AgdaPkt 2007-03-26 - Laserfiche WebLink

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3/13/07 IV. General Debt Guidelines The following guidelines shall govern the issuance and administration of debt obligations: A. Purposes of Issuance -Expenditure of bond proceeds should be limited to major, non-recurring expenditures/expenses including but not limited to the financing of costs related to capital project planning and design, land acquisition, real property and equipment acquisition, the construction or renovation of buildings and permanent structures and the equipping thereof, financing costs related to the issuance of securities, capitalized interest, necessary or financially prudent debt service reserves, or other costs as permitted by law. Refunding bond issues designed to restructure currently outstanding debt are an acceptable use of bond proceeds. B. Maximum Maturity -All debt ob{igatians shall have a maximum maturity of the earlier of: i} the estimated useful life of the capital improvements being financed, ii} 35 years or, iii) in the event they are being issued to refinance outstanding debt obligations, the final maturity of the debt obligations being refinanced unless a longer term is approved by the City Council. C. Capitalized Interest (Funded Interest) -Subject to federal and state law, interest may be capitalized from date of issuance of debt obligations through the completion of construction. Interest may also be capitalized for projects in which the revenue designa#ed to pay the debt service on the bonds will be collected at a future date, not to exceed six months from the estimated completion of construction and offset by earnings in the construction fund. D. Bond Covenants and Laws -The City shall comply with all covenants and requirements of applicable bond resolutions, indentures, trust agreements and other financing documents, as wall as applicable state and federal laws authorizing and governing the issuance and administration of debt obligations. E. Method of Sale -Bonds will be sold on a competitive basis unless it is in the best interest of the City to conduct a negotiated sale or private placement. Negotiated sales may occur when selling bonds to refund existing debt, for land secured debt, for variable interest rate debt, for conduit debt or for other appropriate reasons. Private placements may occur for conduit debt, for capital requirements too small to bear the costs of a public debt issuance, or for other valid reasons. Staff shall evaluate the cost-effectiveness of alternative financing methods before the City shall conduct a private placement of debt. The City Council should seek the advice of its professional managers, special legs! counsel ar qualified public finance consultants in making the determination of the appropriate method of sale. 6.1 B Page 4 F. Enterprise Funds - It is the policy that each utility or enterprise should provide adequate debt service coverage. Projected operating revenues in excess of operating expenses, less capital expenditures, depreciation, and amortization