FY 2017 Budget Highlights

V. VI. the BOCC borrow any money whatsoever for any purpose without special legislative authority to make the loan. However, special exceptions have been created in the Code for certain limited short term loans. The County periodically requests Chapter Law Authorization from the General Assembly, which specifies a not to exceed principal amount of bonds that can be issued pursuant to that Chapter Law. Additionally, local laws are enacted from time to time by the General Assembly providing debt authority to Frederick County. B. Debt issued pursuant to the Water and Sewer Act is limited to six percent of the assessed valuation of taxable real property. C. The County has a Debt Affordability model that it uses to determine the amount of new debt the County can afford to support. The model is driven by revenue and growth assumptions with established standards controlling the amount of new debt to be issued over the life of the CIP. The County uses the following guidelines in deciding how much additional General Obligation Debt may be issued in the six-year CIP period: • There are limiting standards relative to: 1. The ratio of General Fund Debt Service to General Fund Revenue; 2. The ratio of General Fund Debt to Assessed Value of Taxable Real Property. 3. The ratio of General Fund Debt to General Fund Revenue; 4. The ratio of Total Debt Service to General Fund Revenue; 5. Other standards as may be appropriate. Debt Structure: Term A. Bonds are typically issued for 20-25 years. Chapter Law Authorizations typically require that bonds mature not later than thirty (30) years from the date of issuance while the Water and Sewer Act permits a maturity not to exceed forty (40) years from the date of issuance. The IPA program typically limits terms to between ten (10) and twenty (20) years. When bond market conditions warrant, or when a specific project would have a shorter useful life, then different repayment terms may be used. B. Capital Leases generally have a term of five to ten years. C. County debt issues may be structured for repayment with near level debt service payments or level principal payments. Current County practice has been to utilize the near-level debt service payment method to facilitate the budget process. D. The size of the debt issue should be such that economies of scale are reached with regard to issuance costs, including but not limited to Bond Counsel, Financial Advisor, and rating fees. Method of Sale A. Competitive sales should generally be used for General Obligation Debt issues. Negotiated sales may be used if the BOCC, in conjunction with the Director of Finance and the County's Financial Advisor, determines that such a sale method is in the best interests of the County. B. Electronic bidding systems should be encouraged in order to enhance participation. 4

View entire presentation