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<br />______________________________________________________________________________ <br /> <br />Page 1 of 2 <br /> <br /> <br /> <br /> <br />COMMISSION POLICY <br /> <br />Section: Category: <br />Governance Delegation to Management Policies <br />Policy Reference: Policy Title: <br />G.4i3 Debt Issuance and Payment <br /> <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 />156