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Borger council adopts formal debt management policy after S&P upgrade
Summary
The Borger City Council unanimously adopted Resolution R-003-25 on Feb. 4, 2025, formalizing a debt management policy that sets permitted debt types, debt limits tied to assessed value, fund-specific debt-service thresholds, and refinancing criteria; the change follows a recent S&P credit-rating upgrade.
The Borger City Council on Feb. 4 adopted Resolution R-003-25, establishing a formal debt management policy that defines permitted debt types, sets limits tied to assessed value and fund revenue, and requires a biennial policy review.
City staff member Spradlin told the council that the policy formalizes practices the city has been following and noted a recent credit rating change: “we actually, had our credit rating upgraded last week by, S and P ... we've gone from a a plus to a double a minus, which is in the very good category,” Spradlin said. The resolution passed after a motion by a council member and a second; the vote was announced as in favor and the resolution carried.
The policy lists permitted debt types as general obligation bonds, certificates of obligation, revenue bonds and short-term financing (tax notes) and cites compliance with “Texas local government code 31331 and 271” as stated in the presentation. It also establishes an overall outstanding-obligation cap equal to 15% of the city’s freeze-adjusted assessed value and fund-level debt-service thresholds: general fund debt service should not exceed 5% of operating revenue and water/sewer fund debt service should not exceed 30% of operating revenue. The city’s current INS portion of the tax rate was described as 0.15 (per $100 valuation) and the policy sets a recommended target of 0.18 cents per $100 valuation for that portion.
Spradlin described additional mechanics included in the policy: a recommended “debt ladder” structure to stagger repayments as older debt is replaced, a 3% net-present-value savings requirement for refinancing decisions, and a requirement for monitoring, reporting and biennial policy review aligned to the legislative session. Spradlin said these guidelines are intended to allow the city to invest in infrastructure while limiting financial risk.
The council approved the resolution by voice vote. The city attorney or staff did not cite any immediate borrowing tied to the action; Spradlin said the policy “does not have impact on anything that we're doing or planning on doing” and that the council must still approve any individual debt issuance.
The council adopted the policy after discussing how previous capital investments — including a recent $38 million debt for the Northwest well field mentioned in the presentation — factored into rating agency assessments. The policy seeks to preserve access to capital while keeping long-term costs manageable.
Council members did not request additional revisions when the motion was made and the council voted to adopt the resolution.
Looking ahead, Spradlin said the policy will be reviewed every two years to ensure compliance with state law and to remain consistent with rating-agency expectations.
