(A) The city will prepare and update annually a five-year capital improvement program (CIP) to be approved by City Commission. The CIP will be developed with an analysis of the city’s infrastructure and other capital needs, and the financial impact of the debt service required to meet the recommended financing plan. The city will strive to fund at least 10% of the CIP projects’ aggregate cost on a cash basis.
(B) Each project proposed for financing through debt issuance will have an analysis performed for review of tax impact and future operating costs associated with the project and related debt issuance costs.
(C) All proceeds from city issued debt shall be appropriated by the Board of Commissioners.
(D) Proceeds from the issuance of debt shall be monitored with regard to federal arbitrage restrictions. Compliance with all applicable federal tax requirements shall be adhered to. The city will coordinate expected project funds payout so as to maximize investment earnings in light of federal arbitrage requirements.
(E) Long-term debt will be issued for capital improvements or to purchase equipment with a minimum expected life of five years. The city will not use long-term borrowing to finance annual operating needs. The term of any bond issue will not exceed the useful life of the capital project/facility or equipment for which the borrowing is intended.
(F) The city will attempt to avoid short-term debt to provide cash flow for annual operations. Debt issued for operating purposes will be limited to cases where there is reasonable certainty that a known source of revenue will be received in the current fiscal year sufficient to repay the debt or where there is a clear financial emergency.
(G) The city will comply with all applicable U.S. Internal Revenue Service (IRS) and Treasury arbitrage requirements for bonded indebtedness in order to preserve the tax-exempt status of such bonds.
(H) Bond issues will be planned to minimize the frequency of issuance, thereby ensuring the lowest possible costs of issuance. When determining the size of a bond issue, consideration shall be given to the need for construction, debt service and capitalized interest funds. Construction fund draw schedules shall be prepared and projection of earnings on unspent bond funds shall be made in conjunction with the city’s CIP planning.
(I) The decision to use bond proceeds to pay interest during construction for revenue-producing projects shall be made on a case by case basis and shall be based on an evaluation of the opportunity cost of funds and the availability of other sources of funds to pay interest costs.
(J) GO bonds will be amortized on a level principal basis to the extent practical, and revenue bonds will be amortized on a level debt service basis to the extent practical considering the forecasted available pledged revenues.
(K) The city shall not endorse the obligation of any entity. However, the city may enter into contracts with other regional or local public entities with respect to public purpose projects, which provide for certain payments when project or entity revenues prove insufficient to cover debt service on obligation issued to finance such project(s). The city will enter into these types of agreements only when there is long-term public and financial interest in the regional or local project(s). The obligation could be structured as moral obligation bonds, or with an underlying support agreement or other contractual arrangement. These obligations do not affect the legal debt limit of the city and all payments shall be subject to annual appropriation. However, if such payments were made, the obligations would be considered tax supported debt.
(L) The city’s preferred method of sale of bonds is via competitive sale to underwriters. If deemed advantageous, the city may sell bonds via a negotiated sale, private placement, or other method. Coordination will be made with the city’s financial advisor in arriving at a recommendation to issue bonds through a method other than competitive sale.
(1984 Code, § 40.03) (Ord. O-07-19, passed 3-26-2019)