Local Tax and
Budget Information
The Village of Johnstown,
Ohio Debt Policy
It is the policy of the Village of
Johnstown to insure public funds in a manner which will
provide the maximum security with the best return, while
meeting the daily cash flow demands of the entity and
conforming to the State of Ohio statutes governing the debt
issuance of public funds.
1.
LEGAL & REGULATORY REQUIREMENTS
In order to comply with Legal and
Regulatory requirements by the State of Ohio and the Federal
Government's laws, rules, and regulations; the Finance
Director, City Attorney, and Bond Counsel will review all
financings that involve the participation of a private-sector
individual or firm.
For each proposed public-private venture,
the City Attorney and Bond Counsel will advise the elected
officials of structural alternatives that will permit issuance
of bonds in the most cost-effective manner possible.
2.
CAPITAL IMPROVEMENT PROGRAM
To assess the needs of capital improvement
and funding alternatives, the Village Manager shall prepare
and submit a development criterion for the next five years in
accordance with the annual budget calendar.
The Village Council shall
adopt a Five Year Capital Project Plan each year presented by
the Village Manager. Each Capital Project
Plan will identify the projects needed and funding source
anticipated for each improvement. Where
borrowing is recommended, the source of funds to cover debt
service requirements must be identified.
3.
IDENTIFY
USELFUL LIFE OF PROJECT
Any project with a useful life of less than
five years shall not be eligible for inclusion in bond issues
or be included in the Capital Project Plan.
The Village will not issue debt for any capital
improvement for a term that exceeds the useful life of that
improvement.
4.
FINANCING ALTERNATIVES
Prior to the issuance of bonds, the Village
will seek any gifts, grants, other forms of intergovernmental
aid, or developer agreement assistance to finance capital
improvements wherever possible.
5.
SELECTING SERVICE PROVIDERS
The Finance Director will select the
service provider for each debt issuance.
The service provider must be a firm with an office in
the Central Ohio Area with a record of prior working
relationships.
6.
SALE
The Village will use competitive sales as
the primary means of selling bonds.
Negotiated sales will be permitted only if there is
evidence of volatile market conditions, complex security
features, or other overriding factors.
7. RATING
AGENCY APPLICATIONS
The Village may seek a rating on new issues
that are being sold in the public market.
To insure a fare rating the Village may use more than
on rating agency. These rating agencies
shall include, but not limited to, Fitch Investors Service,
Moody’s Investor Service, and Standard and Poor’s.
8.
SELECTING BOND TYPE
The Village shall favor the use of limited
obligation revenue bonds to finance capital improvements as a
means of insuring that beneficiaries of an enterprise pay for
a fair share of the costs. The issuance of
general obligation bonds will be sought only after it is
determined by the Council that no other funds are available to
meet the project costs. Lease purchase
financing shall be undertaken when the project is considered
essential to the efficient operation of the Village.
9.
INVESTMENT OF PROCEEDS
The Finance Director shall follow the
Village Investment Policy.
10.
ARBITRAGE COMPLIANCE
The Village will follow a policy of full
compliance with all arbitrage rebate requirements of the
federal tax code and Internal Revenue Service regulations, and
will perform (internally or by contract consultants) arbitrage
rebate calculations for each issue subject to rebate on an
annual basis. All necessary rebates will be
filed and paid when due.
11.
INVESTOR RELATIONS
The Village will provide its annual
financial report to any interested parties upon request.
12.
RATING AGENCY COMMUNICATIONS
The Village will provide the rating agency
with all material that has a pertinent bearing on Village
finances upon request.
13.
REFUNDING
The Village will monitor its debt portfolio
for refunding opportunities on a regular basis.
The Village will consider refunding for the reasons
listed, but not limited to; interest rate savings, update
covenants on outstanding debt which impair efficient
operations, restructure of debt service, alter bond
characteristics, such as call provisions or payment dates, on
existing debt. For all refunding undertaken
for the principal reason of achieving interest rate savings,
the Finance Director will consult with bond counsel or a
financial advisor for a value of savings based upon the size
of the refunding bond.
14.
GLOSSARY
For the purposes of this
Chapter, the following defined terms shall have the following
meanings:
Arbitrage
The gain that may be obtained by borrowing funds at a
lower (often tax exempt) rate and investing the proceeds at
higher (often taxable) rates. The ability
to earn arbitrage by issuing tax-exempt securities has been
severely curtailed by the Tax Reform Act of 1986, as
amended.
Bond
A security that represents an obligation to pay a
specified amount of money on a specific date in the future,
typically with periodic interest
payments.
Bond
Counsel
An attorney (or firm of attorneys) retained by the
issuer to give a legal opinion concerning the validity of the
securities. The bond counsel’s opinion
usually addresses the subject of tax exemption.
Bond counsel may prepare, ore review and advise the
issuer regarding authorizing resolutions or ordinances, trust
indentures, official statements, validations proceedings and
litigation.
Bond Insurance A
type of credit enhancement whereby a monocline insurance
company indemnifies an investor against a default by the
issuer in the event of a failure by the issuer to pay
principal and interest in-full and on-time, investors may call
upon the insurance company to do so. Once
assigned, the municipal bond insurance policy generally is
irrevocable. The insurance company receives
an up-front fee, or premium, when the policy is issued.
Competitive Sale
The sale of securities in which the securities are
awarded to the bidder who offers to purchase the issue at the
best price or lowest cost.
Debt Limitation
The maximum amount of debt that is legally permitted by
a jurisdiction’s charter, constitution, or statues.
Debt
Service
The amount necessary to pay principal and interest
requirements on outstanding bonds for a given year or series
of years.
Financial Advisor
A consultant who advises an issuer on matters pertinent
to a debt issue, such as structure, sizing, timing, marketing,
pricing, terms and bond
ratings.
