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Discussion -Each year, staff will prepare a S-year CIP made up of new capital projects, major <br />rehabilitation projects, and equipment replacement. The 2004 Facilities Planned 20-Year Project <br />List, as updated from time to time, shall be a primary tool for long-range capital planning, along <br />with the long-term list of major rehabilitation and equipment replacement needs, which are <br />updated annually. <br />The CIP shall contain a comprehensive description of the capital projects, sources of funds, the <br />timing of capital projects and the amount expected to be expended in each year for future <br />operating and capital budgets. <br />Policy C2 The Commission shall establish and maintain a list of approved fmance <br />mechanisms. <br />Discussion -Appendix II contains the listing and discussion of approved financing mechanisms. <br />Policy C3 The Commission shall utilize debt service professionals and GFOA guidance to <br />structure bond covenants. <br />Policy C4 Commission debt should be structured to match the expected useful life of the <br />assets to be funded, preferably not to exceed 20 years, however recognizing there may be some <br />instances where a longer period is warranted. <br />Policy C5 Long-term bonding shall be structured to maximize its cost effectiveness. <br />Policy C6 Before seeking to incur new debt, all available grant programs shall be evaluated <br />for their potential to offset targeted program costs. <br />Policy C7 Consideration shall be given to the overall level of debt fmancing that can be <br />sustained over the long-term given the size of the future capital programs, potential impacts on <br />credit ratings, and other relevant factors such as intergenerational rate equity, overlapping debt, <br />and the types of projects appropriately financed with long-term debt. <br />Policy C8 Consideration shall be given to competing demands for use of the community's <br />overall debt fmancing capacity. <br />Policy C9 The Commission shall annually target at least 2% of the RWP asset value for <br />capital reinvestment. This includes the amounts to be budgeted for major rehabilitation and <br />equipment replacement, and includes regular scheduled maintenance and CIP. <br />Discussion -This will allow the target for annual infrastructure maintenance to increase as the <br />size of the asset base increases. <br />Policy C10 The maximum bonded debt burden shall be determined by comparing the debt <br />service to the user rate revenues. Budgeted debt service shall not exceed 25% of budgeted user <br />rate revenue. <br />2005 MWMC Financial Plan Page 15 <br />