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HomeMy WebLinkAboutExecutive Order SF-2024-09 - Rescind JB-2016-02, Debt Management Policy CITY OF CARMEL, INDIANA EXECUTIVE ORDER SF-2024-09 WHEREAS,the City of Carmel operates in a responsible fiscal management manner; and WHEREAS, consistent with responsible fiscal management comes a requirement to have in place a sound and complete Debt Management Policy for the City of Carmel, Indiana. NOW,THEREFORE,by virtue of the power and authority granted to me as Mayor of the City of Carmel, Indiana, I, Sue Finkam, do hereby rescind the previously signed Executive Order JB-2016-02 and declare and order that effective on and after March, 2024, the attached Debt Management Policy for the City of Carmel, Indiana, to be in full effect. SO ORDERED THIS DAY OF MARCH, 2024. Sue am, Mayor ATTEST: (1_1, Jim Crider, Chief of Staff Debt Management Policy for the City of Carmel, Indiana This Debt Management Policy (the "Debt Policy") is a written guideline ordered by the Mayor (hereinafter"Executive") of the City of Carmel, Indiana ("City") to guide the City administration in issuance and management of current and future debt. The purpose of this Debt Policy is to improve the quality of management and influence legislative decisions consistent with the Debt Policy's goals and the City's commitment to excellent infrastructure and capital planning. It is also the intent that this Debt Policy will signal to credit rating agencies, investors and the capital markets that the City is well managed and will always be prepared to meet its obligations in a timely manner. This debt policy expresses the city Executive's guidelines for approving future debt and managing the debt of the City. In managing its debt (defined herein as tax-exempt or taxable bonds, other notes, capital leases, inter fund loans or notes and loan agreements, it is the City's goal to: 1. Achieve the lowest cost of capital within acceptable risk parameters; 2. Maintain or improve credit ratings; 3. Assure reasonable cost access to capital markets; 4. Preserve financial and management flexibility; 5. Manage interest rate risk exposure within acceptable risk parameters. General Policies Long-term borrowing will not be used to finance current operating expenditures, as required by Indiana law. The City shall observe state constitutional and statutory restrictions applicable to any debt the City issues. The City shall not be subject to any additional local debt limitation, but as a policy goal, the City will maintain its debt supported by valorem property taxes and local income taxes, including bonds and leases, at a level not to exceed fifteen percent (15%) of the net assessed valuation of taxable property of the City excluding overlapping debt and revenue debt, unless approved by the Executive with guidance from the City's Chief Financial Officer/Controller ("Fiscal Officer"). Capital lease obligations, or other debt instruments may be used as a medium-term method of borrowing for the financing of vehicles, computers, other specialized types of equipment or other capital improvements. Procedures for Issuance of Debt The City will only issue debt by utilizing the statutory authorities provided in the Indiana Code ("IC") and the Internal Revenue Code ("IRC"). The City will also adhere to any lawfully promulgated rules and regulations of the State of Indiana and the IRC. All debt must be formally authorized by the Common Council and may need other approvals of other bodies, all as laid out under applicable law. Transparency All meetings of a public entity in which a decision to issue debt is made are subject to the provisions of Indiana's Open Door Law. All ordinances and resolutions,when in final form,are public documents available to any member of the public under Indiana law. Credit Quality and Credit Enhancement The City's debt management activities will be conducted in order to maintain or receive the highest possible credit ratings possible. The City's Fiscal Officer and Executive, in conjunction with any professionals (including but not limited to financial advisors, underwriters, bond counsel, etc., individual or collectively referred to hereinafter as"Financial Professionals")the City may choose to engage, will be responsible for maintaining relationships and communicating with one or more rating agencies. The City will consider the use of credit enhancements on a case-by-case basis, evaluating the economic benefit versus cost for each case. Only when clearly demonstrable savings can be shown will an enhancement, such as insurance, when available be considered. Affordability The City will consider the ability to repay debt as it relates to the total budget resources,the wealth and income and of the community and its property tax base and other revenues available to service the debt. The City may consider debt ratios and other benchmarks compared and contrasted to its peers when analyzing its debt and proposed debt, including materials by the nationally recognized credit rating agencies. Debt Structure The City will establish all terms and conditions relating to the issuance of debt and will invest all debt proceeds pursuant to the terms of its investment policy and in compliance with all applicable city, state and federal law. All capital improvements financed through the issuance of debt will be financed for a period not to exceed the useful economic life of the improvements and in consideration of the ability of the City to absorb such additional debt service expense. Other considerations when determining the term of debt shall include but not be limited to conditions in the capital markets, the availability of adequate revenue streams to finance the debt and in accordance with all applicable law. From time to time, certain financings may require the use of capitalized interest from the date of issuance until the City is able to realize beneficial use and/or occupancy of the financed project. In such cases, interest may be capitalized through a period permitted by federal law and the IC if it is determined by Common Council and approved by the Executive. In general, the City's debt should include a call feature no later than ten (10) years from the date of delivery of the bonds. The City should avoid the sale of long-term debt which carries longer redemption features unless a careful evaluation has been conducted by and recommended by Financial Professionals. The City may also refund debt when it is in its financial interest to do so. Such refunding will be limited to restructuring to meet unanticipated revenue expectations, achieve cost savings, release reserve funds, and remove unduly restrictive bond covenants or any other reason approved by the Common Council and the Executive after consultation with Financial Professionals. The City will take all reasonable and necessary steps to optimize escrows and to attempt to avoid negative arbitrage in its refundings. Any positive arbitrage will be rebated as required according to Federal guidelines. Methods of Issuance The Executive and Fiscal Officer shall consult with the Financial Professionals when determining and recommending the best method to sell the debt. The Executive and Fiscal Officer shall consider competitive sales,negotiated sales and private placement,as permitted by applicable law. Professionals As needed,the City Executive and/or Fiscal Officer may select Financial Professionals to assist in its debt issuance and administration processes. Selection of the Financial Professionals will be based on, but not limited to,the following criteria: 1. Relevant experience with municipal government issuers and public sector; 2. Indication that the firm has a broadly based background and is capable of balancing the City's overall needs for continuity and innovation in capital planning and debt financing; 3. The firm's professional reputation; 4. Professionalism and qualifications and experience of principal employees; and 5. Consideration should be given to the estimated costs, but price should not be the sole determining factor. Any Financial Professionals engaged by the City will enter into written agreements including,but not limited to,a description of services provided and an estimate of fees and expenses to be charged for the engagement and said agreement shall by be approved as to form by the Corporation Counsel for the City. Miscellaneous The goals and police policies outlined herein are intended to provide general direction regarding the future issuance of debt and management of existing debt. The Executive maintains the right to modify this Debt Policy and may make exceptions to any of its guidelines at any time to the extent that the execution of such debt achieves the goals of the City and as long as such exceptions or changes are consistent with the ID, IRC, and other applicable law and rules and regulation.