Laserfiche WebLink
dedicated to debt service (principal and interest plus 5% for G.O. <br />bonds) to less than 20% of the total tax levy. Unlike rating <br />agencies, the City's definition of tax levy does not include special <br />assessments, tax abatements, or tax increments. <br />ii. Pure revenue bond debt for the City shall be used primarily as <br />lease revenue bonds, supported by taxes. The City may use <br />revenue bonds for enterprise, electric and water utility operations, <br />but only if debt service coverage achieves investment grade rating <br />from the City's rating agencies. <br />II. Use of Variable Rate Debt and Derivatives <br />a. Variable Rate Debt. The City shall use variable rate debt only if total <br />principal and interest of the debt constitutes less than 20% of the City's <br />total debt payments and only if circumstances dictate the need for a short <br />call date. <br />b. Derivatives. The City will not use derivative based debt. <br />III. Debt Structuring Practices <br />a. Term: State law limits general obligation debt to 30 years inmost <br />circumstances. The City shall not exceed 2~ years in term of debt. <br />b. Term for Equipment: The city has a ~~~~i1 of paying for all capital <br />equipment with a useful life of five years car less from cash reserves or <br />annual operating budgets. State law does allow cities to issue debt (known <br />as equipment certificates or capital notes) with a term often years or the <br />useful life of tlzc equipment if it is at least 10 years. The city would prefer, <br />within the bounds of levy limits, to fund capital equipment on a pay-as- <br />you-go basis. Capital equipment with a useful life greater than five years <br />may he financed .a it:h debt, but the bondterm should not exceed ten years. <br />c. The Cit~'~ collecti~ e debt goal shall be to amortize at least 50% of its <br />principal within 10 years. ~` <br />d. The City shall usuall _~~ issue debt with level principal and interest <br />payments. <br />e. The City shall have a call date (pre-payment date) of no longer than 10 <br />years on longer term debt and 6 to 8 years on shorter-term debt. <br />IV. ~ Debt Issuance Practices <br />a. Rating .-~ ~encies: The City utilizes Standard and Pooi•'s for all of its debt <br />issuance of more than $1 M or longer than 3 years in term. <br />b. Method of Sale: The City shall use competitive bidding for all of its debt <br />unless the debt is so specialized in its nature that it will not attract more <br />than 2 bids. <br />c. Refunding: <br />i. Advance refunding bonds shall not be utilized unless present value <br />savings of 4% to 5% of refunded principal is achieved and unless <br />the call date is within 4 years. The state law minimum is 3% of <br />refunded principal. Bonds shall not be advance refunded if there is <br />