City Council Agenda and Packet 2015 09 21 BUDGET

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Factors which may favor pay -as- you -use financing include circumstances where: • current revenue or reserves are insufficient to pay project costs; • a project is immediately required; • revenue available for debt issues are considered sufficient and reliable so that long -term financing can be marketed with an appropriate credit rating, which can be maintained; • market conditions present favorable interest rates and demand for municipal debt financing; or • the useful life of the project or asset is five years or greater. The City will not use long -term debt to finance any recurring purpose such as current operations. Debt financing will be used only for capital improvement projects and large equipment purchases. Debt payments shall not extend beyond the estimated useful life of the project or the equipment being financed. 3.2 Limitations and Constraints on Debt Financing. Per Article 12, Section 12 -1, of the City of Louisville Charter, the total amount of the City's indebtedness shall not at any time exceed three (3) percent of the actual value, as determined by the County Assessor, of taxable property within the City, except such debt as may be incurred by supplying water. Per Article 12, Section 12 -3, of the City of Louisville Charter, any lease- purchase agreement, except for the acquisition of water rights, entered into by the City shall be approved by the City Council by non - emergency ordinance. Per the Taxpayer Bill of Rights (TABOR) amendment to the Colorado Constitution, all multiple -year debt shall first be approved by the City's taxpaying electorate unless it is issued for a TABOR - defined government enterprise, refinances bonded debt at a lower interest rate, or sufficient cash reserves are pledged irrevocably for future payments. The City's TABOR - defined enterprises include the Water Utility Fund, the Wastewater Utility Fund, the Storm Water Utility Fund, and the Golf Course Fund. Operating leases, lease - purchases, and certificates of participation (COP's) that are subject to annual appropriation are not considered multiple -year debt and are not subject to TABOR election requirements. 3.3 Structure of Debt Financing. City debt will be structured to achieve the lowest possible net interest cost given market conditions, the urgency of the capital project, and the nature and type of any security provided. City debt will be structured in ways that will minimize impacts on future financing flexibility. To the extent possible, repayment of debt shall be structured to rapidly recapture credit capacity for future use. City debt will be amortized for the shortest period consistent with a fair allocation of cost to current and future beneficiaries of the project being financed, and in keeping with other related provisions of this policy. The City shall normally issue general obligation bonds or revenue bonds with a maximum life of twenty years or less. The City will normally seek to amortize general obligation bonds and revenue bonds with level payments (principal plus interest) over the life of the issue. Pushing higher debt service costs to future years will only be considered under special circumstances. The City will also avoid repayment schedules that consist of low annual payments and a large payment of the balance due at the end of the term. There shall always be at least one interest payment in the first fiscal year after a bond sale. Principal repayment shall start no later than the second year after the bond issue. 23