(A) One of the keys to sound financial management is the development of a debt policy. This need is recognized by bond rating agencies and development of a debt policy is a recommended practice by the Government Finance Officers Association. A debt policy sets forth the parameters for issuing debt and managing outstanding debt and provides guidance to decision makers regarding the timing and purposes for which debt may be issued, types and amounts of permissible debt, method of sale that may be used and structural features that may be incorporated. The debt policy should recognize a binding commitment to full and timely repayment of all debt as an intrinsic requirement for entry into the capital markets. The debt policy ensures that the city maintains a sound debt position and that its credit quality is protected. Adherence to a debt management policy signals to the rating agencies and the capital markets that the city is well-managed and should be able to meet its obligations in a timely manner. Adherence to this policy will help assure the city’s credit ratings.
(B) The city recognizes that a fiscally prudent debt policy is required to:
(1) Maintain the city’s sound financial position;
(2) Ensure the city has the flexibility to respond to changes in future service priorities, revenue levels and operating expenses;
(3) Protect the city’s creditworthiness:
(4) Ensure that all debt is structured to protect both current and future taxpayers, ratepayers and citizens of the city; and
(5) Ensure that the city’s debt is consistent with the city’s planning goals, objectives, capital improvement program and/or budget.
(C) Advantages of a debt policy are as follows:
(1) Enhances the quality of decisions by imposing order and discipline, and promoting consistency and continuity in decision making;
(2) Provides rationality in the decision- making process;
(3) Identifies objectives for staff to implement;
(4) Demonstrates a commitment to long- term financial planning objectives; and
(5) Is regarded positively by the rating agencies in reviewing credit quality.
(1984 Code, § 40.01) (Ord. O-07-19, passed 3-26-2019)