CP075 (Debt Management)CITY OF JANESVILLE Policy No. 75
Page 1 of 4
CITY COUNCIL POLICY STATEMENT
Date Issued: 5/13/97
Revised: 8/23/11
4/13/15
2/10/20
General Subject: Administration Effective Date: 2/10/20
Special Subject: Debt Management
Responsible Dept./Div/: City Manager’s Office / Finance Office Cancellation Date
Supersedes
PURPOSE
To record and clarify the City Council's policy regarding the management and issuance of debt.
STATEMENT OF POLICY
In accordance with State Statutes, Chapter 67, the City is granted the authority to issue debt.
The following practices and procedures shall be followed by the City:
1. Conditions for Debt Issuance
The City shall limit the issuance of debt to capital outlays (and costs associated with the
capital outlay), including the acquisition or construction of capital facilities; infrastructure;
vehicles and equipment; and other capital assets.
2. Capital Improvement Plan (CIP)
The Administration prepares an updated five-year Capital Improvement Plan (CIP) on an
annual basis. The CIP will indicate the source of funding for all proposed capital projects
and/or assets.
The first year of the CIP will be included in the annual budget as the Major Capital
Projects budget. Those capital projects and/or assets which require financing through
the issuance of debt will be reconsidered when the City Council awards public works
contracts, commits to borrow funds in a future debt issuance, or undertakes the debt
issuance process.
3. General Obligation Debt
The City will issue General Obligation Debt for those capital projects benefiting the City
as a whole. Such debt would be secured by the full faith, credit, and taxing powers of the
City.
Every capital project proposed for financing through General Obligation Debt should be
accompanied by a full analysis of the future operating and maintenance costs associated
with the project, including the impact of the proposed project on the annual operating
budget.
Whenever possible, the City will finance capital projects by using self-supporting
Revenue or Special Assessment Bonds. Such Bonds assure the greatest degree of
equity because those who benefit from a project closely match those who pay for a
project.
CITY OF JANESVILLE Policy No. 75
Page 2 of 4
CITY COUNCIL POLICY STATEMENT
Date Issued: 5/13/97
Revised: 8/23/11
4/13/15
2/10/20
General Subject: Administration Effective Date: 2/10/20
Special Subject: Debt Management
Responsible Dept./Div/: City Manager’s Office / Finance Office Cancellation Date
Supersedes
4. General Obligation Debt Limit
Section 67.03(1) of the Wisconsin Statutes provides that the amount of General
Obligation indebtedness of a municipality shall not exceed five (5) percent of the
equalized assessed valuation of the taxable property in the municipality.
The City shall limit outstanding General Obligation Debt to less than two and a half (2.5)
percent of the equalized assessed value. The City Council, by super majority vote, may
increase the stated debt limit.
The City recognizes the importance of issuing debt prudently and should first determine
its long-term financial capability to repay.
5. Revenue Debt
To promote taxpayer equity, the City will consider the issuance of Revenue Debt for
capital projects providing benefits to specific users. Such debt would be secured by
revenues of the financed project.
However, if the projected revenues will not be sufficient to meet the corresponding
annual debt service payments or the credit rating of the proposed Revenue Debt
instrument would result in an adverse interest rate, the City would consider issuing
General Obligation Debt for such projects.
6. Governmental Fund Debt Service Limitations
Annual Governmental Fund Debt Service payments for General Obligation Debt,
exclusive of that funded by enterprise operations or debt approved exceeding the debt
limit described above, shall not exceed twenty (20) percent of annual budgeted
expenditures for Governmental Funds.
7. Review of Financing Alternatives
The City will seek all possible Federal and State reimbursements for mandated projects
and/or programs.
The City will encourage pay-as-you-go financing of capital improvement projects where
feasible. However, it will strive to maintain a balanced relationship between issuing debt
and pay-as-you-go financing to ensure property tax stabilization.
The City will seek to maintain a sufficient General Fund cash balance in order to prevent
the need for external cash flow borrowing.
CITY OF JANESVILLE Policy No. 75
Page 3 of 4
CITY COUNCIL POLICY STATEMENT
Date Issued: 5/13/97
Revised: 8/23/11
4/13/15
2/10/20
General Subject: Administration Effective Date: 2/10/20
Special Subject: Debt Management
Responsible Dept./Div/: City Manager’s Office / Finance Office Cancellation Date
Supersedes
8. Timing of Debt Issuance
Debt should be issued when capital projects are or will be for bid or construction starts
within 6 months. Capital projects funded with borrowed funds shall be completed within
24 months from of the issuance of debt. If funds are not expended within 18 months,
consideration should be given to reprogramming the funds for another approved capital
project.
9. Characteristics of Debt Issuance
The issuance of debt for funding annual general operating expenditures is prohibited.
The use of derivatives is prohibited.
The average maturities of long-term obligations shall only exceed 10 years if the
expected useful life of the capital project or asset financed justifies it.
The scheduled maturities of long-term obligations should not exceed the expected useful
life of the capital project or asset(s) financed.
10. Debt Issuance Process
The City will use competitive sales as the primary means of selling long-term bonds and
notes. Negotiated sales will be permitted only if there is evidence of volatile market
conditions, complex security features, or other unique factors.
Bonds - The issuance of bonds requires the City Council to follow various procedures
identified in State Statutes 67.05. These include separate City Council actions to
authorize and establish the bond details and are comprised of, but not limited to, setting
the final amount of bonds to be issued.
Promissory Notes - Although State Statutes 67.12 permits the City Council to combine
the authorization and details of a note issue into one City Council action, the City Council
will adopt the aforementioned issuance procedure required for bonds.
11. Professional Services
The City shall retain an independent Municipal Advisor for debt structuring, the rating
review process, marketing debt issuances, sale and post-sale services, and to assist in
issuing the City's Official Statement.
The City shall retain bond counsel for legal and procedural advice on all debt issuances,
which include determining the legal authority to issue the proposed debt and that it
CITY OF JANESVILLE Policy No. 75
Page 4 of 4
CITY COUNCIL POLICY STATEMENT
Date Issued: 5/13/97
Revised: 8/23/11
4/13/15
2/10/20
General Subject: Administration Effective Date: 2/10/20
Special Subject: Debt Management
Responsible Dept./Div/: City Manager’s Office / Finance Office Cancellation Date
Supersedes
qualifies for tax-exempt status.
12. Market Relations
The City will maintain effective communications with investors and credit rating agencies
concerning the City's financial condition by posting information to the Municipal
Securities Rulemaking Board (MSRB) Electronic Municipal Market Access (EMMA)
website.
Additionally, the City recognizes there are several key debt ratios used by investors and
credit rating analysts when reviewing the City's credit worthiness. Therefore, the City will
address the following ratios:
• Debt Per Capita.
• Debt as a Percentage of Equalized Property Value.
• Annual Debt Service as a percentage of annual Governmental Fund operating
expenditures.
The City will comply with the Security and Exchange Commission’s (SEC’s) reporting
requirements concerning "Continuing Disclosure Undertakings".
13. Credit Rating Goals
The City will seek to maintain and improve its credit rating to minimize borrowing costs
and to ensure access to markets.