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  <br /> ‐4‐ <br />of: i) the estimated useful life of the capital improvements being financed, ii) 3540 years <br />or, iii) in the event theyobligations are being issued to refinance outstanding debt <br />obligations, the final maturity of the debt obligations being refinanced unless a longer term <br />is approved by the City Council. <br /> <br />D. C. Debt Limitations - All long-term financings will comply with applicable statutory <br />regulations and City policy. Specifically, the City will maintain compliance at a more <br />conservative 3.75% of the City’s assessed valuation of real property, well under thewith <br />State law limiting applicable indebtedness to 15% of the City’s assessed valuation of real <br />property. Other debt limitations will be established for specific issuances to ensure all debt <br />covenants can be met and operations can be maintained. <br /> <br />E. Debt Structures – The City is not restricted in the structure of the debt that it issues, which <br />includes issuing variable rate debt. Should the City issue variable rate debt, the annual <br />debt service should be budgeted at not less than 1.5 times the prior year’s actual debt <br />service to ensure adequate funds are available should interest rates rise materially. <br /> <br />F. Capitalized Interest (Funded Interest) - Subject to federal and state law, interest may be <br />capitalized from date of issuance of debt obligations through the completion of <br />construction. Interest may also be capitalized consistent with prudent financial practice, <br />State law and federal tax regulations, for projects in which the revenue designated to pay <br />the debt service on the bonds will be collected at a future date,period not to exceed six <br />months one year from the estimated completion of construction and shall be offset by <br />earnings in the construction fund. <br /> <br />G. D. Bond Covenants and Laws - The City shall comply with all covenants and <br />requirements of applicable bond resolutions, indentures, trust agreements, and other <br />financing documents, as well as applicable state and federal laws authorizing and <br />governing the issuance and administration of debt obligations. <br /> <br />H. E. Method of Sale - Bonds will be sold on a competitive basis unless it is in the best <br />interest of the City to conduct a negotiated sale or private placement. Negotiated sales may <br />occur when selling bonds to refund existing debt, for land -secured debt, for variable interest <br />rate debt, for conduit debt, or for other appropriate reasons. Private placements may occur <br />when economically advantageous for conduit debt, for capital requirements too small to <br />bear the costs of a public debt issuance, for debt obligations with short amortization <br />schedules, or for other valid reasons. Staff shall evaluate the cost-effectiveness of <br />alternative financing methods before the City shall conductconducts a private placement of <br />debt. The City Council should will seek the advice of its professional managers, special <br />legal counsel , and/or qualified public finance consultantsmunicipal advisors in making the <br />determination of the appropriate method of sale and the use of credit ratings and/or credit <br />enhancements on a case by case basis.. <br /> <br />I. F. Enterprise Funds - It is the policy that each utility or enterprise should provide <br />adequate debt service coverage. as required in the bond contract/agreement. Projected <br />operating revenues in excess of operating expenses, less capital expenditures, <br />depreciation, and amortization in the operating fund, should be at least 1.20 times the <br />annual debt service costs. prior to the issuance of debt. <br /> <br />J. G. Refundings - The City shall review its outstanding debt for the purpose of determining <br />if the financial marketplace will afford the City the opportunity to refund an issue and lessen <br />6.1.C. - Page 13