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unofficial consolidation, the official version is held by the municipal clerk.
Purpose
The purpose of this comprehensive debt policy is to set the parameters for
issuing new debt and managing the existing debt portfolio of the Town of
Mahone Bay.
Policy Statements
Special Reserve Fund - Capital Section
The Town of Mahone Bay will pay all principal payments on outstanding debt
from its special reserve fund- capital section. In accordance with the Municipal
Affairs Act, no interest payments will be made from the special reserve fund
capital section.
Revenue contributions to the special reserve fund - capital section will be
maintained at an annual amount sufficient to prevent the find from falling
below zero ($0) in the current or future fiscal years.
Revenues from the Town's sewer and garbage by-laws, interest earnings from
the special reserve fund - capital section, and a portion of the dividend paid to
the Town by its electric utility will be used to pay the full interest charged on
the Town's outstanding short and long-term debt. The balance of these funds,
once all interest payments have been made, will be transferred to the special
reserve fund - capital section. If revenues from these sources are inadequate to
meet the Town's annual interest payments, the required balance will be paid out
of general revenues.
The Town will transfer the full value of the unconditional capital grant from
the Province of Nova Scotia, and any other funds transferred to the Town for
the purpose of debt service cost sharing, to the special reserve fund - capital
section.
Borrowing Limits
The Town will not borrow money if said borrowing will cause.the balance of
the special reserve fund - capital section to fall below zero in the current or
future fiscal years.
The Town will not borrow money if said borrowing will cause the required_
revenue contribution to the special reserve fund - capital section to exceed 20
per cent of own-source revenue after fiscal year 1997/98.
Recognizing that funds borrowed in one year result in significant principal and
Comprehensive Debt Policy
interest charges in future years, the Town will endeavour to limit future
borrowing such that the required revenue contribution to the special reserve
fund - capital section is less than 15 per cent of own-source revenue.
Short-Term Debt
All short-term debt should be retired or financed long-term within one year,
and shall be retired or financed long-term. within two years of completion of
the project for which it was incurred.
Debt Term and Structure
Debentures of the Town will not be amortized over a period longer than the
useful life of the project for which they were incurred and will not be amortized
over a period exceeding twenty (20) years. The preferred amortization period
for all debentures of the Town is ten (10) years or less.
Straight serial debentures with equal annual principal payments are preferred by
the Town.
Pay-As-You-Go
The Town recognizes the financial benefit in funding capital projects out of
general revenue as opposed to long-term debt. The Town will endeavour to pay
a portion of the cost of any capital project from general revenues or reserves.
Operating and Maintenance Requirements
Design and planning for all future capital projects will include a projection of
ongoing operating and maintenance requirements. Other than in exceptional
circumstances, the maintenance of existing capital assets will take priority over
the acquisition of new ones.
Long-Term Projections
The Town Clerk will include with the annual operating and capital budgets in
each fiscal year, a projection of current and proposed debt service charges,
contributions to the special reserve fund - capital section, the balance of the
special reserve fund - capital section, and the ratio of contributions to the
special reserve fund - capital section to own-source revenues. The last year of
this projection will correspond with the last maturity date for outstanding
debentures of the Town.
The above-described projection will be submitted to the Minister of Housing
and Municipal Affairs with the Town's capital budget in each fiscal year.'
Amendments
All changes to this policy must be approved by the Minister of
Housing and Municipal Affairs prior to taking effect.
This comprehensive debt policy has been approved by Council on the 12 day of
November 1997.
Mayor (Signature)
Clerk/Treasurer (Signature)
This comprehensive debt policy has been approved by the Minister of Housing
and Municipal Affairs on the ___ day of ______________, 19_____.
___________________________________
Minister (Signature)