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policy:financial_management_policy_statement [2015/08/28 21:57] – external edit 127.0.0.1 | policy:financial_management_policy_statement [2017/02/01 19:20] – dustin | ||
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===== Financial Management Policy Statement ===== | ===== Financial Management Policy Statement ===== | ||
- | The following policies are intended to give direction to planning decisions and help ensure that the District provides for adequate wastewater and potable water services to all customers | + | The following policies are intended to give direction to planning decisions and help ensure that the District provides for adequate wastewater and potable water services to all customers reliably and in a cost efficient manner |
- | - | ||
- **General Rate and Financial Management Policies** | - **General Rate and Financial Management Policies** | ||
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- Under state law, the District is allowed to collect a connection or general facilities charge from new connections. The District' | - Under state law, the District is allowed to collect a connection or general facilities charge from new connections. The District' | ||
- The District will not approve any construction contract unless it has sufficient monies in its pay—as—you—go construction fund or bond funded construction fund, which together with approved grants or loans, is sufficient to pay for the amounts expected to become due under the contract. | - The District will not approve any construction contract unless it has sufficient monies in its pay—as—you—go construction fund or bond funded construction fund, which together with approved grants or loans, is sufficient to pay for the amounts expected to become due under the contract. | ||
- | - When a capital project is funded from both rates and bond proceeds, the District will maintain records to allow a separate accounting of the expenditure of bond proceeds. Bond proceeds will be spent before drawing upon other available cash. The acquisition of grants or loans will not be assumed in the rate planning process. | + | - When a capital project is funded from both rates and bond proceeds, the District will maintain records to allow a separate accounting of the expenditure of bond proceeds. Bond proceeds will be spent before drawing upon other available cash. The acquisition of grants or loans will not be assumed in the rate planning process. |
- | - Debt will not be used to finance operating and maintenance requirements. | + | - While both debt and pay-as-you-go financing may be used to finance utility capital needs, the debt-financing component will be managed to minimize annual volatility in rate requirements. |
- | - **Management Policies for Debt Obligations** | + | |
- | - Capital projects financed through debt issuance will not be financed for a term longer than the expected useful life of the project assets. | + | |
- | - Capital financings will be designed to minimize the cost of funds, ensure equity over time among ratepayers, and provide for the timely completion of capital facilities. | + | |
- | - While both debt and pay-as-you-go financing may be used to finance utility capital needs, the debt-financing component will be managed to minimize annual volatility in rate requirements. | + | |
- The District has a goal of paying for a minimum of 20 percent of the capital program with cash from rates and charges over the long run. As a rule, the District’s baseline level of capital expense for routine replacements, | - The District has a goal of paying for a minimum of 20 percent of the capital program with cash from rates and charges over the long run. As a rule, the District’s baseline level of capital expense for routine replacements, | ||
- | - With respect to any issuance of debt, alternative issuance timing and amortization structures will be analyzed to ensure the most cost—efficient financing, given prevailing market conditions at the time of sale. | ||
- The District will set rates sufficient to provide debt service coverage in excess of the legal minimums. Rates will be set so that the debt service coverage ratio on the Utilities’ senior lien debt, not including connection charge revenue, shall be at least 1.25. | - The District will set rates sufficient to provide debt service coverage in excess of the legal minimums. Rates will be set so that the debt service coverage ratio on the Utilities’ senior lien debt, not including connection charge revenue, shall be at least 1.25. | ||
- | | + | |
- | - The District | + | - |
- **Management Policies for District Funds** | - **Management Policies for District Funds** | ||
- To accommodate periodic unanticipated or unforeseen needs, the District will maintain at all times an Operating Reserve equal to at least 21 days of utility operating costs. | - To accommodate periodic unanticipated or unforeseen needs, the District will maintain at all times an Operating Reserve equal to at least 21 days of utility operating costs. | ||
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Approved: April 7, 2008 | Approved: April 7, 2008 | ||
- | **Revised: ** October 9, 2014 | + | **Revised: ** October 9, 2014; September 21, 2016 |