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Financial Management Policies Page 15 9 <br />The city will maintain reserves in the Special Revenue Ffunds at levels sufficient to provide working <br />capital for current expenditure needs plus an amount that is estimated to be needed to meet legal <br />restrictions, requirements by external funding sources and/or pay for future capital projects. Future <br />capital projects must be identified and quantified in a written plan for the fund, which shall be <br />included in the city’s annual CIP. <br />E. Debt Service Funds <br />The city will maintain reserves in the Debt Service fFunds at levels sufficient to provide working <br />capital for current expenditure needs plus an amount that is estimated to be needed to meet legal <br />restrictions and requirements by external funding sources. <br />F. Capital Project Funds <br />The city will maintain reserves in the Capital Project fFunds at levels sufficient to provide working <br />capital for current expenditure needs plus an amount that is estimated to be needed to meet legal <br />restrictions, requirements by external funding sources and/or pay for future capital projects. Future <br />capital projects must be identified and quantified in a written finance plan for the fund, which shall <br />be included in the city’s annual CIP. <br />G. Monitoring and Reporting <br />The Finance Director Manager shall annually review with the City Council the status of the fund <br />balances with this policy and present it to the City Council in conjunction with the development of <br />the annual budget and/or other long-term financial planning documents such as the CIP. <br />The city will annually review the adequacy of the reserve balances. <br />The city will periodically review updates to rating agency methodologies and medians to make sure <br />that the reserve policy is consistent to ensure maintaining its existing rating or that it positions itself <br />for an upgrade. <br />Debt <br />The Ccity of Elk River has chosen, by policy, to guide its issuance of debt by following the guidelines listed <br />below. These practices were identified through examination of materials from state statutes, bond rating <br />agencies, and the Government Finance Officers Association (GFOA). This policy can be amended in the <br />future by the City Council, butCouncil but is consistent with general municipal practices at the time of its <br />adoption. <br />In accordance with the authorities cited in the background section, the Ccity of Elk River will use the <br />following policies in determining when and how to use debt for financing capital and equipment needs. <br />A. Debt Limits <br />1. Legal Limits: <br />a. Minnesota Statutes, Section 475 prescribes the statutory debt limit that outstanding principal <br />of debt cannot exceed 3% of taxable market value. This limitation applies only to debt that <br />is wholly tax-supported. The type of debt included is either general obligation debt of any <br />size bond issue (G.O.) or lLease rRevenue bBond iIssues that were over $1,000,000 at the <br />time of issuance. However, there are also several other debt types of debt that do not count <br />Page 89 of 294