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Elk River <br /> Municipal Utilities COMMISSION POLICY <br /> Section: Category: <br /> Governance Delegation to Management Policies <br /> Policy Reference: Policy Title: <br /> G.4i3 Debt Issuance and Payment <br /> PURPOSE: <br /> With this policy,the Commission sets forth its expectations for the General Manager concerning <br /> Debt Issuance and Payment. This policy is subsidiary to the Financial Condition and <br /> Transactions Policy, and relates to Financial Planning and Budgeting Policy, and Cost Allocation <br /> and Recovery Policy. <br /> POLICY: <br /> The General Manager,when preparing ERMU's Financial Plan and Business Plan/Budget for <br /> Commission approval, shall consider and present the benefits and costs of borrowing funds in <br /> relation to the benefits and costs of using income and revenues to secure adequate funding for <br /> infrastructure and operations. Factors to be considered and communicated to the Commission <br /> include,but are not limited to: revenue requirements,reserve fund balances,the cost of borrowing, <br /> the competitiveness of ERMU's rates and charges for services,the desired relationship between <br /> those who will receive benefit from the borrowed funds and those who will pay for retirement of the <br /> debt, and ERMU's overall financial condition and bond rating. Factors contributing to a favorable <br /> financial condition and bond rating include, but are not limited to: a consistent record of compliance <br /> with bond covenants, achievement of key financial ratios, determination of revenue requirements, <br /> establishment of adequate rates and charges for services, and compliance with generally accepted <br /> accounting and financial reporting practices. <br /> In addition,the General Manager shall: <br /> 1. Establish, as a part of any recommendation for the issuance of revenue bonds, adequate <br /> provisions for setting aside and pledging the income and revenue of the utility enterprise for <br /> which the bonds are issued into a separate and special fund to be used in the payment of the <br /> principal and interest on the revenue bonds. <br /> 2. Ensure that the income and revenues pledged for the bonds are allocated and deposited in <br /> conformity with the provisions of the revenue bond documents. <br /> Page 1 of 2 <br /> F2 <br />