Fiscal & Budgetary Guidelines
Debt Policies
General � The Town will confine long-term borrowing to capital improvements or projects that cannot be financed from current revenues except where approved justification is provided .
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The Town will utilize a balanced approach to capital funding utilizing debt financing , draws on capital reserves and / or fund balances in excess of policy targets , and current year ( pay-as-you-go ) appropriations . When the Town finances capital improvements or other projects by issuing bonds or entering into an installment financing agreement , it will repay the debt within a period not to exceed the expected useful life of the project . The Town also will ensure that it conservatively projects the revenue sources that will be utilized to pay the debt . Target debt ratios will be calculated annually and included in the review of financial trends . Where feasible , the Town will explore the usage of special assessment , revenue , or other self-supporting bonds instead of general obligation bonds . The Town will retire tax anticipation debt , if any , annually and will retire bond anticipation debt within six months after completion of the project . Where feasible and appropriate , the Town will look to refund or refinance previous debt issuances when the net present value of the refunding exceeds 3.0 % or more of the existing financing agreement .
Tax Supported Debt
� The Town shall manage the issuance of debt obligation such that the net debt of the Town shall not exceed 8 % of the assessed value of taxable property , as required by North Carolina General Statutes .
� Direct net debt as a percentage of total assessed value of taxable property should not exceed 2.0 %.
Direct net debt is defined as Town-issued debt that is tax-supported .
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The ratio of direct net debt service expenditures as a percent of total governmental fund expenditures should not exceed 15 % with an aggregate ten-year principal payout ratio target of 50 % or better . The Town recognizes the importance of underlying and overlapping debt in analyzing financial condition . The Town will regularly analyze total indebtedness including underlying and overlapping debt . The Town will seek to maintain and if possible improve its current bond ratings so borrowing costs are minimized and its access to credit is preserved . Full disclosure of operation will be made to the bond rating agencies and other users of the Town ’ s financial information . The Town staff will aid in the production of any released Official Statements , and takes responsibility for the accuracy of all information contained therein .
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