Oregon City Council on Monday will consider approving an agreement with Sudsina & Associates, LLC, for the development of a financial debt and general reserve policy for the city.
If approved, the city will pay Sudsina $7,500 to develop the policy.
A financial debt and general reserve policy would help account for and manage public resources wisely, according to Administrator Ken Filipiak.
Demonstrating a structural commitment to sound financial management practices is also important in realizing and maintaining a favorable credit rating, said Filipiak.
“The decision to move forward and establish a formal debt and reserve policy is the administration’s recommendation,” Filipiak said at a committee of the whole meeting last Monday. “We have discussed this for a lot of years. It’s wise financial practice for any community to establish a policy that provides some structure in determining…when to consider debt and what type of debt.”
Currently, the financial community might conclude that the city has been managed fairly effectively, he added.
“They would look at our books today and say, `Oregon has done a pretty good job. They have reasonable reserve balances, their debt load is not unreasonable. But they would also want to know that if we were to change, what assurances do they have that this community is dedicated to that same level of financial constraint and good management practices,” said Filipiak.
“So what this tries to do is incorporate, as a formal policy, sound financial practices that are out there. This is particularly important for us right now. You will see us do some other work with Sudsina & Associates as our financial advisors to help prepare us for re-rating by one of the financial agencies this year. We will be entering into the bond market, if not by the end of this year, early next year. Financial rules are different today. There’s much more critical assessment of public sector plans than there ever was in the past. While we’re still considered pretty good risks, the tightening of the credit market makes it that much more important for us to be in a position to get the highest rating possible, to be able to get the best bond rates possible when we go out to bid. They’ll be looking to see if we have sound practices incorporated into policies and procedures. We’re doing some work on some other internal administrative policies that are more minor in nature. But this will help prepare us. Overall, it’s simply something we should already have in place,” said Filipiak.
Councilman Jerry Peach asked what role Squires, Sanders & Dempsey would have, since it has a long history with the city preparing its bond documents.
“Would they have a role that might be complementary to the work that Sudsina & Associates would perform, or would they be a firm that would perhaps be utilized instead of Sudsina & Associates?” asked Peach.
“Squires, Sanders & Dempsey’s role is to provide us with legal counsel and a legal opinion,” said Filipiak.
“We’re looking to Sudsina & Associates for financial advice on sound financial practices, which is their expertise,” said Filipiak.