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City of St Anthon, - 41 <br /> Financial Plat, <br /> VI. DEBT MANAGEMENT <br /> The use of borrowing and debt is an important and flexible revenue source available to <br /> the City. Debt is a mechanism, which allows capital improvements to proceed when <br /> needed, in advance of when it would otherwise be possible. . It can reduce.long-term <br /> -costs due to inflation, prevent lost opportunities, and equalize the costs of <br /> improvements to present and future constituencies. <br /> Debt management is an integral part of the financial management of the City. <br /> Adequate resources must be provided for the repayment of debt, and the level of debt <br /> incurred by the City must be effectively controlled to amounts that are manageable and <br /> within levels that will maintain or enhance the City's credit rating. A goal of debt <br /> management is to stabilize the overall debt burden and future tax levy requirements to <br /> ensure that issued debt can be repaid and prevents default on any municipal debt. A <br /> debt level, which is too high, places a financial burden on taxpayers and can create <br /> problems for the community's economy as a whole. <br /> .POLICY STATEMENT <br /> Wise and prudent use of debt provides fiscal and service advantages. Overuse of debt <br /> places a burden on the fiscal resources of the .City and its taxpayers. The following <br /> guidelines provide a.framework and limit on debt utilization: <br /> 1. The City will confine long-term borrowing to planned capital improvements. <br /> 2. The City will not use long-term debt for current operations. <br /> 3. The City will pay back debt within a period not to exceed the expected useful life <br /> of the projects, with at least 50% of the principal retired within two-thirds of the <br /> term of the bond issue. <br /> 4. Total general obligation debt shall not exceed 2% of the total market valuation of <br /> taxable property in the City. <br /> 5. Direct net debt (gross debt less available debt service funds) shall not exceed <br /> 3% of the total market valuation of taxable property in the City. <br /> 6. The City will maintain good communications with bond rating agencies regarding <br /> its financial condition. The City will follow a policy of full disclosure in every <br /> financial report and bond prospectus. <br /> 7. The City will use refunding mechanisms to reduce interest cost when <br /> economically feasible. <br /> 10 <br />