2018-07-06 Special Meeting Agenda

SPECIAL MEETING AGENDA      6 JULY 2018


                         ATTACHMENT 3




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SPECIAL MEETING AGENDA                                                                  6 JULY 2018

                                                                                    ATTACHMENT 3
   | ¢ WY     NOOSA                                                         Council Policy
        mi    Keelenor                                                    DEBT POLICY

   Corporate Plan Reference:                  Long term planning for Noosa Shire

   Endorsed by Council:                       6 July 2018

   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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