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II. CAPITAL FINANCING AND DEBT MANAGEMENT The Capital Financing and Debt Management Section of this Goals Statement establishes the parameters for the issuance of debt and provides guidance for the use of debt, and in the timing and structuring of short and long term debt commitments. These Goals apply to all types of debt issued by the City, are for general use, and allow for exceptions in extraordinary conditions. A. Capital Financing 1) The City will consider the use of debt financing only for one-time capital improvement projects and unusual equipment purchases, and only under the following circumstances: (i) When the project's useful life will exceed the term of the financing. (ii) When the project revenues or specific resources will be sufficient to service the long-term debt. 2) Debt financing will not be considered appropriate for any recurring purpose, such as current operating and maintenance expenditures. The issuance of short-term instruments, such as tax, revenue, grant or bond anticipation notes, is excluded from this limitation. (i) There is an appropriate role for tax and revenue anticipation notes (TRANS) in meeting legitimate short-term cash needs within the fiscal year. The City will only issue TRANS or other forms of short- term debt if necessary to meet demonstrated cash flow needs. TRANS or any other form of short-term debt financing will not be issued for investment or arbitrage earning purposes. 3) Capital improvements will be financed primarily through user fees, service charges, assessments, special taxes, or developer agreements when benefits can be specifically attributed to users of the facility. Accordingly, development impact fees should be created and implemented at levels sufficient to ensure that new development pays its fair share of the cost of constructing necessary community facilities. 4) The City will use the following criteria to evaluate pay-as-you-go versus long-term financing in funding capital improvements: (i) Factors Favoring Pay -As -You -Go Financing: (a) Current revenues and adequate fund balances are available or project phasing can be accomplished. (b) Debt levels would adversely affect the City's credit rating. 4