Agenda - Council Work Session - 10/11/2016

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City of Ramsey Debt Management Policy The following debt management policy should be used to provide the general framework for planning and reviewing debt proposals. City Council recognizes there are no absolute rules or easy formulas that can substitute a thorough review of all information affecting the City's debt position. Debt decisions should be the result of deliberative consideration of all factors involved. 1. General Debt Policy 1.01 The City shall seek to maintain and improve its current bond rating so borrowing costs are minimized and access to credit is preserved. It is imperative that the City demonstrate to rating agencies, investment bankers, creditors and taxpayers that City officials are following a prescribed financial plan. The City will follow a policy of full disclosure by communicating with bond rating agencies to inform them of the City's financial condition. 1.02 Every bond issue proposal will be accompanied by an analysis of the sources and uses of funds for the project to be financed with the bond proceeds and sources of funding for the repayment of the bonds. The analysis will reflect how the new bond will fit with the City's existing debt structure. 1.03 The City will confine long-term borrowing to capital improvements or projects that cannot be funded from operating revenues and/or a reasonable amount of other resources. 1.04 Bonds will be sold on a competitive basis unless it is in the best interest of the City to conduct a negotiated sale. Competitive sales will be the preferred method. Negotiated sales may occur when selling bonds for a defeasance of existing debt, for current or advanced refunding of debt or for other appropriate reasons. 2. Taxpayer Equity 2.01 Ramseys' property taxpayers and citizens who benefit from projects financed by bonds should be the source of the related debt service funding. This principle of taxpayer equity should be a primary consideration in determining the type of projects selected for financing through bonds. Furthermore, the principle of taxpayer equity shall be applied for setting rates in determining net revenues for bond coverage ratios. 3. Uses 3.01 Acceptable uses of bond proceeds can be viewed as items which may be capitalized, according to financial reporting standards and practices. Non -capital furnishings and supplies will not be financed from bond proceeds. 3.02 Bond proceeds should be limited to financing the costs of project planning and design, land acquisition, buildings and other permanent structures, attached fixtures, equipment, and/or other costs as permitted by law. Utility revenue bond proceeds may be used to establish a debt service reserve as allowed by State law. Refunding bond issues designed to restructure currently outstanding debt are an acceptable use of bond proceeds.