2017-06-29 Special Meeting Agenda

                                                                                Council Policy
                                                                              DEBT POLICY
 Corporate Plan Reference:                    Long term planning for Noosa Shire

 Endorsed by Council:                         29 June 2017

 Policy Author:                               Director Corporate Services


POLICY BACKGROUND
The purpose of this policy is to ensure the sound management of Council’s existing and future debt.

The policy will provide clear guidance for staff in the management of Council’s debt portfolio and
maintenance of appropriate debt and debt service levels.

This policy applies to all Councillors and Council staff and extends to all borrowing activities of
Council and any controlled entities.

COUNCIL POLICY
Council will utilise a debt management strategy based on sound financial management principles
and ensure net debt (net financial liabilities) remains within financial sustainability targets.
Borrowing Purposes
1.   Council will not utilise loan funding to finance operating activities or recurrent expenditure.
2.   Council undertakes full analysis of all funding options as outlined in the Long Term Financial
     Model, including a forward program of capital works, to determine loan funding requirements.
3.   Council recognises that infrastructure demands placed upon Council can often only be met
     through borrowings, but will always be mindful of the additional cost incurred by the community
     when assets are acquired through borrowings which increases the cost of providing capital
     infrastructure.
4.   Council will endeavour to fund all capital renewal projects from operating cash flows and
     borrow only for new or upgrade capital projects, having regard to sound financial management
     principles and giving consideration to inter-generational equity for the funding of long term
     infrastructure projects.
5.   Where capital expenditure is deferred from one year to the next, the drawdown of approved
     loan funds will be reviewed to minimise interest expenses.
6.   Borrowings for infrastructure that provides a positive rate of return on investment will take
     priority over borrowing for other assets.
Debt Term
7.   Where capital projects are financed through borrowings, Council will repay the loans within a
     term not exceeding the life of those assets, and over a term that optimises cash flow efficiency.
     7.1. If surplus funds become available, and where it is advantageous to Council, one-off loan
          repayments will be made to reduce the term of existing loans.
     7.2. In an environment of fluctuating interest rates, and where there is a distinct economic
          advantage to Council, consideration will be given to renegotiating any outstanding loans
          to obtain the best long-term benefit to Council.



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