§ 210-4. Debt Policy.

A. 

The Town will confine long-term borrowing to capital improvements or projects that cannot be financed with current revenues or from state or federal funds.

B. 

The Town will not fund current operations from the proceeds of borrowed funds.

C. 

Any capital project financed through the issuance of general obligation bonds shall be financed for a period commensurate with the useful life of the asset. Moreover, whenever possible, projects with an estimated cost of less than $100,000 shall not be financed with long-term debt.

D. 

The Town may use short-term financing in the form of Bond Anticipation Notes ("BANs") to provide temporary financing for capital projects. BANs will be retired either through cash reserves or through the issuance of long-term bonds as soon as market conditions permit.

E. 

The Town will adhere to the requirements of Rule 15c2-12(b)(5), promulgated by the Securities and Exchange Commission when issuing Bonds and will provide to any nationally recognized municipal securities repository, or "NRMSIR," annual financial information and operating data and timely notices of material events with respect to the bonds.

F. 

The Town will maintain an annual debt service appropriation equal to the level in the preceding year unless new large construction or mandated emergency projects are introduced within the five-year Capital Plan.

G. 

The Town will comply with and keep current with all federal regulations for tax-exempt bonds.

H. 

To qualify under IRS arbitrage rebate exemption provisions, the Town will not issue more than $10 million in debt in any calendar year of which not more than $5 million of the issue may be for non-school construction expenditures and will comply with the two-year expenditure schedules.

I. 

The Town will comply with federal reimbursement regulations for tax-exempt bond proceeds used to reimburse capital expenditures by:

(1) 

Declaring reasonable intent in authorizing ordinances;

(2) 

Issuing bonds within one year after the expenditure was paid or project was put into service; and

(3) 

By qualifying expenditures as capital expenditures under general income tat principles.

J. 

The Town will endeavor to comply with the median debt ratios used by investors (underwriters) and credit analysts when reviewing the Town's creditworthiness. The matrix below contains ratios that the Town will endeavor to adhere to:

	Fiscal Indicators	Guideline	FY 2002 Actuals
	Debt service as a percentage of budget	10.0%	9.57%
	Percent of debt retired in 10 years	50.0%	47.6%
	Debt as a percentage of equalized value	1.5%	0.2%

K. 

The Town will plan and schedule bond sales to obtain a true interest cost (TIC) at or below the published bond yield averages for debt of similar credit quality (Moody's A1 ratings).