SPA Process User’s Guide –
Chapter 2 – General Policies

Debt-Financed Property

Definition

Property financed with debt instruments such as commercial paper, general obligation bonds or revenue bonds.

Policy

All property acquired using any form of debt-financing must be reported to SPA in the required debt-finance-related data fields.

The financed amount of debt-financed assets must be based on the total principal. This includes the purchase price of the asset plus any applicable service fee charged by the Texas Public Finance Authority.

The acquisition cost of debt-financed assets, other than manufactured assets, must reflect the total principal plus all associated costs required to place the asset into service. The acquisition cost of manufactured assets should be based on the total cost of acquiring the asset and placing it into service. This includes principal, interest (if constructed or produced for an enterprise fund) and financing charges. The financing charge includes the cost of issuance and the cost of administrative fees.

If specified by bond covenant, agencies may be required to obtain insurance coverage for the replacement cost of any equipment purchased with revenue bonds. At the agency’s request, the Texas Public Finance Authority will provide guidance in estimating the replacement cost for insurance purposes.

The AMOUNT FINANCED field shows the principal amount of the financing agreement and should change only when the financing or the debt instruments being used to acquire the property are refinanced or restructured.