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Cltyof Louisville FINANCIAL POLICIES COLORADO • SINCE 1878 Debt Policies Policy Section: 3 Adopted by Resolution No. Series L3 Effective Date: Purpose and Scope To enhance creditworthiness and engage in prudent financial management, the City of Louisville is committed to systematic capital planning and long -term financial planning. Maintaining the City's bond rating is an important objective and, to this end, the City is continually working to improve its financial policies, budgets, forecasts, and financial health. These policies establish criteria for the issuance of debt obligations by the City so that acceptable levels of indebtedness are maintained. The objectives of these policies are to ensure that the City obtains debt financing only when necessary, that the process for identifying the timing and amount of debt financing be as efficient as possible, that the most favorable interest rates and related issuance costs are obtained, and that future financial flexibility remains relatively unconstrained. Debt financing includes general obligation bonds, revenue bonds, notes payable to the Colorado Water Resources & Power Development Authority, leases, and any other City obligations permitted to be issued or incurred under Colorado law, the City's Municipal Code, and the City's Charter. This policy does not apply to the Urban Revitalization District, a legally separate entity, but a component unit of the City for financial reporting purposes. Policies 3.1 Use of Debt Financing. Although the City will normally finance projects on a cash basis (pay -as- you -go), the City may decide that the most equitable way of financing a project is through debt financing (pay -as- you -use). Factors which may favor pay -as- you -go financing include circumstances where: • the project can be adequately funded from available current revenue and reserves; • the project can be completed in an acceptable timeframe given the available resources; • additional debt levels could adversely affect the City's credit rating or repayment sources; or • market conditions are unstable or are not conducive to marketing debt.