Finance Committee Agenda and Packet 2021 06 14

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SUBJECT: DEBT POLICY & OUTSTANDING DEBT OBLIGATIONS DATE: JUNE 14, 2021 PAGE2OF5 o market conditions are unstable or are not conducive to marketing debt. • Factors which may favor pay -as -you -use (debt financing) financing include circumstances where: o current revenue or reserves are insufficient to pay project costs; o a project is immediately required; o 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; o market conditions present favorable interest rates and demand for municipal debt financing; or o the useful life of the project or asset is five years or greater. • The policy states that: o The City will not use long-term debt to finance any recurring purpose such as current operations. o Debt financing will be used only for capital improvement projects and large equipment purchases. o 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 of taxable property within the City, except such debt as may be incurred by supplying water. Calculation of Legal Debt Limit & Debt Margin 2020 Actual Value $ 6,009,316,067 Debt Limit = 3% of Actual Value 180,279,482 Outstanding Debt Applicable to Debt Limit at December 31, 2020 26,715,841 Debt Margin $ 153,563,641 • 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, CITY COUNCIL COMMUNICATION 7