Page 265 - Ord 866 Adopting a revised Fiscal Year 17-18 and new proposed Fiscal Year 18-19 budget

Section 7 Debt Service Funds
Debt Service Funds Overview

Analysis of Debt Issuance and Debt Issuance Alternatives
Staff will explore alternatives to the issuance of debt for capital acquisitions and construction projects.
These alternatives will include, but not be limited to,
Grants, Leases, User fees, Impact fees
Use of reserves
Use of either current on-going general revenues or one-time revenues
Contributions from developers and others

Use of Debt Financing
The useful life of the asset or project shall, at a minimum, exceed the payout schedule of any debt the
Town assumes.
1. Debt financing instruments to be considered by the Town may include:
o General obligation bonds - These must be authorized by a vote of the citizens of
Westlake.
o Revenue bonds - These bonds generate capital requirements necessary for
continuation or expansion of a service which produces revenue and for which the
asset may reasonable be expected to provide for a revenue stream to fund the debt
service requirement.
o Certificates of obligation - These can be authorized by Council approval with debt
service by either general revenues or backed by a specific revenue stream or a
combination of both.
o Lease/ purchase agreements - These shall only be used to purchase capital assets that
cannot be financed from either current revenues or fund balance/ retained earnings
and to fund infrastructure improvements and additions.

2. Assumption of Additional Debt - The Town shall not assume more tax-supported general-
purpose debt than it retires each year without first conducting an objective analysis as to the
community' s ability to assume and support additional debt service payments.

3. Affordability Targets - The Town shall use an objective multi-year analytical approach to
determine whether it can afford to assume new general- purpose debt beyond what it
retires each year. This process shall compare generally accepted standards of
affordability to the current values for the Town. The process shall also examine the direct
costs and benefits of the proposed expenditures. The decision on whether or not to
assume new debt shall be based on these costs and benefits and on the Town' s ability to
afford” new debt as determined by the aforementioned standards. The Town shall strive
to achieve and/ or maintain these standards at a low to moderate classification.
4. Debt Structure - The Town shall structure its debt payment schedules for general purpose debt to
ensure level principal repayment schedules. The Town shall not assume any debt with "balloon'
repayment schedules which consist of low annual payments and one large payment of the
balance due at the end of the term. While balloon payment structures minimize the size of debt
payments during the period, they force a large funding requirement on the budget of the final
year. Given the uncertainties of the future, level payment schedules improve budget planning
and financial management.
5. Sale Process - The Town shall use a competitive bidding process in the sale of debt unless the
nature of the issue warrants a negotiated bid. The Town shall award bonds based on a true
interest cost (TIC) basis as long as the financial advisor agrees that the TIC basis can satisfactorily
determine the lowest and best bid.

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