Res 30-00RESOLUTION NO. 30-00
A 'RESOLUTION OF THE CITY COMMISSION OF THE CITY OF
DFJ.RAY BEACH, FLORIDA, ADOPTING DEBT MANAGEMENT
POLICIES TO BECOME EFFECTIVE UPON PASSAGE.
WHEREAS, it is the goal of the City of Delray Beach, Florida, to maintain a
long-term stable and positive financial condition; and
WHEREAS, well planned and prudent financial and debt management is
essential to the achievement of the City's goal.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION
OF THE CITY OF DEr.RAY BEACH, FLORIDA, AS FOIJ.OWS:
Section 1. That the City Commission of the City of De[ray Beach, Florida,
hereby adopts the Debt Management Policy attached hereto as Exhibit "A" and made a part
hereof.
Section 2. That thi.~ resolution shall become effective immediately upon passage.
PASSED AND ADOPTED in regular session on this the 4* day of April, 2000.
City Clerk ~ - - ?
MAYOR
EXHIBIT "A" to RESOLUTION NO. 30-00
CITY OF DELRAY BEACH, FLORIDA
DEBT MANAGEMENT POLICY
PURPOSE:
The following policies are enacted in an effort to standardize and rationalize the issuance
and management of debt by the City of Delray Beach. The primary objective is to
establish conditions for the use of debt and create procedures and policies that minimize
the City's debt service and issuance costs, retain the highest practical credit rating, and
maintain full and complete fin~cial disclosure and reporting.
RESPONSIBILITY:
The Director of Finance and the Treasurer shall essentially be responsible for compliance
of these guidelines and obtaining the necessary resources and assistance to assure their
achievement in an economical manner. Where independent professionals are involved or
charged with some aspect of the debt management, they shall also follow these
guidelines. Responsibilities shall consist of the following:
· Meet as necessary to consider the need for financing and assess progress on the
Capital Improvement Program.
· Discuss matters relative to the preparation of a financing; review changes in state and
federal legislation.
· Review, as needed, the resolutions authorizing the issuance of obligations to ensure
compliance, and to
Review services provided by the Financial Advisor, Bond Counsel, Paying Agent and
Registrar and other service providers to evaluate the extent and effectiveness of
services being provided.
CAPITAL PLANNING:
To enhance creditworthiness and prudent financial management, the City of Delray
Beach is committed to systematic capital planning, intergovernmental cooperation and
coordination, and long-term financing financial planning. Evidence of this commitment
to systematic capital planning will be demonstrated through adoption and periodic
adjustment of a Comprehensive Plan. The Comprehensive Plan shall contain a Capital
Improvement Element that shall serve as a guide to the development of a five-year
Capital Improvement Plan consisting of project lists and revenue sources for the current
year as well as the next five.
Page 1 of 6
The CIP shall be reviewed by the Capital Improvement Committee consisting of the City
Manager, Assistant City Manager, Director of Finance, Environmental Services Director,
and the City Engineer. The final draft of the Capital Improvement Plan shall be
submitted for review to the Planning and Zoning Board to ensure that projects are in
compliance with the Comprehensive Plan.
LIMITATIONS ON CITY INDEBTEDNESS:
The City Will attempt to maintain primarily a "pay as you go" financing program for
capital improvements. Debt financing, to include general obligation bonds, revenue
bonds, certificates of participation, lease/purchase agreements, and other obligations
permitted to be issued under Florida state law, shall only be used to purchase capital
assets and infrastructure that cannot be acquired from either current revenues or fund
balance.
· Long term debt will not be issued in order to finance current operating costs or
normal, routine maintenance.
· All long-term debt will be repaid in a period of time not to exceed the estimated
useful life of the asset being purchased or constructed.
The City shall not assume more tax-supported general purpose debt than it retires
each year without conducting an objective analysis as to the community's ability to
assume and support additional debt service payments.
· For the City to issue additional pari passu bonds, covenants as authorized in the
respective bond issues must be complied with.
· When appropriate, self-supporting revenue bonds shall be issued before general
obligation bonds.
· The City will strive to maintain a gross bonded general obligation principal debt at a
level not to exceed 2% of the assessed value of taxable property within the City.
· The City will strive to ensure that its net bonded debt per capita does not exceed
$700.
The City will strive to ensure that the combined total of its direct net bonded debt and
its share of overlapping debt issued within Palm Beach County does not exceed
$2,000 per capita.
The City will strive to ensure that annual general bonded debt service costs (principal
and interest) will not exceed 15% of General Fund Expenditures (excluding one-time
bond and extraordinary expenses).
Exhibit "A" to Res. No. 30-00 Page 2 of 6
OTHER FISCAL POLICIES:
· The City will adopt an annual budget for all funds as required by the State of Florida
in which expenditures do not exceed projected revenues.
The City will strive to develop and maintain a General Fund Undesignated Fund
Balance of 10-15% of annual General Fund revenues (excluding one-time bond and
extraordinary receipts).
The City will strive to maintain a water/sewer renewal and replacement program
annually consisting of 2.5% of the value of fixed assets of the Water and Sewer Fund
excluding land and work in progress.
METHOD OF SALE:
Competitive Sale. The City, as a matter of policy, shall seek to issue its debt obligations
in a competitive sale unless it is determined that such a sale method will not produce the
best results for the City. In such instances where the City in a competitive bidding for its
debt securities (whether general obligation or non-general obligation debt) deems the bids
received as unsatisfactory or does not receive bids, it may enter negotiation for sale of the
securities.
Neltotiated Sale. When determined appropriate, the City may elect to sell its debt
obligations through a negotiated sale. Such determination may be made on an issue by
issue basis, for a series of issues, or for part or all of a specific financing program.
Private Placement. When determined appropriate, the City may elect to sell its debt
obligations through a private placement or limited public offering.
SHORT TERM AND INTERIM FINANCING:
Lines and Letters of Credit. Where their use is judged by the Director of Finance to be
prudent and advantageous to the City, the City has the power to enter into agreements
with commercial banks or other financial entities for purposes of acquiring lines or letters
of credit that shall provide the City with access to credit under terms and conditions as
specified in such agreements. Before entering into any such agreements, takeout
financing for such lines or letters of credit must be planned for and determined to be
feasible. Lines and letter of credit may be issued in the form of either a competitive or
negotiated sale. The City Commission shall approve any agreements with financial
institutions for the acquisition of lines or letters of credit. Lines and letters of credit
entered into by the City shall be in support of projects contained in the approved Capital
Improvement Plan.
Bond Anticipation Notes. Where their use is judged by the Director of Finance to be
prudent and advantageous to the City, the City may choose to issue Tax and Revenue
Anticipation Notes as a source of interim construction financing. Before issuing such
Exhibit ~A~ to Res. No. 30-00 Page 3 of 6
notes, takeout financing for such notes must be planned for and determined to be feasible.
Bond Anticipation Notes may be sold in either a competitive or negotiated sale, subject to
authorization and approval by the City Commission.
Tax and Revenue Anticipation Notes. Where there use is judged by the Director of
Finance to be prudent and advantageous to the City, the City may choose to issue Tax
and Revenue Anticipation Notes to fund working cash_flow needs. Cash_flow projections
shall be made prior to the issuance of such notes. Tax and Revenue Anticipation Notes
may be sold in either a competitive or negotiated sale, subject to authorization and
approval by the City Commission.
DERIVATIVES:
The City will consider the use of derivative products on a case by case basis and
consistent with state statute and financial prudence.
REFUNDING OF CITY INDEBTEDNESS:
Debt Service Savings - Advance Refunding. The City may issue advance refunding
bonds (as defined for federal tax law purposes) when advantageous, legally permissible,
prudent, with net present savings, expressed as a percentage of the par amount of the
refunding bonds, equal to or exceeding 5 percent. Exceptions to this requirement shall be
made only upon the approval of the City Commission upon recommendation of the
Director of Finance.
Debt Service Savings - Current Refundine. The City may issue current refunding
bonds (as defined for federal tax purposes) when advantageous, legally permissible,
prudent, with net present value savings equal to or exceeding 5%. Exceptions to this
requirement shall be made only upon the approval of the City Commission upon
recommendation of the Director of Finance.
Restructuring of Debt. The City may choose to refund outstanding indebtedness when
existing bond covenants or other financial structures impinge on prudent and sound
financial management. Savings requixements for current or advance refundings
undertaken to restructure debt may be waived by the City Commission upon
recommendation of the Director of Finance.
Open Market Purchase of City Securities. The City may choose to defease its
outstanding indebtedness through purchases of its securities on the open market when
market conditions make such an option financially feasible. The Director of Finance will
be responsible for developing procedures for executing open market purchases and the
savings objectives to be achieved by undertaking such actions.
Exhibit "A" to Res. No. 30-00 Page 4 of 6
CREDIT ENHANCEMENT:
The City may seek to use credit enhancement (letters of credit, bond insurance, surety
bonds, etc.) when such credit enhancement proves to be cost effective. Selection of
credit enhancement shall be subject to a competitive bid process. Credit enhancement
may be used to improve or establish a credit rating on debt obligation even when such
credit enhancement is not cost effective if the use of such credit enhancement meets the
City's debt financing goals and objectives.
CONDUIT FINANCINGS:
Conduit financings are securities issued by a government agency to finance a project of a
third party, such as a non-profit organization or other private entity. The City may
sponsor conduit financings for those activities (e.g., economic development, housing) that
have a general public purpose and are consistent with the City's overall service and
policy objectives. Such conduit financings will not in any way pledge the City's faith
and credit.
MANAGEMENT PRACTICES:
The City has instituted sound management practices and will continue to follow practices
that will reflect positively on it in the rating process. Among these are the City
development of and adherence to long-term financial and capital improvement plans,
management of expense growth in line with revenues and maintenance of an adequate
level of reserves.
REBATE REPORTING AND COVENANT COMPLIANCE:
The Director of Finance shall essentially be responsible for maintaining a system of
record keeping to meet the arbitrage rebate compliance requirements of the tax code. This
effort includes tracking investment earnings on bond proceeds, obtaining assistance in
calculating rebate payments in compliance with tax law, and remitting any rebatable
earnings to the federal government in a timely manner in order to preserve the tax-exempt
status of the City's outstanding debt issues. Additionally, general financial reporting and
certification requirements embodied in bond covenants are monitored to ensure that all
covenants are complied with.
REPORTING/CONTINUING DISCLOSURE:
The City will comply with the standards of the Government Finance Officers Association
for financial reporting and budget presentation and the disclosure requirements of the
Securities and Exchange Commission. The City is committed to continuing disclosure of
financial and pertinent credit information relevant to the City's outstanding debt and will
maintain compliance with disclosure standards promulgated by state and national
regulatory bodies.
Exhibit mAm tO Res. No. 30-00 Page 5 of 6
CREDIT RATINGS:
The City of Delray Beach seeks to maintain the highest possible credit ratings for all
categories of short and long-term debt that can be achieved without compromising
delivery of basic City services and achievement of adopted City policy objectives. Full
disclosure of operations and open lines of communication shall be made to rating
agencies. City staff, with the assistance of financial advisors, shall prepare the necessary
materials and presentation to the rating agencies. Credit ratings will be sought from
Moody's, Staiadard & Poor's, and Fitch as recommended by the City's financial advisor.
Exhibit mAm tO ~es. No. 30-00 Page 6 of 6
MEMORANDUM
To:
From:
Subject:
Date:
City Commission
David T. Harden, City Manager~/
Debt Management Policies
March 22, 2000
The attached Resolution No. 30-00 formally adopts debt management policies for the
City of Delray Beach. These policies will help ensure the maintenance of sound fiscal
practices. The policies set forth guidelines for the purpose of standardizing and
rationalizing the issuance and management of debt. The primary objective is to establish
conditions for the use of debt and to create policies that minimize the City's debt service
and issuance costs, retain the highest practical credit rating, and maintain full and
complete financial disclosure and reporting.
Staff recommends City Commission approval. I concur with their recommendation.
Request to be placed on:
x Regular Agenda
When: 4/4/00
Agenda Item No.:
AGENDA REQUEST
Date: 3/22/00
Special Agenda
Workshop Agenda
Description of agenda item (who., what, where, how much):
Approve Resolution # 30-00 formally adopting debt m~naf~m~nt pnl-;r-;~=~
ensure maintenance of sound f~nanai~l premieres,
ORDINANCE/ RESOLUTION REQUIRED: YES/NO
Recommendation: Recommend Resolution # 30-0~.
Draft Attached: YES/NO
Department Head Signature:
Determination of ~
Consistency Comprehensive
City Attorney Review/ Recommendation (if applicable):
Budget Director Review (required on all items involving expenditure
of funds):
Funding available: YES/ NO n/a
Funding alternatives: n/a
Account No. & Description:
Account Balance:
(if applicable)
City Manager Review:
Approved for agenda:
Hold Until:
Agenda Coordinator Review:
(~/ NO~
Received:
Action: Approved/Disapproved