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CITY OF SOUTH BEND I OFFICE OF THE CLERK
<br /> Particularly,the only types of debt that are included in that are general obligation bonds,the bonds
<br /> that are full-faith and credit, and economic development income tax revenue bonds. So, if I could
<br /> flip back here to recent debt issuances, most of these debt issuances are not going to be included
<br /> in that debt limit. The ones that would be included are the parks general obligation bonds, but for
<br /> the Park District, which we will look at in just a second, which has a separate debt limit than the
<br /> City. The Park District has a separate debt limit than the City.The general obligation bond for Fire
<br /> Station Nine (9) and the Zoo economic development revenue bond are included in the debt limit,
<br /> but the TIF bonds are not, generally.
<br /> He continued, So that debt limit does drive one (1) component of our analysis when we decide
<br /> whether we can and should issue new debt. However,because most types of debt that we issue are
<br /> not included in that debt limit, we have a policy around what kinds of analysis we do when we are
<br /> deciding whether we want to issue new debt. So, before a new debt is issued, we form a financial
<br /> analysis, sort of an administrative baseline before we do anything else. We make sure the City can
<br /> financially handle new debt, that we have sufficient cash reserves, that our revenues, especially
<br /> the revenue that is going to be pledged to support the new debt, is sufficient to not only fund the
<br /> new debt service that we're going to incur but continue to fund whatever operational requirements
<br /> that it has. So that's the baseline analysis. We make sure the revenues that we are bringing in are
<br /> sufficient to fund current services, and to take on the additional debt service that they're going to
<br /> have to add in the future.
<br /> He went on, The second(2nd)type of analysis we do is a governmental analysis,to make sure that
<br /> whatever we're issuing debt for is within the priorities of the Council,of the Administration,of the
<br /> residents. We are making sure that the types of projects that we're funding are representative of
<br /> things that we think are going to drive or increase economic activity, increase safety, whatever
<br /> type of priority we're looking at. And then the last analysis is an economic analysis, and this one's
<br /> also extremely important. We're looking at five(5), ten(10),fifteen(15)years in the future, which
<br /> we'll still have the debt at that point,to try and figure out if the economy is still going to be efficient,
<br /> if property values will still be high enough, if incomes are still going to be high enough that we're
<br /> going to be able to sustain the debt service on these new bonds. And what happens if incomes do
<br /> go down? Are we still going to be able to sustain the debt service? We do a kind of a stress-test of
<br /> the debt service that make sure if something bad happens, we will still be able to operate and to
<br /> sustain the debt service that we're taking on. So,we do a pretty thorough debt analysis that we then
<br /> bring to the Mayor and bring to Council to say "Hey, here's why we think the debt is warranted,
<br /> why it's necessary, and why we're going to be able to manage it."
<br /> Committee Chair White stated, I have a couple of questions. In terms of the different analysis, are
<br /> they done internally or externally? And looking at that second(2nd) one, in terms of governmental
<br /> and administrative analysis,and sometimes I think that there's not a comfort level with that because
<br /> what we may see as Council and what the Administration may see, and then what the citizens are
<br /> saying, I think there's a disconnect there, and that's one (1) area that I know that as we move
<br /> forward, we want to have more discussion in. Also, we want to make sure that individuals at the
<br /> table when those kinds of decisions are made will be where we bring our priorities. I think we're
<br /> in a good place now, so we're starting the process. But I think there's some disconnect there.
<br /> Mr. Parker replied, Yeah, no, I think it's a great point. So, to the first (1st) question of whether the
<br /> analysis is done internally or externally, the answer is yes, to both. So, we do a lot of analysis
<br /> internally,particularly financial analysis.We may ask consultants or others,like financial advisors,
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