2017/03/29 Council Agenda Packet

• 10 • 1.5. The City shall pursue a moderate capitalimprovement atialgram r�ap capital projects.ugh a reful balance of moderate debt issuance and pay-as-you-go 1.6. Subject to federal and state law, interest may be capitalized fortom the date of revenue producing ae • of debt obligations through the completion of construction projects. 1.7. The City shall not use debt to finance s bepondting needs except in the case its control or reasonable abilityfan to forecast. extreme financial emergency that y 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. Long-term debt will have a maximum maturity otr e earlier of 1)the estimateurity of debt d useful life of the projects financed;2)thirty(30)years; ) obligations being refinanced, unless a longer term is recommended by the Council Budget and Finance Committee. 2.3. When appropriate,the City may choose to issue general obligation securities that pay a rate of interest that varies according to a pre-determined formula or results from a periodic remarketing of the securities. However,the City will avoid over use of variable-rate debt due to the potential volatility of such instruments. 2.4. The City will not engage in derivative instruments,such as interest rate swaps, due to the risk associated with those financial products. • • 3. Utility Debt 3.1. The City shall maintain a utility rate structure that preserves its revenue debt coverage ratio at no less than 2.0. 3.2. The City shall maintain an operating cash reserve rveanal balancedebinsUtilityrvice Fund 401 f no less than 90 days of operating expenses, p 3.3. The City shall maintain a minimum capital c balancesh ' each Utility function.nstruction fund equal to the six-year average of renewal and replacement projects for This average shall be based on annual depreciation for each Utility function. 3.4. The City will emphasize level debt service structures and nageable basis for m instruments for Utility debt to maintain a predictable long- term capital and utility rate planning. 4. Bond Issues 4.1. Every project proposed for financing should be accompanied by a full analysis of associated future operating and maintenance costs. 4.2. Prior to submitting a financing project to City Council for approval, Finance Department staff will undertake an analysis that examines the following: 2 1 Page _ .