utility CIP
Transfer - Utility Fund
20
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
IMPACT FEES
Water Impact Fees 718,332 222,501 400,000 400,000
Sewer Impact Fees 344,883 120,734 200,000 200,000
Investment Income - - - -
TOTAL REVENUES 1,063,215 343,235 600,000 600,000
EXPENDITURES
Water Impact Fee Reimbursement - - - -
Sewer Impact Fee Reimbursement 28,434 - 240,000 240,000
Contractual Services - Water Master Plan - - - -
TOTAL EXPENDITURES 28,434 - 240,000 240,000
TRANSFERS OUT:
Transfer - Capital Project Admin - - -
Transfer - Utility Revenue Debt Service 750,000 750,000 750,000 750,000
TOTAL TRANSFERS OUT 750,000 750,000 750,000 750,000
TOTAL EXPENDITURES & TRANSFERS 778,434 750,000 990,000 990,000
EXCESS (DEFICIENCY)284,781 (406,765) (390,000) (390,000)
BEGINNING FUND BALANCE 1,074,090 1,358,871 952,106 562,106
ENDING FUND BALANCE 1,358,871 952,106 562,106 172,106
WATER/SEWER IMPACT FEES FUNDRevenue & Expenditure ProjectionsFiscal Year 2024-2025
21
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
HOTEL/MOTEL TAXES
Taxes 1,937,273 2,356,974 1,200,000 2,010,000
Miscellaneous 1,688 1,095 - -
1,938,961 2,358,069 1,200,000 2,010,000
TRANSFERS IN
Transfer from - General Fund 115,000 400,000 800,000 0
TOTAL TRANSFERS IN 115,000 400,000 800,000 -
TOTAL REVENUES & TRANSFERS 2,053,961 2,758,069 2,000,000 2,010,000
EXPENDITURES
Communications
120,740 129,090 129,674 136,734
10,099 11,132 14,740 15,440
1,384 1,503 4,050 2,650
Maintenance - - 900 500
339,949 340,408 396,327 397,008
Contractual Services 391,610 560,051 689,575 677,595
12,744 8,499 12,000 12,000
Maintenance 5,623 - 24,190 20,173
426,322 314,925 275,000 450,000
6,996 31,177 - -
1,315,467 1,396,786 1,546,456 1,712,100
TRANSFERS OUT
Transfer to CIP - - - -
Transfer to Special Event 200,000 200,000 200,000 700,000
TOTAL TRANSFERS OUT 200,000 200,000 200,000 700,000
TOTAL EXPENDITURES & TRANSFERS 1,515,467 1,596,786 1,746,456 2,412,100
OH COST 35,681 35,691 35,691 35,691
502,814 1,125,592 217,853 (437,791)
381,395 884,209 2,009,801 2,227,654
884,209 2,009,801 2,227,654 1,789,863
TOTAL REVENUES
HOTEL/MOTEL TAX FUND
Revenue & Expenditure Projections
Fiscal Year 2024-2025
EXCESS (DEFICIENCY)
BEGINNING FUND BALANCE
ENDING FUND BALANCE
Personnel Services
Contractual Services
Supplies
CVB
Personnel Services
Capital Items
TOTAL EXPENDITURES
Supplies
NFM HOT Reimbursements
22
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
CHARGES FOR SERVICES
335,138 372,429 299,000 304,000
Concession Revenues - 769 1,000 1,000
Tribute Lease 101,074 123,466 220,000 120,000
Old American Lease - - - -
Blue Sky 732 - 12,000 12,000
Marine Quest 166,250 139,218 90,000 90,000
4,602 19,218 - -
Mitigation Fees - - - -
100,553 100,553 - -
708,350 755,653 622,000 527,000
TOTAL REVENUES & TRANSFERS 708,350 755,653 - 622,000 527,000
EXPENDITURES
10,044 17,860 30,300 34,050
- - - 20,000
80,623 80,342 95,950 109,300
4,829 11,922 12,250 15,150
64,218 112,110 46,000 55,000
Non-Capital - Other Equipment - - - -
32,484 4,200 - -
192,197 226,434 184,500 233,500
TRANSFERS OUT
35,000 35,000 50,000 50,000
TOTAL TRANSFERS OUT 35,000 35,000 50,000 50,000
227,197 261,434 234,500 283,500
481,153 494,219 387,500 243,500
1,079,364 1,560,517 2,054,735 2,442,235
1,560,517 2,054,735 2,442,235 2,685,735
Maintenance
ENDING FUND BALANCE
Capital Outlay
TOTAL EXPENDITURES
Transfer to Parks Fund
TOTAL EXPENDITURES & TRANSFERS
EXCESS (DEFICIENCY)
BEGINNING FUND BALANCE
Lease Interest Revenue
Lease Revenue
TOTAL REVENUES
Contractual Services
Supplies
Part Time Temporary Personel
Professional Services
Fees & Permits
LAKE PARKS FUND
Revenue & Expenditure Projections
Fiscal Year 2024-2025
23
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
REVENUES
Donations & Sponsorships 25,440 31,852 13,000 36,200
36,737 23,719 17,000 36,000
62,177 55,572 30,000 72,200
TRANSFERS IN
345,000 400,000 444,000 0
200,000 200,000 200,000 700,000
545,000 600,000 644,000 700,000
TOTAL REVENUES & TRANSFERS 607,177 655,572 674,000 772,200
EXPENDITURES
Personnel 156,247 116,859 150,779 160,768
Supplies 13,125 - - 0
Printing Services 1,562 3,284 3,500 3,200
Christmas 5,246 7,384 7,500 10,500
Christmas Light Show Supplemental 50,000 49,512 65,000 65,000
Liberty by The Lake 85,778 45,544 96,000 100,000
American Heroes 219,560 275,305 245,000 245,000
Parent Child Event 5,399 6,550 6,550 6,550
Halloween Campout 6,120 6,000 - -
Easter Egg Hunt 4,532 6,092 6,500 7,500
Event Marketing 2,467 4,378 3,500 3,500
Arbor Day 737 1,209 2,500 1,750
Movies In The Park 6,448 4,915 6,000 6,000
Coach Cox Kids Chase 3,506 2,537 4,000 4,500
Up, Up & Away 3,506 2,537 4,000 4,000
Back To School 0 0 0 2,500
Bow Wow Pow Wow 2,302 1,074 2,000 2,000
Road Runners Club 10,000 10,000 10,000 10,000
N TX Food Pantry 8,000 - 5,000 5,000
Chamber Golf Tourney - - 6,000 6,000
Lakeside Community Theatre 12,000 12,000 12,000 12,000
Metro Relief - - - -
TOTAL EXPENDITURES 596,536 555,180 635,829 655,768
OH COST 35,688 35,670 35,670 35,670
(25,047) 64,722 2,501 80,762
3,372 (21,675) 43,047 45,548
(21,675) 43,047 45,548 126,310
Event Revenues
SPECIAL EVENTS FUND
Revenue & Expenditure Projections
Fiscal Year 2024-2025
ENDING FUND BALANCE
TOTAL REVENUES
Transfer from - General Fund
Transfer from - Hotel/Motel Tax
TOTAL TRANSFERS IN
EXCESS (DEFICIENCY)
BEGINNING FUND BALANCE
24
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
REVENUES
One Dollar Donation 257 252 300 300
Recycling Rebate Donation - - - -
Investment Income - - - -
TOTAL REVENUES 257 252 300 300
EXPENDITURES
Contractual Services - - - -
TOTAL EXPENDITURES - - - -
257 252 300 300
10,134 10,391 10,643 10,943
10,391 10,643 10,943 11,243
BEGINNING FUND BALANCE
ENDING FUND BALANCE
EXCESS (DEFICIENCY)
CITIZEN DONATION FUNDRevenue & Expenditure ProjectionsFiscal Year 2024-2025
25
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
REVENUES
Child Safety Fund Revenue 2,651 3,293 1,700 2,000
Denton County Child Safety Fund 49,330 50,545 49,000 50,000
51,981 53,838 50,700 52,000
TOTAL REVENUES & TRANSFERS 51,981 53,838 50,700 52,000
EXPENDITURES
Child Advocacy Center - 59,500 65,608 50,000
TOTAL EXPENDITURES - 59,500 65,608 50,000
TRANSFER OUT
Transfer - General Fund 10,000 10,000 10,000 10,000
TOTAL TRANSFER OUT 10,000 10,000 10,000 10,000
10,000 69,500 75,608 60,000
41,981 (15,662) (24,908) (8,000)
44,689 86,670 71,008 46,100
86,670 71,008 46,100 38,100 ENDING FUND BALANCE
TOTAL REVENUES
TOTAL EXPENDITURES & TRANSFERS
CHILD SAFETY FUNDRevenue & Expenditure ProjectionsFiscal Year 2024-2025
EXCESS (DEFICIENCY)
BEGINNING FUND BALANCE
26
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
REVENUES
Donations - - - -
- - - -
TRANSFERS IN
10,000 10,000 10,000 10,000
10,000 10,000 10,000 10,000
TOTAL REVENUES & TRANSFERS 10,000 10,000 10,000 10,000
EXPENDITURES
Personnel 609 445 2,200 2,250
Contractual Services - - 300 300
Supplies 25 7,907 11,700 13,200
Maintenance - - - -
TOTAL EXPENDITURES 634 8,351 14,200 15,750
TRANSFERS OUT
General Fund - - - -
634 8,351 14,200 15,750
9,366 1,649 (4,200) (5,750)
1,833 11,199 12,847 8,647
-
11,199 12,847 8,647 2,897 ENDING FUND BALANCE
TOTAL REVENUES
Transfer In - General Fund
TOTAL TRANSFERS IN
TOTAL EXPENDITURES & TRANSFERS
EXCESS (DEFICIENCY)
KEEP THE COLONY BEAUTIFULRevenue & Expenditure ProjectionsFiscal Year 2024-2025
BEGINNING FUND BALANCE
27
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
REVENUES
5,527,317 - -
- - -
5,527,317 - - -
TOTAL REVENUES & TRANSFERS 5,527,317 - - -
TRANSFERS OUT
- - 11,032,945
- - - -
TOTAL TRANSFERS OUT - - 11,032,945 -
- - 11,032,945 -
5,527,317 - (11,032,945) -
5,505,628 11,032,945 11,032,945 0
11,032,945 11,032,945 0 0 ENDING FUND BALANCE
TOTAL REVENUES
Transfer - Tax Debt Fund
Transfer - Utility Fund
TOTAL EXPENDITURES & TRANSFERS
EXCESS (DEFICIENCY)
BEGINNING FUND BALANCE
Interest
SLFRF Fund
Revenue & Expenditure Projections
Fiscal Year 2024-2025
SLFRF Revenue
28
2021-2022 2022-2023 2023-2024 2024-2025
Actual Actual Budget Budget
REVENUES
264,960 - - -
State Grant Revenue - -
264,960 - - -
Transfer In - Community Development - 7,083,340 4,000,000 3,500,000
TOTAL REVENUES & TRANSFERS 264,960 7,083,340 4,000,000 3,500,000
EXPENDITURES
Contractual Servics - - 150,000 -
Maintenance 61,945 205,526 50,000 -
Non-Capital - - 50,000 -
Capital Outlay 909,885 1,659,244 3,500,000 -
TOTAL EXPENDITURES 971,829 1,864,769 - 3,750,000 - -
TRANSFERS OUT
- - - -
Transfer - Parks Fund - - - -
TOTAL TRANSFERS OUT - - - -
971,829 1,864,769 3,750,000 -
(706,869) 5,218,571 250,000 3,500,000
4,695,803 3,988,933 9,207,504 9,457,504
3,988,933 9,207,504 9,457,504 12,957,504
PARK IMPROVEMENTS FUNDRevenue & Expenditure ProjectionsFiscal Year 2024-2025
Park Dedication Fees
BEGINNING FUND BALANCE
ENDING FUND BALANCE
TOTAL REVENUES
Transfer - General Fund
TOTAL EXPENDITURES & TRANSFERS
EXCESS (DEFICIENCY)
29
Department General Description 2025
PARD Dumpster Enclosure Expansion 31,590.00$
Public Works Waste Water Plant Precast Screening Wall 500,000.00$
Streets Mueller Equipment Barn 35,000.00$
Streets Sand Spreader Enclosure 50,000.00$
Facilities Maint.LED Lighting Upgrades 150,000.00$
Facility Maint.Community Center Roof 300,000.00$
Facility Maint.Fire Station 2 Roof 150,000.00$
Facility Maint.Foundation Repairs @ PD and City Hall 165,000.00$
Facility Maint.PD Courtroom Floor Replacement 9,000.00$
Facility Maint.Police Lobby Automatic Doors 50,000.00$
Facility Maint.Recreation Center Roof 240,000.00$
Fleet Additional Electical Outlets 8,000.00$
Total:1,688,590.00$
Dispatch Dallas Regional Warrant Interface 17,000.00$
Fleet Vehical Maintenance Software 45,000.00$
IT Access Control Systems 350,000.00$
IT Annes AV System 25,000.00$
IT Cell Phone Upgrades (61)30,000.00$
IT Compliance Mnagement Software 44,000.00$
IT Enterprise Backup Solution 52,000.00$
IT Microsoft enterprise Agreement 150,000.00$
PARD VenTek Kiosk Card Reader Upgrade 34,500.00$
Police Axon Interview Room Camera System 65,000.00$
Police Flock Safety Cameras 39,250.00$
Police Power DMS Bundle 30,756.00$
Waste Water Security Camera's 50,000.00$
Police Brazos Zebra Ticket Writers/Printers 45,000.00$
Total:977,506.00$
Police K9 unit 47,000.00$
Police Grandscape Police Equipment 48,000.00$
Police Motorola Portable Radios (35)250,000.00$
Total:Total:345,000.00$
Emergency Svcs Outdoor Warning Sirens 127,500.00$
Fleet Brake Rotor Machine 12,000.00$
PARD Stage for Events & Concerts 313,534.00$
Animal Services Outdoor Dog Kennels 5,000.00$
Animal Services Dog Bowl Sanitizing Machine 7,500.00$
Capital Outlay & Special Maintenance Plan Summary
FY24-25
Building Expansion, Renovation, & Maintenance
Computers, Software & Hardware
Emergency Vehicles & Equipment
Equipment
30
Fleet Fuel Injector Cleaner 2,000.00$
Total:467,534.00$
Engineering ITS Detection Equipment 325,000.00$
Engineering Replace/Upgrade Traffic Signal Equipment 170,000.00$
Engineering School Zone Flashers 25,000.00$
Streets Husqvarna Walk Behind Saw 30,000.00$
Engineering AutoCad License Renewal 1,500.00$
Engineering Bridge Repair at Grandscape 300,000.00$
Engineering City Wide Street Pavement Lifting Surfaces 250,000.00$
Engineering Drainage Impact Fee Study 50,000.00$
Engineering Misc. Drainage & Erosion Repair Projects 400,000.00$
Engineering Pavement Condition Evaluation for Alleys 50,000.00$
Engineering Regional Detention Pond Evaluation (SW Utility Fund 50,000.00$
Engineering Roadway Impact Fee Study 50,000.00$
Engineering Stormwater Permit Consulting Assistance (SW Utility 50,000.00$
Engineering Street Lights 30,000.00$
Streets Barricades 20,000.00$
Total:1,801,500.00$
Engineering Ford F150 55,500.00$
Facilities Maint F250 w/ Ladder rack (3)158,768.00$
Fire Divison Chief of Training Vehicle 79,726.00$
Fire Fire Admin Staff Vehicles (2)159,452.00$
Fire Firefighting Drone 39,000.00$
Fire Incident Support Vehicle 50,000.00$
PARD John Deere Gator Model TE 4x2 18,700.00$
PARD Replace Unit #545E 27,000.00$
PARD Replace Unit #552 73,000.00$
Police Grandscape Police Vehicles (3)285,000.00$
Police K9 Officer Vehicle 95,000.00$
Police Replacement Police Vehicles (6)450,000.00$
Storm Water Cat Skid Steer Loader 75,000.00$
Streets Backhone Loader 175,000.00$
Streets Dynamic Message Boards (5)110,000.00$
Streets Ford F-250 w/ Ladder Rack & Toolbox (2)200,000.00$
Streets Ford F350 Super Cab w/ Asphalt Heater 140,000.00$
Utility Admin 2024 Ford Maverick (Unit #6135)34,400.00$
Utility Admin Ford F150 Trucks (Units #6136 & #6137)105,294.00$
Waste Water Flatbed Attached Crane 30,000.00$
Waste Water Sludge Hauling Trailers (2)100,000.00$
Water Dist.Ford F550 4x4 100,000.00$
Water Dist.Ranger Pickup 27,055.00$
Water Dist.Sewer Camera Trailer 207,000.00$
Water Production Mobile Workshop Utility Trailer 20,500.00$
Streets
Vehicles, Trailers, & Heavy Equipment
31
Water Production Replace Unit #6122 - Transit Cargo Van 83,425.00$
Total:2,898,820.00$
Waste Water Lift Station Aerators 27,000.00$
Water Dist.Line Locate Wand 13,860.00$
Water Production Connecting Water Facilities to City Network 150,000.00$
Water Production Disinfectant Equipment Well #4 56,500.00$
Water Production Paluxy Well Pump 105,000.00$
Water Production Paving Parking Area 46,000.00$
Water Production Public Works Radio Repeater 56,000.00$
Water Production Stage 1 of 2 Motor Control Center 807,537.00$
Water Production VFD Pump 178,500.00$
Engineering Water/Wastewater Master Plan & Impact Fee Study 150,000.00$
Total:1,590,397.00$
9,769,347.00$
CDC Parks Master Plan Revision 100,000.00$
Total:100,000.00$
9,869,347.00$ Combined Capital Outlay & Special Maintenance Grand Total:
Capital Outlay & Special Maintenance Grand Total:
Water & Wastewater Equipment & Projects
Community Development Corporation
32
Department General Description 2025 2026 2027 2028 2029 Total:
Facility Maint.Animal Shelter Expansion 350,000.00 - - - - 350,000.00
Facility Maint.Library Remodel 600,000.00 - - - - 600,000.00
Facility Maint.Remodel Community Center 220,000.00 - - - - 220,000.00
Facility Maint.PD Relocation at Comm Center 225,000.00 - - - - 225,000.00
Facility Maint.Remodel Trinity North Building 11,000,000.00 - - - - 11,000,000.00
PARD Stewart Creek Park Master Plan Impv 550,000.00 550,000.00 550,000.00 500,000.00 - 2,150,000.00
Totals:12,945,000.00 550,000.00 550,000.00 500,000.00 - 14,545,000.00
Fire Fire Station 3 Aux Building 517,990.00 - - - - 517,990.00
Totals:517,990.00 - - - - 517,990.00
Fire Squad 18 Wet Rescue Fire Apparatus 1,505,140.00 - - - 1,505,140.00
Totals:1,505,140.00 - - - - 1,505,140.00
Engineering Bill Allen Stream Bank Stabalization 350,000.00 - - - - 350,000.00
Engineering Haven Hills & Waters Edge Connector 80,000.00 850,000.00 - - - 930,000.00
Engineering Memorial Drive Widening 500,000.00 2,000,000.00 5,000,000.00 7,000,000.00 5,000,000.00 19,500,000.00
Engineering North Colony Flooding 175,000.00 200,000.00 - - - 375,000.00
Engineering Paige Road Channel Stabalization 600,000.00 - - - - 600,000.00
Engineering Plano Parkway Outfall Dissipator 250,000.00 - - - - 250,000.00
Engineering Residential Street Reconstruction 6,650,000.00 1,850,000.00 - - - 8,500,000.00
Streets General Alleyway Repair - Large 1,500,000.00 1,500,000.00 1,500,000.00 1,500,000.00 1,500,000.00 7,500,000.00
Streets General Alleyway Repair - Small 500,000.00 500,000.00 500,000.00 500,000.00 500,000.00 2,500,000.00
Streets General Street Repair - Multi-Panel 1,500,000.00 3,500,000.00 3,500,000.00 3,500,000.00 3,500,000.00 15,500,000.00
Engineering Residential PCI Driven Concrete Road Repa 1,000,000.00 1,000,000.00 1,000,000.00 1,000,000.00 1,000,000.00 5,000,000.00
Engineering Strickland Drainage Pipe Repairs 850,000.00 - - - - 850,000.00
Engineering Tribute Water Ponding 200,000.00 200,000.00 200,000.00 - - 600,000.00
Totals:14,155,000.00 11,600,000.00 11,700,000.00 13,500,000.00 11,500,000.00 62,455,000.00
Engineering Tribute Water Well 1,200,000.00 5,000,000.00 4,000,000.00 - - 10,200,000.00
Engineering Wastewater Treatment Plant CMAR 5,500,000.00 - - - - 5,500,000.00
Facility Maint.Backup Generator Equipment Well #4 1,008,000.00 - - - - 1,008,000.00
Totals:7,708,000.00 - - - - 6,508,000.00
CIP Grand Total:36,831,130.00 12,150,000.00 12,250,000.00 14,000,000.00 11,500,000.00 85,531,130.00
Comprehensive Improvement Plan Summary
FY25-29
Building Expansion, Renovation, & Maintenance
Computers, Software & Hardware
Emergency Vehicles
Streets
Water & Waste Water
33
CDC Aquatic Park Upgrades 450,000.00 450,000.00 450,000.00 - - 1,350,000.00
CDC Bill Allen Park Erosion (CDC Portion)500,000.00 - - - - 500,000.00
CDC Athletic Facility Upgrades 850,000.00 850,000.00 850,000.00 850,000.00 - 3,400,000.00
Totals:1,800,000.00 1,300,000.00 1,300,000.00 850,000.00 - 5,250,000.00
Combined CIP Grand Total:38,631,130.00 13,450,000.00 13,550,000.00 14,850,000.00 11,500,000.00 90,781,130.00
Combined CIP Grand Total 38,631,130.00$
Combined Capital Outlay Total 9,869,347.00$
Grand Total CIP & Capital Outlay 48,500,477.00$
FY24-25
Community Development Corporation
34
CITY OF THE COLONY
DEBT MANAGEMENT POLICIES
September 3rd, 2024
Prepared by the Finance Department
Confirmed by the City Council on September 17th, 2024
35
DEBT MANAGEMENT POLICIES
Table of Contents
Page No.
I. Purpose Statement 1
II. Responsibility 1
A. Bond Counsel Involvement 2
B. Financial Advisor Involvement
III. Short Term Debt 2
A. General
B. Commercial Paper
C. Line of Credit
IV. Long Term Debt 2
A. General 2
B. Bonds 3
C. Certificates of Obligation
D. Public Property Finance Contractual Obligation
E. Anticipation Notes 4
F. Negotiated versus Competitive Sale versus Private Placement
G. Bidding Parameters 5
H. Bond Elections
V. Refunding 5
VI. Capital Leasing 6
VII. Other Types of Financing 6
VIII. Ratios and Reserves 6
IX. Official Statement 7
A. Responsibility
B. Timing
C. Auditor’s Involvement 8
D. Printing
X. Ratings 8
36
DEBT MANAGEMENT POLICIES
Table of Contents
Page No.
XI. Credit Enhancements 9
XII. Secondary Market Disclosure 9
XIII. Arbitrage Liability Management 10
A. General
B. Responsibility
C. Internal Interim Financing 11
D. Spend-Out Exceptions For Federal Rebate
XIV. Modification to Policies 12
37
I. 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.
II. 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.
38
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.
III. 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.
39
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.
40
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.
41
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.
42
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
43
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.
44
3.Comments from reviewers should be submitted during the two-week
review period. About 1 week will be required to make the requested
changes. After 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.
45
A personal meeting with representatives of the rating agencies will be scheduled every
few years or whenever a major project is initiated.
XI .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:
46
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.
47
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
Ar bitrage 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.
48
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.
49
CITY OF THE COLONY
FINANCIAL MANAGEMENT POLICIES
SEPTEMBER 3rd, 2024
Prepared by the Finance Department
Confirmed by the City Council on September 17th, 2024
50
FINANCIAL MANAGEMENT POLICIES
Table of Contents
Page No.
I. Purpose Statement 1
II. Accounting, Auditing and Financial Reporting 1
A. Accounting
B. Funds
C. External Auditing
D. External Auditors Responsible to City Council
E. External Auditors Rotation 2
F. External Financial Reporting
G. Internal Financial Reporting
III Internal Controls 2
A. Written Procedures
B. Department Managers Responsible
IV. Operating Budget 2
A. Preparation
B. Balanced Budget 3
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 4
F. Street Maintenance
G. Water/Wastewater Main Rehabilitation and Replacement
H. Water and Wastewater Special Projects
I. Reporting
51
FINANCIAL MANAGEMENT POLICIES
Table of Contents
Page No.
VI. Revenue Management 4
A. Simplicity
B. Certainty
C. Equity 5
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 6
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 7
G. Information Technology
VIII. Asset Management 7
A. Investments
B. Cash Management
C. Fixed Assets and Inventory
52
FINANCIAL MANAGEMENT POLICIES
Table of Contents
Page No.
IX. Financial Condition and Reserves 7
A. No Operating Deficits
B. Interfund Loans
C. Operating Reserves 8
D. Risk Management Program 9
E. Loss Financing
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 9
A. Adequate Staffing
B. Training
C. Awards, Credentials 10
XII. Grants Financial Management 10
A. Grant Solicitation
B. Responsibility
XIII. Annual Review & Reporting 10
53
I. 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.
54
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
annually 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 is responsible
to the City Manager to ensure that good internal controls are followed 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.
55
The preliminary budget should be filed with the City Secretary’s office on or before
July 31st 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.
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.
56
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 REHABILITATION 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.
I. 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
57
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.
I. 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.
58
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. UTILITY 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.
O. 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
59
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.
60
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.
61
(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,
62
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.
63
CITY OF THE COLONY
THE COLONY ECONOMIC DEVELOPMENT CORPORATION
THE COLONY COMMUNITY DEVELOPMENT CORPORATION
INVESTMENT POLICY
September 3rd, 2024
Prepared by the Finance Department
Confirmed by the City Council on September 17th, 2024
64
THE COLONY INVESTMENT POLICY
TABLE OF CONTENTS
PAGE
I. SCOPE OF POLICY 1
A. Funds Included 1
B. Funds Excluded 1
C. Pooling of Funds 1
D. Additional Requirements 1
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 INVESTMENTS 4
VI. INVESTMENT REPORTS 4
VII. PORTFOLIO 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. COLLATERALIZATION 6
A. Insurance or Collateral Pledged 6
B. Collateral Defined 6
C. Audit of Pledged Collateral 7
65
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
66
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
67
Investment Officers and their oversight managers to control adverse developments in
accordance with the terms of this Policy.
III. OBJECTIVES 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.
68
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),
69
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 REPORTS
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 activities 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
70
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.
71
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:
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.
72
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.
I. Reconcilements and comparisons of security receipts with the investment records.
73
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
74
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)
75