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55 r V. DEBT POLICIES A. Purpose The debt policies ensure that the city's debt 1) does not weaken the city's financial structure; and 2)provides limits on debt to avoid.problems in servicing debt. This policy is critical for maintaining the best possible credit rating for the city. B. Policy The city will not use long-term debt for current operations. The city will confine long-term borrowing to capital items or capital. projects. The city will pay back bonds within a period not to exceed the expected life of the project. The city will not exceed 2 percent of the market value of taxable property . for general obligation debt per state statutes. The city will attempt to only spend 80 percent of the 2 percent in order to provide-for emergency needs. The city will consider the maintenance of the best possible credit rating in making all decisions on debt. The city will seek credit enhancements, such as Letter of Credit or insurance, when necessary for marketing purposes, availability and cost-effectiveness. The city will follow a policy of full disclosure on financial reports and bond prospectus. The city will refinance or call any debt issue when interest rates are - beneficial for future debt savings. The city will monitor all forms of debt'on an annual basis concurrent with the city's Budget and Capital Improvement Program hearing process and report concerns and remedies, if needed, to the city council. For Enterprise operations,the city will attempt to issue debt that is self- supporting through user fees and charges, assessments, or special taxes, and not backed or funded by General Fund revenues. . Advance refunding of outstanding bonds will be considered when the present value.savings, at a minimum, are in excess of cost of issuing refunding bonds.