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<br />4. Method of Sale - The Director of Finance will use a competitive bidding process <br />in the sale of bonds unless the nature of the issue or market conditions warrmlt a <br />negotiated sale. In situations where a competitive bidding process is not elected, <br />the Director of Finance will publicly present the reasons why and will participate <br />with the City's Finmlcial Advisor in the selection of the underwriter or direct <br />purchaser. <br /> <br />C. Analysis of Financing Alternatives - The Director of Finance will explore alternatives to <br />the issuance of debt for major capital projects. These alternatives will include, but are <br />limited to: 1) grants-in-aid, 2) use of fund balance or working capital, 3) use of current <br />revenues, 4) contributions from developers and others, 5) leases, and 6) impact fees. <br /> <br />D. Conditions for Using Debt - Debt financing of major capital projects will be done only <br />when the following conditions exist: <br /> <br />· When non-continuous projects (those not requiring continuous annual appropriations) <br />are desired; <br /> <br />· When it can be detennined that future users will receive a benefit from the major <br />capital project; <br /> <br />· When it is necessary to provide basic serVlces to residents and taxpayers (for <br />example, purchase of water rights); <br /> <br />· When total debt, including that issued by overlapping governmental entities, does not <br />constitute an unreasonable burden to the residents and taxpayers. <br /> <br />E. Costs and Fees - All costs and fees related to debt issuance will be paid out of debt <br />proceeds. <br /> <br />F. Debt Limitations - The City maintains the following limitations in relation to debt <br />Issuance: <br /> <br />An Ad Valorem tax rate of $1.20 per $100 of assessed value is the maximum <br />municipal tax rate that may be levied for all General Fund tax supported expenditures <br />and debt service. <br /> <br />Debt payments made solely from ad valorem tax revenue should not exceed 20% of <br />combined General Fund and Debt Service Fund expenditures. <br /> <br />Total outstanding debt should not exceed 5% of the current year's taxable assessed <br />valuation. <br /> <br />City of San Marcos financial Policy - Revised April 2004 <br /> <br />Page ] 6 <br />