Policy No..: MDTA 7009 Effective: August 16, 2005
Debt Management
I. Purpose and Uses of Debt a. Policy Statement 1. In accordance with Title 4 of the Transportation Article of the Annotated Code of Maryland, MDTA may issue revenue bonds, notes, or other evidences of obligation to finance the cost of: i. Transportation facilities projects as defined in said Article; ii. A vehicle parking facility located in a priority funding area as defined in §5-7B-02 of the State Finance and Procurement Article; iii. Any other project for transportation facilities that the MDTA Board authorizes to be acquired or constructed; and iv. Any additions, improvements, or enlargements to any of these projects, whenever authorized by the MDTA Board. b. Policy Statement 2. Debt will be used only to finance capital projects (including land) and capital equipment that are reasonably necessary for governmental purposes. c. Policy Statement 3 . The MDTA will finance its projects with a prudent issuance of debt through the sale of revenue bonds, notes, or other evidences of indebtedness within the constraints of the MDTA Financial Forecast Policy. d. Policy Statement 4. Capital financing proposals received by MDTA that involve a pledge or extension of credit through sale of securities, loans or leases, shall be referred to the Division of Finance for review. e. Policy Statement 5. The MDTA Consolidated Transportation Program (CTP) will be funded through a combination of cash reserves, revenues and appropriate levels of debt in accordance with affordability guidelines. i. To provide adequate liquidity, MDTA will maintain unrestricted cash balances at the end of each fiscal year equal to the next fiscal year’s Operating Budget, excluding Police Reimbursables 1 and Extraordinary One-Time Expenses 2 . ii. For financial forecast purposes, unrestricted cash will be modeled to equal the annual Operating Budget, less Police Reimbursables and Extraordinary One-Time Expenses. The MDTA Board effectively approves the increase in the minimum unrestricted cash target annually with the adoption of the Financial Forecast and Operating Budget. iii. Credit rating agencies gauge a Toll Sector issuer’s ability to manage unforeseen revenue disruptions or higher expenses as a function of unrestricted cash. The Days Cash on Hand 3 1 Police Reimbursables – MDTA Police provide law enforcement services on a reimbursable basis to the Maryland Aviation Administration and the Maryland Port Administration. 2 Extraordinary One-Time Expenses – Operating Expenses not expected to occur annually. 3 Days Cash on Hand – Unrestricted Cash Reserves divided by Average Daily Operating Expenses.
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