The free city of Rust is approx. 2,000 inhabitants a statutory city and its own administrative district in Austria. As part of our financial management, there are a variety of topics in the community as well as in our outsourced units, which led us some time ago to install a strong partner to oversee our financial activities. Since it has been a matter of course for municipalities in the area of legal and tax advice to use external specialists for many years, we have now also implemented this in the area of financial activities.
The analysis, digital preparation and continuous monitoring of our loan portfolio ensure that we always have an up-to-date overview of our individual financing conditions and developments on the financial market. In addition, there is ongoing monitoring and reporting, which we consider necessary for reasons of external and internal control and the greatest possible transparency.
The realization of projects in the public sector is usually associated with borrowing with long terms. A municipality takes different risks with every financing decision. It makes sense to be able to assess these risks. To do this, it is necessary to understand and identify the risks beforehand. Questions such as the selection of financing partners, loan volumes and terms, funding options up to the decision about the fixed interest rate and the applicable interest rate indicators (variable vs. fixed interest rate) require an intensive examination of all these problems. This requires essential prerequisites such as sufficient human resources, time, knowledge, experience and technical systems. Specifically, we could, for example. achieve a debt rescheduling in a long-term project in which a new, fixed-rate interest rate complies with a significantly lower interest rate than the existing variable interest rate.
As part of tour reporting and personal support, we can work on strategic as well as daily issues to our satisfaction. This means that we are always on an equal footing with our partners in the area of financing and finance and thus meet our high requirements for the management of public funds.
We therefore see the financing function for cities and municipalities as a constantly changing process that must be subjected to an ongoing review. For this purpose, we decided to work with FRC – Finance & Risk Consult GmbH (FRC) after internal discussion and opinion-forming. FRC is a reliable service provider in this segment who can prove its experience in the area of financing on both sides (public sector and banks). In addition to comprehensive advice for our existing loan portfolio of the community as well as the outsourced units and companies, the tendering function for new loans (also via municipal loan platforms) is performed by FRC. This means that we are not only as close to the market as possible and benefit from the best conditions as part of our existing banking partnerships, but also take part in digitization and thus in the technical development of municipal financing.
Even complex issues, such as the processing of non-disclosure of negative interest rate indicators, are resolved to our fullest satisfaction with the necessary sensitivity by FRC. The specialists at FRC find solutions that also correspond to our understanding of financial partnerships. Municipalities and banks, a balanced team at eye level.
Finally, I would like to mention that, of course, municipalities and municipal officials are also subject to a general duty of care and are responsible for their actions. As is known, this fact is subject to an ex post evaluation by control bodies. By involving the external specialists from FRC, who work for our community and for our outsourced units and companies, we not only reduce the interest burden on our financing, but also our liability risk.