Page 123 - Pantego FY22 Operating Budget

2. LONG-TERM DEBT. Long-term debt will not be used for operating purposes, and the
life of a bond issue will not exceed the useful life of a project financed by that bond
issuance. A resolution of intent to issue bonds authorizing staff to proceed with the
preparations shall be presented for consideration to the Town Council when the
capital budget is presented.

Certificates of obligation may be issued to finance permanent improvements and
land acquisition if needed between bond elections. The life of the certificates of
obligation issued to finance equipment shall match the life of the equipment, which is
usually three (3) to five (5) years. Certificates of obligation may be backed by a tax
pledge under certain circumstances as defined by law. They may also be backed by
a combination tax and revenue pledge. When appropriate, self-supporting revenues
will pay debt service in lieu of tax revenues.

The Town shall obtain voter authorization before issuing General Obligation Bonds
as required by law. Voter authorization is not required for the issuance of Revenue
Bonds. However, the Town may elect to obtain voter authorization for Revenue
Bonds.

C. FINANCING ALTERNATIVES. The Town will explore all financing alternatives in
addition to long-term debt including leasing, grants and other aid, developer
contributions, impact fees and use of reserves of current available funds.

D. DISCLOSURE. Full disclosure of operations will be made to the bond rating agencies
and other users of financial information. The Town staff, with the assistance of financial
advisors and bond counsel, will prepare the necessary materials for presentation to the
rating agencies, will aid in the production of Offering Statements, and will take
responsibility for the accuracy of all financial information released.

E. FEDERAL REQUIREMENTS. The Town will maintain procedures to comply with
arbitrage rebate and other Federal requirements.

F. DEBT STRUCTURING. The Town will issue general obligation bonds with an average
life of 20 years or less, not to exceed the life of the asset acquired. Total debt service
requirements (principal and interest) in any fiscal year should generally not exceed
twenty-five (25) percent of total expenditures/expenses.

The structure should approximate level debt service unless operational matters dictate
otherwise or if market conditions indicate a potential savings could result from modifying
the level payment stream. Consideration of market factors, such as the tax-exempt
qualification, minimum tax alternative, and so forth will be given during the structuring of
long-term debt instruments.

G. DEBT ISSUANCE.

1. Bond Elections. Before a bond election, the Town Manager, Bond Election
Committee Members and Town Councilmembers will be provided with competent
debt capacity analyses, tax and user fee impact projections and other information as
directed by the Town Manager. The Bond Counsel and Financial Advisor will
provide support during the process.

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