Debt Service

The City's Debt Service provides for the payment of principal and interest on outstanding general obligation bonds, and certificates of obligation. Debt financing is used to pay for large capital improvements to and/or construction of the City's street, water and sewer systems; parks and recreational facilities; police and fire protection facilities; and the flood protection and storm drainage systems. 

The City maintains two debt service funds: one for tax supported debt and one for utility revenue supported debt. Tax supported debt is funded from the debt service portion of the property tax rate. Revenue supported debt is funded from other revenue sources, such as utility revenues. 

In order to understand the information presented here, a few key terms need to be defined:

General Obligation Bond (GO Bond) - a municipal bond backed by the credit and taxing power of the issuing jurisdiction rather than the revenue from a given project. GO Bonds are issued with the belief that a municipality will be able to repay its debt obligation through taxation or revenue. The City has a total of $69.6 million in general obligation debt - $66.2 million is tax supported and $3.5 million is revenue supported. 

Certificates of Obligation (CO) - a financing mechanism a city may use to pay a contractual obligation incurred in; (1) a construction contract; (2) the purchase of materials, supplies, equipment, machinery, buildings, land, and rights-of-way for authorized needs and purposes; or (3) the payment of professional services, including services provided by tax appraisers, engineers, architects, attorneys, map makers, auditors, financial advisers, and fiscal agents. The City has a total of $18.3 million in certificates of obligation - $15.1 million is tax supported and $3.2 million is revenue supported. 

Refunding - a process where bonds are issued for the purpose of retiring outstanding bonds in order to restructure debt, reduce finance costs, and/or alter maturities. This is a complicated and detailed process, but in the simplest terms, bond proceeds from a new issue are used to pay off all or a portion of existing debt. Interest savings of $3,446,153 have been recognized since the City began the practice of refunding bonds in Fiscal Year 2011. 

Early Redemption - a process where portions of bond principal are paid off early to reduce interest costs. The City began using early redemption in Fiscal Year 2013 when TxDOT began repayment per the Pass Through Toll Agreement (See 2008 GO Bond detail below). Since 2013, the city has redeemed an additional $7,110,000 in principal that has resulted in $4,989,638 in interest savings. 

Combined interest savings from refunding and early redemption total $8.4 million. 

Credit Rating

Credit ratings are opinions about credit risk. Ratings express an opinion about the ability and willingness of an issuer, such as a corporation or state or city government, to meet its financial obligations in full and on time.

The City's credit is reviewed and rated with each bond issue by both Standard & Poor's (S&P) and Moody's Investors Service. 

Standard & Poor's Global Ratings - AA-

S&P issues credit ratings in range from 'AAA' (Extremely strong capacity to meet financial commitments) to 'D' (Payment default on a financial commitment or breach of an imputed promise; bankruptcy petition or similar action taken). A plus (+) or minus (-) can be added to ratings from 'AA' to 'CCC' show relative standing within the major rating categories. 

The City's rating of 'AA-' indicates a very strong capacity to meet financial commitments.

Moody's Investors Service - Aa3

Moody's issues credit ratings in a range from 'Aaa' (Highest Quality, with minimal risk) to 'C' (Typically in default, with little prospect for recovery of principal and interest). Moody's uses numerical modifiers to indicate a rating is on the higher end (1), mid-range (2), or lower end (3) of a rating category.

The City's rating of 'Aa3' indicates the city is viewed to be high quality with very low credit risk. 

Combined debt service


The following information represents combined tax supported (General) and revenue supported (Utility) debt. The City's combined debt totals $79,132,766. This is a reduction of $8,870,920 from the prior year's total debt, and includes the addition of the 2017 Tax Notes.

Of the total debt, $73,108,503 is tax supported and accounted for in the General Debt Service Fund, and $6,024,262 is utility revenue supported and accounted for in the Utility Debt Service Fund. 

COMBINED DEBT SCHEDULE 
 Fiscal Year  Principal Due  Interest Due  Total Principal & Interest
2018 4,780,000 2,221,724 7,001,724
 2019 4,870,000 2,133,275 7,003,275
2020 5,040,000 1,964,629 7,004,629
2021 4,960,000 1,785,761 6,745,761
2022 5,140,000 1,605,561 6,745,561
2023 5,340,000 1,412,246 6,752,246
2024 5,460,000 1,219,775 6,679,775
2025 5,345,000 1,002,269 6,347,269
2026 4,075,000 797,100 4,872,100
2027 3,625,000 636,837 4,261,837
2028 1,890,000 530,250 2,420,250
2029 1,955,000 458,775 2,413,775
2030 2,040,000 383,494 2,423,494
2031 2,115,000 302,922 2,417,922
2032 3,345,000 228,125 3,573,125
2033 1,515,000 86,019 1,601,019
2034 515,000 19,178 534,178
2035 160,000 7.350 167,350
2036 165,000 2,475 167,475
Total 62,335,000 16,797,766 79,132,766
Total Debt 2018

General and Utility Debt by Series


Of the total debt, $73,108,503 is tax supported and accounted for in the General Debt Service Fund and $6,024,262 is utility revenue supported and accounted for in the Utility Debt Service Fund. 

 Series  Source  Principal  Interest  Total
2008 General Obligation Bonds  Tax Supported 10,680,000 4,353,713 15,033,713
2011 General Obligation Refunding (2000B & 2003)  Tax Supported 2,295,000 1,412,913 3,707,913
2011 Combo Certificates of Obligation Tax Supported 3,115,000 949,347 4,064,347
2012 General Obligation Refunding Tax Supported 1,305,000 57,821 1,362,821
2012 Certificates of Obligation Tax Supported 830,000 174,125 1,004,125
2014 Certificates of Obligation Tax Supported 4,645,000 1,456,206 6,101,206
2014 General Obligation Refunding (2005A) Tax Supported 1,755,000 180,044 1,935,044
2015 General Obligation Refunding (2007 GO) Tax Supported 8,585,000 2,576,688 11,161,688
2016 General Obligation Refunding (2007 GO) Tax Supported 8,170,000 713,375 8,883,375
2016 Certificates of Obligation Tax Supported 2,405,000 687,903 3,092,903
2017 Subordinate Lien Pass-Through Toll Revenue & Limited Tax Refunding   Tax Supported 11,465,000 3,036,801 14,501,801
2017 Tax Notes  Tax Supported  2,055,000 204,568 2,259,568
 Total Tax Supported   57,305,000 15,803,503 73,108,503
2011A General Obligation Refunding (2000B & 2003) Utility Revenue Supported 580,000 41,213 621,213
2011 Combo Certificates of Obligation Utility Revenue Supported 2,300,000 701,869 3,001,869
2014 General Obligation Refunding (2005A) Utility Revenue Supported 1,055,000 108,787 1,163,787
2014 General Obligation Refunding (2005B) Utility Revenue Supported 1,095,000 142,394 1,237,394
Total Utility Revenue Supported   5,030,000 994,262 6,024,262
 TOTAL CITY DEBT   62,335,000 16,797,766 79,132,766



GENERAL DEBT SERVICE

General Debt Service is primarily supported by the debt service portion of the City's tax rate. This portion of the tax rate is not flexible, and is set by  a calculation based on the required fiscal year payments. 

In addition to revenue from the Debt Service portion of the tax rate, the city receives an annual payment from the Texas Department of Transportation (TxDOT) as part of a Pass Through Tolling Agreement. This payment is applied to the 2008 General Obligation Bonds and payment details and further information on the agreement can be found on the "2008 GO Bonds" tab below. 

To date, the 2014 Certificate of Obligation have not impacted the debt service tax rate. These payments have been made from fund balance in the General Debt Service Fund. The 2017 Tax Notes were issued to purchase new fire equipment and payments on this issue will also be paid from fund balance. This fund balance is the result of interest collected in the fund, as well as delinquent and penalty taxes that have accumulated over prior years and is restricted to use on debt payments. 


 total tax supported debt 

 Fiscal Year  Principal Due  Interest Due  Total Principal & Interest
2018 4,230,000 2,060,093 6,290,093
2019 4,300,000 1,987,356 6,287,356
2020 4,450,000 1,835,654 6,285,654
2021 4,555,000 1,676,086 6,231,086
2022 4,725,000 1,508,624 6,233,624
2023 4,900,000 1,328,640 6,228,640
2024 5,005,000 1,150,656 6,155,656
2025 4,880,000 948,413 5,828,413
2026 3,905,000 754,438 4,659,438
2027 3,445,000 601,175 4,046,175
2028 1,705,000 501,888 2,206,888
2029 1,760,000 438,013 2,198,013
2030 1,840,000 370,731 2,210,731
2031 1,905,000 298,591 2,203,591
2032 3,345,000 228,125 3,573,125
2033 1,515,000 86,019 1,601,019
2034 515,000 19,178 534,178
2035 160,000 7,350 167,350
2036 165,000 2,475 167,475
Total  57,305,000 15,803,503 73,108,503

Tax Supported 2018

Tax Supported Debt Per Capita

Debt Service per capita is calculated using the Forney EDC population estimate for 2017 of 19,122.

Bond Series  Total Principal & Interest Debt Per Capita
2008 General Obligation Bonds 15,033,713 786
2011 General Obligation Bonds 3,707,913 194
 2011 Certificates of Obligation 4,064,347 213
 2012 General Obligation Refunding 1,362,821  71
2012 Certificates of Obligation 1,004,125 53
 2014 General Obligation Refunding 1,935,044 101 
2014 Certificates of Obligation 6,101,206 319
 2015 General Obligation Refunding 11,161,688 584
2016 Certificates of Obligation 3,092,903 162
2016 General Obligation Refunding 8,883,375 465
 2017 Subordinate Lien Pass Through Toll Revenue & Limited Tax Refunding 14,501,801 758
2017 Tax Notes 2,259,568 118
 Total Tax Supported Debt per Capita $73,108,503 $3,823
     
Remaining TxDOT Pass Through Payments to the City (20,959,057) (1,096)
 City's Remaining Obligation for Pass Through Toll Bonds (2008 & 2017) 8,576,457
     
 Total Per Capita Debt adjusted for Pass Through Program $52,149,446 $2,727


Click on the tabs below to see detailed payment schedules for all general bond series. 
  1. 2008 GO Bonds
  2. 2011 GO Refunding
  3. 2011 COMBO CO
  4. 2012 GO REFUNDING
  5. 2012 CO
  6. 2014 GO Refunding
  7. 2014 CO
  8. 2015 GO Refunding
  9. 2016 CO
  10. 2016 GO Refunding
  11. 2017 refunding
  12. 2017 Tax Notes

2008 General Obligation Bonds

Original Issue Amount: $39,605,000
Original Date of Issue: July 15, 2008
Maturity Date: August 15, 2033

USE OF BOND PROCEEDS

"Proceeds from the sale of the Bonds will be used to (i) provide funds for the design, development, construction, extension, expansion and/or improvement of certain state highway facilities and roadways located within the City and as more specifically described in the {Pass Through} Agreement, (ii) pay interest on the Bonds for the period authorized by State law, and (iii) pay the costs of issuance on the Bonds..."

Initial Design of three Pass Through Toll Projects
Total Project Cost: $9,598,084
2008 Bond Allocation: $8,687,712
Completion Date: March 2013

FM 548 @ US HWY 80 Roadway Reconstruction & Widening
Total Project Cost: $14,818,921
 2008 Bond Allocation: $8,867,416
Completion Date: October 2015

FM 740 Roadway Reconstruction & Widening
Total Project Cost: $7,084,333
2008 Bond Allocation: $4,889,896
Completion Date: May 2016

FM 741 Roadway Reconstruction & Widening
Total Project Cost: $13,604,976
2008 Bond Allocation: $13,604,976
Completion Date: October 2015

Bond Interest
Recognizing that there would be a gap between the time where bond payments became due and the time that TxDOT began making the Pass Through Reimbursements, $3,239,848 of the bond issue was used to decrease the annual Series 2008 Bond Payments from Fiscal Year 2009 to Fiscal Year 2012. This reduced the impact on the debt service tax rate over three years. 

Bond Issuance Costs
Total Cost: $315,153

All of the proceeds from the 2008 General Obligation Bonds have been spent. 

Pass Through Toll Program - Early REDEMPTION

The Pass Through Toll Program is an agreement between the City and the Texas Department of Transportation (TxDOT). With this agreement, the City sold the 2008 General Obligation Bonds to fund the expansion of three state owned roadways within the city limits, and oversaw the construction. Upon completion of the projects, responsibility for maintenance of the roadways was returned to the state and TxDOT began to reimburse the City annually. 

TxDOT began making annual payments to the City in Fiscal Year 2013. This repayment is structured with a minimum annual payment and an additional accelerated portion (the amount above the guaranteed minimum annual payment) based on traffic counts. The minimum annual payment is $2,009,570. The City Council has deemed any amount above the minimum payment be held as committed fund balance and, if possible, used for early redemption in order to reduce future interest payments. As of October 2017, the City has redeemed an additional $9,184,493 resulting in $5,884,388 in interest savings.  
Early Redemption Payment History & Interest Savings
Fiscal Year  Pass Through Reimbursement Amount  Amount Applied to the annual 2008 Bond Payments  Remaining Available for Early Redemption Early Redemption  Interest Savings 
 2013 3,606,373 2,009,570 1,596,803 1,590,000 1,359,450
2014 3,685,934 2,009,570 1,676,364 1,675,000 1,281,313
2015 3,901,756 2,009,570 1,892,186 1,890,000 1,260,175
2016 4,019,140 2,009,570 2,009,570 1,955,000 1,088,700
 2017 4,019,140 2,009,570 2,009,570 1,989,475 894.750
  19,232,343 10,047,850 9,184,493 9,099,475 5,884,388


REFUNDING


The following amounts have been refunded from the 2008 General Obligation Bonds:

2011 General Obligation Refunding
Principal Amount Refunded: $1,200,000
Interest Savings: $94,825

2017 Subordinate Lien Pass Through Toll Revenue and Limited Tax Refunding
Principal Amount Refunded: $11,465,000
Interest Savings:$1,200,000


series 2008 Payment Schedule

 Fiscal Year   Principal Due  Interest Due  Total Principal & Interest
2018 1,575,000 505,688 2,080,688
2019 - 442,688 442,688
 2020 - 442,688 442,688
2021 - 442,688 442,688
2022  - 442,688 442,688
2023 1,040,000 442,688 1,482,688
2024 1,890,000 388,088 2,278,088
2025  1,990,000 288,863 2,278,863
2026 910,000 199,313 1,109,313
 2027 600,000 158,363 758,636
2028 160,000 126,863 286,863
 2029 170,000 119,463 289,463
2030 185,000 111,388 296,388
2031 240,000 102,600 342,600
 2032 900,000 91,200 991,200
2033 1,020,000 48,450 1,068,450
 Total 10,680,000 4,353,713 15,033,713


UTILITY DEBT SERVICE


Utility debt is supported by utility revenues, and water and sewer impact fees.  

Combined Water Sewer Debt Schedule
 Fiscal Year  Principal Due  Interest Due  Total Interest & Penalty
2018 550,000 161,631 711,631
2019 570,000 145,919 715,919
2020 590,000 128,975 718,975
2021 405,000 109,675 514,675
2022 415,000 96,937 511,938
2023 440,000 83,606 523,606
2024 455,000 69,119 524,119
2025 465,000 53,856 518.856
2026 170,000 42,662 212,662
2027 180,000 35,662 215,662
2028 185,000 28,363 213,363
2029 195,000 20,763 215,763
2030 200,000 12,763 212,763
2031 210,000 4,331 214,331
Total 5,030,000 994,262 6,024,262

Tax Supported 2018
Click on the tabs below to see detailed payment schedules for all water sewer bond series. 
  1. 2011A GO refunding
  2. 2011 combo CO
  3. 2014 GO Refunding
  4. 2014A GO Refunding

2011A General obligation refunding, taxable series

Original Issue Amount: $1,635,000
Original Date of Issue: August 2, 2011
Maturity Date: February 15, 2031

Interest savings from this refunding will be $409,217.


USE OF BOND PROCEEDS

"Proceeds from the sale of the Taxable Bonds are expected to be used to (i) refund the Tax and Waterworks and Sewer System Surplus Revenue Certificates of Obligation, Taxable Series 2000A as described on Schedule II {In the Official Statement} ... for debt savings; and (ii) pay the costs associated with the issuance of the taxable bonds."


Tax and Waterworks and Sewer System (Limited Pledge) Revenue Certificates of Obligation, Series 2000A
Principal Amount Refunded: $1,535,000
Interest Savings: $409,217

All of the proceeds from the 2011A General Obligation Refunding have been spent. 


 SERIES 2011A GENERAL OBLIGATION REFUNDING PAYMENT SCHEDULE

 Fiscal Year  Principal  Interest  Total Principal & Interest
2018 185,000 19,631 204,631
2019 195,000 14,081 209,081
2020 200,000 7,500 207,500
Total 580,000 41,213 621,213