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II: City,/ <br />INN Louisville <br />COLORADO • SINCE 1878 <br />FINANCE COMMITTEE <br />COMMUNICATION <br />SUBJECT: <br />NEW MEMBER ORIENTATION — DEBT POLICIES & <br />OUTSTANDING DEBT OBLIGATIONS <br />DATE: JUNE 14, 2021 <br />PRESENTED BY: KEVIN WATSON, FINANCE DIRECTOR <br />BACKGROUND <br />At the December 2020 Finance Committee Meeting, staff presented a new -member <br />orientation on the City's Financial Policies. Staff briefly reviewed each of the eight policy <br />sections. Attached to is Policy Section 3 — Debt Policies for the Committee's reference. <br />The Committee has requested a new -member orientation session focusing specifically <br />on debt and outstanding debt obligations. Staff has chosen to use the City's Debt Policies <br />as a guide for discussing some general debt concepts. This communication and <br />attachments discuss the City's Debt Policies in detail and summarize the City's <br />outstanding debt issues. <br />DEBT POLICIES — FINANCIAL POLICY SECTION 3 <br />The objectives of the Debt Policies are to ensure that the City pursues debt financing only <br />when necessary, that the process for identifying the timing and amount of debt financing <br />be as efficient as possible, that the most favorable interest rates and related issuance <br />costs are obtained, that acceptable levels of indebtedness are maintained, and that future <br />financial flexibility remains relatively unconstrained. <br />Note: The City's Debt Policies do not apply to the Urban Revitalization District, <br />metropolitan districts within the City's boundaries, or to "pooled financing" arrangements <br />with other entities. <br />Staff will be available at the meeting to discuss each policy section and highlight some <br />specific concepts and requirements. Below is a summary of the anticipated presentation. <br />3.1 Use of Debt Financing. <br />• Factors which may favor pay-as-you-go (cash financing) financing include <br />circumstances where: <br />o the project can be adequately funded from available current revenue and <br />reserves; <br />o the project can be completed in an acceptable timeframe given the available <br />resources; <br />o additional debt levels could adversely affect the City's credit rating or <br />repayment sources; or <br />FINANCE COMMITTEE COMMUNICATION <br />6 <br />