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Financial Management Policies Page 15 11 <br />4. The city shall usually issue debt with level principal and interest payments; or to align with a <br />specific revenue stream. <br />5. The city shall have a call date (pre-payment date) of no longer than 10 years on longer- term <br />debt and 6 to 8 years on shorter-term debt. <br />D. Debt Issuance Practices <br />1. Rating Agencies: The city utilizes a rating agency for all of its debt issuance of more than $1M <br />or longer than three3 years in term. <br />2. Method of Sale: The city shall use competitive bidding for all of its debt unless the debt is so <br />specialized in its nature that it will not attract more than 2two bids. <br />3. Refunding: <br />a. Advance refunding bonds shall not be utilized unless present value savings of 4% to 5% of <br />refunded principal is achieved and unless the call date is within four4 years. The sThe state <br />law minimum is 3% of refunded principal. Bonds shall not be advance refunded if there is a <br />reasonable chance that revenues will be sufficient to pre-pay the debt at the call date. <br />b. Current refunding bonds shall be utilized when present value savings of 3% of refunded <br />principal is achieved or in concert with other bond issues to save costs of issuance. <br />c. Special Aassessment or rRevenue debt will not be refunded unless the Ffinance Director <br />manager determines that special assessments or other sufficient revenues will not be <br />collected soon enough to pay off the debt fully at that call date. <br />4. Professional Services. The city shall use an outside bond attorney and an independent financial <br />advisor to structure the sale. <br />E. Debt Management Practices <br />1. Investment of bond proceeds. The city shall invest bond proceeds in a capital project fund. <br />2. Disclosure: The city shall comply with SEC rule 15(c)2(12) on primary and continuing <br />disclosure. Continuing disclosure reports shall be filed no later than 180 days after receipt of <br />the city’s annual financial report. <br />3. Arbitrage Rebate: The city shall complete an arbitrage rebate report for each issue no less than <br />every five years after its date of issuance. <br />4. Communication: The city will maintain frequent and regular communications with bond rating <br />agencies about its financial condition and will follow a policy of full disclosure in every financial <br />report and bond prospectus. The city will comply with Securities Exchange Commission (SEC) <br />reporting requirements. <br />F. Post issuance debt compliance policy <br />The City Council (the “Council”) of the City of Elk River, Minnesota (the “City”) has chosen, by <br />policy, to take steps to help city shall ensure that all obligations will be are in compliance with all <br />applicable state and federal regulations. This policy may be amended, as necessary, in the future. <br />Background <br />The Internal Revenue Service (IRS) is responsible for enforcing compliance with the Internal <br />Revenue Code (the “Code”) and related regulations governing certain obligations (for example: tax- <br />exempt obligations, Build America Bonds, Recovery Zone Development Bonds and various “Tax <br />Credit” Bonds). The IRS expects issuers and beneficiaries of these obligations to adopt and <br />implement a post-issuance debt compliance policy and procedures to safeguard against post- <br />issuance violations. <br />Page 91 of 294