Debt Management

Goal: General obligation and revenue debt will only be issued for capital needs and structured to limit financing costs and future commitments.

Long-term debt will only be issued for real property, or capital projects and capital acquisitions with a life greater than three years.  Long-term debt will not be issued to finance current operations.  The maturity of long-term debt will be equal to or less than the expected life of the project or acquisition, and no longer than 20 years.  In some utility infrastructure financing, a 30-year financing term may be considered.

Interfund borrowing for short-term cash flow needs should be considered over external borrowing for terms less than two years.  A resolution adopted by the council will approve and detail the terms of the borrowing.

Loans from state agencies with favored interest rates and repayment terms should be considered whenever possible.  The funding source for repayment of the loan shall be indicated.

The bond coverage is detailed in each revenue bond issue.  The current requirement is gross revenues less operation and maintenance costs before depreciation equate to at least 1.25 times the maximum annual debt service.

At the first optional redemption date for each general obligation or revenue bond issue, (usually ten years after issuance) an analysis will be done to determine if exercising a call would be financially prudent at that time.  If the bonds are not called at that time, this analysis will continue at least every two years.

The city will comply with IRS arbitrage regulations for bond issues, document the compliance and maintain files of documentation until 3 years after the bonds are matured.

All debt service obligations will be detailed in the Comprehensive Annual Financial Report and the annual budget document.