By Tony Wittkowski | City Reporter | The Times Herald
Port Huron City Council will be adopting the city’s first debt policy on Monday.
The policy would put limitations in place to determine how Port Huron is issued debt with bond agencies.
“It’s a best practice that most other cities do,” said James Freed, city manager. “We have never done it before, and it is something that the bond agencies like to see.”
The policy would require the city to analyze bond proposals and send financial reports to credit rating agencies — something the city already does, Freed said.
Those agencies assign credit ratings, which rate a borrower’s ability to pay back debt.
Freed said his office drew up the policy after researching other cities’ policies and consulting legal counsel.
While the city is not required by law to have a policy, Freed said putting one in place is a “best practice.”
Freed said the policy can be considered a blanket policy and will remain in place unless a change is needed.
“This will not change how the city operates,” Freed said. “It just formalizes what we’ve already been doing. This would coincide with our general fund policy.”
The policy will help maintain the city’s current bond rating and help minimize borrowing costs by establishing a line of credit.
Cities borrow money through bonds to help pay for large projects such as roads, bridges and new buildings.
The interest rate they pay to borrow is tied to their credit worthiness.
The policy will include guidelines for the debt issuance process, management of the city’s debt portfolio and compliance with federal and state laws and regulations.
“One of the things I promised when I became city manager was to review and recommend best practices that are done in other communities and other businesses,” Freed said. “This is one of them. It’s important to show our community and our stakeholders that we have parameters in place for which we find appropriate to issue debt.”
Council members were given the policy on Thursday to look over the details.
The council also will discuss the reappointment of the three-member Board of Review for 2015.
The Board of Review is responsible for correcting errors for residents who review property tax estimates. Freed said the positions are required by law to be filled.
“They will all be appointed,” he said. “They’ve done an excellent job.”
A special council meeting is scheduled for Feb. 2 in Conference Room 408 to discuss goals and priorities for 2015.
(Author’s Note: This article was originally published on Jan. 25, 2015)