City of Alexandria, Virginia
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MEMORANDUM
DATE: APRIL 26, 2017
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
FROM: MARK B. JINKS, CITY MANAGER /s/
DOCKET TITLE:
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Consideration of Modification to the City's Debt-Related Financial Policies.
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ISSUE: Modifying the City's debt policy guidelines to better balance the City's ability to pay for increased capital investment needs and the need to maintain the City's top AAA/Aaa bond ratings
RECOMMENDATION: That City Council adopt modified Debt-Related Financial Policies (Attachment 1) in order to:
(1) Increase the Debt to Tax Base Ratio Limit from 1.6% to 2.5%,
(2) Increase the Debt Service as a Percent of General Expenditures Limit from 10% to 12 %,
(3) No longer utilize Debt as a Percent of Personal Income as a debt ratio measure,
(4) Recognize only General Obligation Tax-Supported Debt and General Obligation Tax-Supported Debt Service as appropriate for debt ratio measure calculations, and
(5) Adopt debt repayment rapidity ratios of 50% as a minimum 10-year repayment ratio and 65% as the target 10-year repayment ratio as new policy elements of the modified Debt-Related Financial Policies.
BACKGROUND: The City's Debt-related Financial Policies were initially adopted in 1987. These guidelines when they were adopted were considered innovative by the bond rating agencies, and those debt-related financial policies have been used as a model by other localities. The policies were substantially updated in 1997. With the exception of a few minor changes since then, these policies have continued to guide Council and staff in financing the 10-year Capital Improvement Program of the City, managing the impact of debt service on the operating budget and maintaining adequate fund balances to cope with unexpected financial problems or emergencies.
The City has established policies to help guide financial...
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