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• Project and analyze total debt service related to the total debt of the City. <br />• A debt study will be provided summarizing the impact of the project, review of the <br />revenues and proposed debt. <br />The City Council will evaluate all proposed Capital Improvements and decide on the following: <br />• Project Prioritization <br />• Funding Source Acceptability <br />• Acceptable Financial Impact on Tax Levy, Total Debt, or Utility Rate Levels. <br />VII. DEBT MANAGEMENT <br />The use of borrowing and debt is an important and flexible revenue source available to the <br />City. Debt is a mechanism, which allows capital improvements to proceed when needed, in <br />advance of when it would otherwise be possible. It can reduce long -term costs due to inflation, <br />prevent lost opportunities, and equalize the costs of improvements to present and future <br />constituencies. <br />Debt management is an integral part of the financial management of the City. Adequate <br />resources must be provided for the repayment of debt, and the level of debt incurred by the <br />City must be effectively controlled to amounts that are manageable and within levels that will <br />maintain or enhance the City's credit rating. A goal of debt management is to stabilize the <br />overall debt burden and future tax levy requirements to ensure that issued debt can be repaid <br />and prevents default on any municipal debt. <br />Policy Statement. <br />Wise and prudent use of debt provides fiscal and service advantages. Overuse of debt places a <br />burden on the fiscal resources of the City and its taxpayers. The following guidelines provide a <br />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 of the <br />projects, with at least 50% of the principal retired within two- thirds of the term of the <br />bond issue. <br />4. Total general obligation debt shall not exceed 2% of the total market valuation of taxable <br />property in the City. <br />5. Direct net debt (gross debt less available debt service funds) shall not exceed 3% of the <br />total market valuation of taxable property in the City. <br />6. The City will maintain good communications with bond rating agencies regarding its <br />financial condition. The City will follow a policy of full disclosure in every financial <br />report and bond prospectus. <br />7 <br />