Finance Committee Agenda and Packet 2021 06 14

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SUBJECT: DEBT POLICY & OUTSTANDING DEBT OBLIGATIONS DATE: JUNE 14, 2021 PAGE3OF5 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 Consolidated 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: o 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. o To minimize impacts on future financing flexibility. o 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 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 and principal repayment shall start no later than the second year after the bond issue. • Call provisions for bond issues shall be made as short as possible, consistent with the lowest interest cost to the City. Unless specific compelling reasons exist, all bonds shall be callable only at par. • Credit enhancements may be used if the costs of such enhancements are lower than the reduction in net debt service payments or if they provide other significant financial benefits to the City. CITY COUNCIL COMMUNICATION 8