FINANCIAL POLICIES
The City may seek to use credit enhancement (letters of credit, bond insurance, surety bonds, etc.) when it proves cost-effective or provides additional security for the payment of debt service.
Cost and Fees All costs and fees related to the issuance of debt will be paid out of debt proceeds. An amount will be determined at the time of the issuance to reimburse the City for costs incurred based on the time factors and complexity of the issue. Where applicable, the annual, recurring costs incurred by the City for administering the debt shall be charged to the appropriate account.
Method of Debt Offering The City shall evaluate the best method of offering for each proposed debt.
I. Competitive offering. In a competitive offering, bids for the purchase of the bonds are opened at a specified place and time and are awarded to the underwriter whose confirming bid represents the lowest true interest cost to the City. II. Negotiated sale. When a negotiated sale is deemed advantageous in consultation with the City’s financial advisor, the City shall negotiate the most competitive pricing on debt issues and underwriter discounts in order to ensure the best value to the City. Generally in a negotiated sale, the underwriter will be selected based on a formal bid process. The City, with the assistance of its financial advisor, shall evaluate the interested underwrit ers’ proposals on qualifications, and net fees. Criteria for selection will be determined on a case by case basis. No debt issue will be sold on a negotiated basis without an independent financial advisor. III. Private placement. In certain instances, the City may determine to utilize private placements or offerings to specially defined or otherwise limited investor types, but will only do so in the absence of other avenues for acquiring the required capital in a more cost effective manner or in instances where the purpose is determined to be of significant strategic importance to the City. Relationship to Capital Improvement Program and Operating Budget The decision to incur new indebtedness should be integrated with the City Council adopted annual operating budget and Capital Improvement Program (CIP) budget. Prior to issuance of debt, a reliable revenue source shall be identified to secure repayment of the debt and the annual debt service payments shall be included in the operating budget. The City shall integrate its debt issuances with the goals of its CIP by timing the issuance of debt to ensure that projects are available when needed in furtherance of the City's public purposes. Use of Debt Proceeds The City will consider the use of debt financing primarily for assets and capital projects only if the term of debt shall not exceed the asset(s) or proj ect’s useful life or will otherwise comply with Federal tax law requirements. An exception to this long-term driven focus is the issuance of short-term instruments, such as tax and revenue anticipation notes, which are to be used for reasonable cash management purposes. Bonded indebtedness should not be issued to finance normal operating expenses. General Fund debt will not be issued to support ongoing operational costs unless such debt issuance achieves net operating cost savings and such savings are verified by independent analysis.
FY 2023-25 Adopted Budget
469
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