2022-06-28 Special Meeting Agenda

SPECIAL MEETING AGENDA   28 JUNE 2022




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SPECIAL MEETING AGENDA                                                                           28 JUNE 2022

                                                                                   ATTACHMENT 3

               | ¢ )_ |  NOOSA                                                          Council Policy
               br        Reels                                                        DEBT POLICY
              Corporate Plan Reference:                  Long term planning for Noosa Shire

              Endorsed by Council:                       28 June 2022

              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.    Legislation prevents Council from accessing loan financing to fund operating deficits.
            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 any borrowing 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.
             4.    Council will consider loan funding for capital renewal projects on a case by case basis, but
                   predominately borrow only for new, expansion or upgrade capital projects, giving consideration
                  to inter-generational equity particularly 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 loan over a term
                  which takes into consideration the expected 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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