2007/01/17 Council Agenda Packet

i 1.6. Subject to federal and state law, interest may be capitalized from the date of issuance of debt obligations through the completion of construction for revenue producing projects. 1.7. The City shall not use debt to finance operating needs except in the case of an extreme financial emergency that is beyond its control or reasonable ability to forecast. 2. Limitations 2.1. The City shall seek to limit outstanding general obligation debt to a maximum of 75% of its statutory debt limit as set out in RCW 39.36.020. 2.2. The City shall maintain a utility rate structure that preserves its revenue debt coverage ratio at no less than 2.0. 2.3. Long-term debt will have a maximum maturity of the earlier of: 1)the estimated useful life of the projects financed; 2) thirty (30) years; or 3) the final maturity of debt obligations being refinanced, unless a longer term is recommended by the Budget and Finance Committee. 3. Bond Issues 3.1. Every project proposed for financing should be accompanied by a full analysis of associated future operating and maintenance costs. 3.2. Prior to submitting a financing project to City Council for approval, Finance Department staff will undertake an analysis that examines the following: 3.2.1. Debt Analysis • Debt capacity • Purpose for which debt is issued • Debt structure • Debt burden • Debt history and trends • Adequacy of debt and capital planning • Obsolescence of capital plant 3.2.2. Financial Analysis • Stability, diversity, and growth rates of revenue sources • Trends in assessed valuation and collections • Current budget trends • Historical revenue and expenditure trends • Fund balance status and trends in operating and debt funds • Cash flow projections 3.3. Debt service payments will be structured to match projected cash flows from targeted funding sources. 3.4. Premium or discount bonds may be issued based on capital market demand and project funding requirements. 9