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City Of Elk River Debt Policy <br />The City of Elk River has chosen, by policy, to guide its issuance of debt by following <br />the guidelines listed below. These practices were identified through examination of <br />materials from state statutes, bond rating agencies, and the Government Finance Officers <br />Association (GFOA). This policy can be amended in the future by the City Council, but <br />is consistent with general municipal practices at the time of its adoption. <br />Policy Adoption <br />In accordance with the authorities cited in the background section, the City of Elk River <br />will use the following policies in determining when and how to use debt for financing <br />capital and equipment needs. <br />Debt Limits <br />a. Legal Limits: <br />i. Minnesota Statutes, Section 475 prescribes the statutory debt limit <br />that outstanding principal of debt cannot exceed 3% of taxable <br />market value~This limitation applies only to debt that is wholly <br />tax-supported. The type of debt included is either general <br />obligation debt of any size bond issue (G.O.) or lease revenue bond <br />issues that were over S l .Ot1U,D00 at the time of issuance. However, <br />there are also several other types of debt that do not count against <br />the limit. CJ.O. tax incrcnlcllt, G.O. abatement G.O. special <br />assessment, G.O. utility revenue, and most HRA or EDA-issued <br />debt is considered to hay c a separate revenue source other than just <br />taxes and so are excluded iiom the legal debt limit calculation. <br />HRA and EDA public project revenue bonds or lease revenue <br />bonds with financing lease agreement with a city or county do <br />count against the statutory debt limit. <br />ii. Local ordinances do not limit the City's ability to issue debt. <br />b. Policy Limit.: <br />i. Uses of Debt: Debt will be used only for capital costs. The City <br />«~ill not utilize debt for cash flow borrowing, even though this is <br />allo~~~cd by state statutes. <br />ii. CII' and Financial Planning: The City's capital improvement plan <br />shall contain debt assumptions which match this policy and <br />requires a commitment to long range financial planning which <br />looks at multiple years of capital and debt needs. <br />iii. Tax Increment Bonds: The City shall use G.O. Tax Increment <br />Bonds only when the development merits special consideration. <br />c. Financial Limits: <br />i. Bond issues may require a special debt levy. The City hereby <br />adopts a policy to limit the amount of the city's property tax levy <br />