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• The City will not use long -term debt for current operations. • The City will not use short-term borrowing to support routine operations, provided however, that it may be used to meet temporary cash flow needs. • The City will maintain strong communications with bond rating agencies about the City's financial condition and will follow a policy of full disclosure on financial reports and bond prospectus. • The City will strive to maintain or improve the City's bond rating. • The City will utilize inter -fund loans when possible to reduce the cost of financing capital improvements. F. CAPITAL IMPROVEMENT POLICIES • The City will construct all capital improvements in accordance with an adopted capital improvement program. • The City will develop a five -year plan for capital improvements to be updated at least bi- annually. Future capital expenditures will be projected annually for a five -year period based on changes in the community population, real estate development or replacement of the infrastructure. • The City will coordinate preparation of the Capital Improvement Budget with preparation of the Operating Budget. Future operating costs associated with new capital improvements will be projected and included in Operating Budget forecasts. • The City will identify the estimated costs and potential funding sources for each proposed capital project before it is submitted to Council for approval. • The City will attempt to determine the least costly financing method for all new projects. • The estimated cost of Capital replacement for enterprise funds such as water and sewer will be updated at least every two years to ensure that rates and charges are covering the full cost of operating these programs. C -4