6.5. SR 10-03-2011 - Laserfiche WebLink

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Ji Elk REQUEST FOR ACTION .`~.. River To Item Number City Council 6.5. Agenda Section Meeting Date Prepared by Administration October 3, 2011 Tim Simon, Finance Director Item Description Reviewed by ~~ Update to the City of Elk River Debt Policy Robert Thistle, Interim City Administrator Reviewed by Action Requested City Council is asked to consider the updated City of Elk River Debt Policy. Background/Discussion One of the goals for the finance department is to review and update all financial policies. During the last bond rating call with Standard and Poor's, they made comment that our policy could be more comprehensive (in regards to policy limits, financial limits, variable rate debt, and derivatives) than it is currently written. In anticipation of the upcoming public works expansion/remodel project, I have been reviewing samples from the Government Finance Officers Association (GFOA) and other cities, in addition to discussions with Ehlers. I have attached a draft copy of the new policy for the Council to consider. In regards to the policy and financial limits, we are currently below the guidelines established. I will continue to monitor these and make recommendations to the City Council if we start to get close to the limits. Ehlers has also reviewed our updated debt policy and likes the way it is more detailed and addresses the items from the last rating call. The current polity is printed below for reference: Debt It is not in the best interests of the City to finance capital investment on a cash only basis. Saving the money needed to undertake large capital projects may prevent the City from providing needed improvements in a timely manner and/or create unacceptable demands on revenues. A cash-only approach places the entire financial burden on residents that precede the project. Persons that follow the improvement and receive its benefit do not pay. The City will maintain operating reserves at sufficient levels to prevent the need for short-term borrowing in anticipation of the receipt of revenues, grants, or other funds. Temporary financing will be used only when, in the judgment of the City Council, short-term debt serves the best interests of the City. Factors that favor the use of temporary debt include potential for large variations in project expenses, potential for future lower interest rates, ability to reduce long-term debt, and the ability to better manage taxes and other revenues. All bond issues and other obligations shall be repaid before the end of the useful life of the financed asset. N:\Public Bodies\City Council\Council RCA\Agenda Packet\10.03-2011 \updateddebtpoliry[1].docx