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CITY OF MIAMI, FLORIDA
DEBT M ANAGEMENT POLICY
L PURPOSE
The purpose of this policy is to establish parameters and provide guidance governing the issuance,
management, continuing evaluation of and reporting on all debt obligations issued by the City of Miami, and to
provide for the preparation and implementation necessary to assure compliance and conformity with this policy.
IL POLICYSTATEMENT
Under the governance and guidance of Federal and State laws and the City's Charter, ordinances and
resolutions, the City may periodically enter into debt obligations to finance the construction or acquisition of
infrastructure and other assets or to refinance existing debt for the purpose of meeting its governmental obligation to
its residents. It is the City's desire and direction to assure that such debt obligations are issued and administered in
such fashion as to obtain the best long-term financial advantage to the City and its residents, while making every
effort to maintain and improve the City's bond ratings and reputation in the investment community.
The City may also desire to issue debt obligations on behalf of external agencies or authorities for the
purpose of constructing facilities or assets, which further the goals and objectives of City government. In such case,
the City shall take reasonable steps to confu-m the financial feasibility of the project and the financial solvency of the
borrower; and, take all reasonable precautions to ensure the public purpose and financial viability of such
transactions,
The City shall not issue debt obligations or utilize debt proceeds to finance current operations of City
Goverrmnent.
This Debt Management Policy shall be reviewed periodically by the City's Finance Director and Finance
Committee, and updated, revised, or enhanced as necessary.
III. FINANCE COMMITTEE
It is the responsibility of the Finance Committee to review and make recommendations regarding the
issuance of debt obligations and the management of outstanding debt. The Finance Committee shall consist of seven
voting members consisting of five members from the local business community appointed by the City Corrunission,
the Mayor or his designee, and the City's Finance Director as the City Manager's designee. Others who may be
present at meetings of the Finance Committee to provide technical expertise and advice shall include representatives
from the City Attorney's office, the Budget Department, the Department to which the proposed debt may relate, the
City's Financial Advisor, Bond Counsel and Disclosure Counsel. Meetings will be open to all interested parties and
official minutes will be taken and copies made available upon request to the City Clerk.
The Finance Committee will consider all issues related to outstanding and proposed debt obligations, and
will vote on issues affecting or relating to the credit worthiness, security and repayment of such obligations,
including but not limited to procurement of services, structure, repayment terms and covenants of the proposed debt
obligation, and issues which may affect the security of the bonds and ongoing disclosure to bondholders and
interested parties.
IVII. GENERAL DEBT GOVERNING POLICIES
The City hereby established the following policies concerning the issuance and management of debt:
A. The City will not issue debt obligations or use debt proceeds to finance current operations.
DRAFT Proposed Additions are underscored; Proposed Deletions are Struck Through:
B. The City will utilize debt obligations only for acquisition, construction or remodeling of
capital improvement projects that cannot be funded from current revenue sources or in such
cases wherein it is more equitable to the users of the project to finance the project over its
useful life. Every issuance should include a summary of useful life by asset class being
funded by the respective issue.
C. The City will measure the impact of debt service requirements of outstanding and proposed
debt obligations on single year, five, ten and twenty year periods. This analysis will consider
debt service maturities and payment patterns as well as the City's commitment to a pay as
you go budgetary capital allocation.
V. SPECIFIC DEBT POLICIES, RATIOS A4
The City will evaluate the long-term operational impact of capital projects to the City's
budget and five-year financial plan. Each proposed debt issuance will be accompanied by a
statement from the City Manager stating the estimated operational impact of the project
being financed.
The City may periodically refinance debt to take advantage of lower interest rates which
will result in a Present Value Savings. The City may issue current refunding bonds that
result in a minimum of three percent (3%) Net Present Value savings, and advance
refunding bonds that result in a minimum of five percent (5%) Net Present Value savings.
Refunding bonds shall not extend the final maturity of the bonds being refunded. If the
present value savings is less than the threshold, or will result in a present value loss. and/or
the maturity is greater than the maturity on the debt obligations to be refunded, the City may
issue or enter into refunding Debt obligations but only after a finding by the Commission
that a compelling public policy objective would be achieved by the refunding, such as
eliminating restrictive bond covenants or providing additional financial flexibility. The
Commission's findings may be based on a report presented with the legislation authorizing
the refunding.
III METHOD OF SALE AND SELECTION OF UNDERWRITERS
A. Florida law dictates that the City sell its bonds through a competitive sale unless it makes a
finding based on the recommendation of its financial advisor that the circumstances warrant
a negotiated sale.
B. For each bond sale that is determined to be a negotiated sale, the City's Finance Director
will formally request proposals from the firms within the pool in order to select the
underwriting syndicate, including a senior manager or lead book runner. for that bond sale.
The Finance Director will directly request proposals from the firms in the pool, and rank the
proposals with a review committee. The review committee will be made up of the City
Treasurer and the Assistant City .Manager/CFO. Once the review committee
recommendation is determined, the Finance Director will present the recommendation to the
Finance Committee.
C. All debt shall be sold at public sale by Competitive Bid unless waived by the Commission
under the following circumstances:
a. upon written recommendation of the City Manager and Financial Advisor, and by
majority vote of the entire membership of the Commission that a waiver of competitive
bids is in the best interest of the County. The City Manager's written recommendation
shall set forth specific findings as to the reasons a negotiated sale is recommended, or
b. by an affirmative four -fifths vote (4/5) vote of the entire membership of the
Commission, provided that the Conunission makes specific findings as to the reasons
why a negotiated sale is in the best interest of the City.
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DRAFT Proposed Additions are underscored and Proposed Deletions are struck through:
IV. DEBT POLICY RATIO TARGETS
This section of the Debt Management Policy establishes the target debt policies, ratios and
measurements for the City to consider in the—felle ing-eatogef simeasuring debt capacity
and flexibility.
B. Co n:itraintss catio-ss ankd-Measurements
A. Meas fifty
As the City periodically addresses its ongoing needs, the City Manager and the City Commission must ensure
that the future elected officials will have the flexibility to meet the capital needs of the City. Since neither
State law nor the City Charter provides any limits on the amount of debt, which may be incurred (other than
the requirement to have General Obligation debt approved in advance by referendum), this policy establishes
the following targets and limits which at the same time provide future flexibility.
General Government Debt Service as a percentage of Non -Ad Valorem General Fund Revenues:
Debt Limit 3.00%
Calculation is determined as all general governmental debt service (special obligation and non -ad
valorem secured debt, exclusive of General Obligation and proprietary fund revenue secured debt)
divided by non -ad valorem revenues.
Goal/Target Less than or equal to 15%
Net. Debt Per Capita:
Calculation is determined as Net Debt Per Capita shall be calculated by dividing the Governmental
Net Debt by the most current population within the City.
Goal/Target Less than or equal to $2,000
iti?et..Dnb.t.to_.Tax.able.Mw.s.s..V :lucGoal/Target 2.50%
Unconlritt o 0
u tk" ri �€�l k€:sicC�i�iic ca4—e e � ea�i
rn the issuance and
aa,,...,s obligations:
Calculation is determined as dividing the Net Debt by the taxable assessed value of all taxable
properties within the City.
Goal/Target.
Less than or equal to 5%
V. CONTINUING DISCLOSURE AND ONGOING REPORTING
A. The City shall strive to meet all continuing disclosure and ongoing reporting
requirements on a timely basis. The City has agreed, in accordance with the provisions
of, and to the degree necessary to comply with, the secondary disclosure requirements
of Rule 15c2-12 of the Securities and Exchange Commission.
B. The City shall implement documented post -issuance compliance procedures upon each
debt issuance.
C. The City shall utilize a nationally recognized dissemination agent (such as DAC) for
continuing disclosure.
D. The City, through the City Manager or designee, shall provide a report to the City
Commission on an annual basis describing the Citv's debt Uosition.
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DRAFT Proposed Additions are underscored and Proposed Deletions are struck through:
VIII. OTHER PROVISIONS
The following other provisions shall be applicable to the City each time it considers a debt issuance:
A. Purposes of Issuance — The City will issue debt obligations for acquiring, constructing or
renovating Capital Improvements or for refinancing existing debt obligations. Projects must be
designed as public purpose projects by the City Conunission prior to funding.
B. Maximum Maturity — All debt obligations shall have a maximum maturity of the earlier of:
(i) the estimated useful life of the Capital Improvements being financed; or, (ii) thirty years: or,
(iii), in the event they are being issued to refinance outstanding debt obligations the final
maturity of the debt obligations being refinanced, unless a longer term is recommended by the
Finance Committee. Every issuance should include a summary of useful life by assetclass being
funded by the respective issue.
exceed 3,00% of such median as established by the Finance Committee,The Net Debt Per
ra,,;t si,ali b the most current
The City shall strive to maintain a ratio of Net Debt to
Taxable Assessed Value of properties within theCit a+ blot the to„daar,a ;wry
dividing
die—Ne Dtl e— a ess�d=ate of all taxable erties
within the City.
C. Capitalized Interest (Funded Interest) — Subject to Federal and State law, interest may be
capitalized from date of issuance of debt obligations through the completion of construction
for revenue producing projects. Interest may also be capitalized for projects in which the
revenue designated to pay the debt service on the bonds will be collected —at a future date, not
to exceed six months from the estimated completion of construction and offset by earnings in
the construction fund.
D. Bond Covenants and Laws — The City shall comply with all covenants and requirements of
the bond resolutions, and State and Federal laws authorizing and governing the issuance and
administration of debt obligations.
E. Good Faith. Deposit - The City shall receive a Good Faith Deposit at the time of award to the
Underwriters regardless of the method of sale. The purchaser of the Debtor Underwriter shall
pay the good faith deposit (security deposit on the bonds) to the City in an amount equal to
approximately one percent (1%) of the par amount of the Debt being issued.
F. Interest Rate Derivatives and Swaps — The City shall not use interest rate derivatives, or
swaps, as a debt management tool.
G. Investment of Bond Proceeds — Investment of Bond Proceeds shall be consistent with the
Citv's Investment Policy.
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