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VI. CAPITAL IMPROVEMENTS The demand for services and the cost of constructing and maintaining the City’s infrastructure is always present. The Long-Term Capital Funds Budgets provide a realistic projection of community needs, the meeting of those needs, and a framework to support City Council prioritization of those needs. Capital improvements include the scheduling of public improvements for the community over a 15- year period, and take into account the community’s financial capabilities as well as its goals and priorities. A “capital improvement” is defined as any major nonrecurring expenditure for physical facilities of government. Typical expenditures are the construction of roads, stormwater improvements utilities, parks, vehicles and capital equipment replacement. Capital improvements are directly linked to goals and policies, land use, community needs and sections of the Comprehensive Plan. Infrastructure Improvements Process:  Devise proposed funding sources for proposed Infrastructure Improvements projects (typically streets, utilities and stormwater) . Recommended funding sources will be clearly stated for each project.  Analyze debt service related to new projects. Each project, when applicable, will include its separate impact on the tax levy and/or utility charges as well as its total dollar cost.  Project and analyze total debt service related to the total debt of the City.  A debt study will be provided summarizing the impact of the project, review of the revenues and proposed debt. The City Council will evaluate all proposed Capital Improvements and decide on the following:  Project Prioritization  Funding Source  Acceptable Financial Impact on Tax Levy, Total Debt, or Utility Rate Levels. VII. DEBT MANAGEMENT The use of borrowing and debt is a revenue source available to the City. Debt as a mechanism, allows capital improvements to advance when needed. Financing can reduce long-term costs due to inflation, prevent lost opportunities, and equalize the costs of improvements to present and future constituencies. Debt management is an integral part of the financial management of the City. Adequate resources must be provided for the repayment of debt, and the level of debt incurred by the City must be effectively controlled to amounts that are manageable and within levels that will maintain or enhance the City’s credit rating. A goal of debt management is to stabilize the overall debt burden and future tax levy requirements to ensure that issued debt can be repaid and prevents default on any municipal debt. Debt Management Practices: Prudent use of debt provides fiscal and service advantages. Overuse of debt places a burden on the fiscal resources of the City and its taxpayers. The following guidelines provide a framework and limit on debt utilization: 1. The City will confine long-term borrowing to planned capital improvements. 2. The City will not use long-term debt for current operations. 74