Goleta City Council
April 2, 2024

CITY OF GOLETA
Debt Management Policy

I. Introduction
So as to maintain the highest quality debt management program possible, the City of Goleta (“City”) has adopted the guidelines and policies set forth in this document, referred to hereafter as the “Debt M anagement Policy.” The Debt Management Policy is intended to guide decisions relat ed to debt supported by the City’s general fund and any other related entities. Debt issuance for related entities should be evaluated on an individual basis as well as within the context of the City’s general debt management program. The Debt Management Policy is not applicable to intra- City borrowing.

Goals and Objectives
The Debt Management Policy fo rmally establishes parameter s for issuing debt and managing a debt portfolio which encompass the City’s specific capital improvement needs, its ability to repay financial obligat ions, and the existing legal, economic, financial and debt market conditions. The po licies outlined in the Debt Management Policy ensure that adequate financial resour ces are available to support the City’s long-term capital needs and align with the Cit y’s goals. Specifically, the policies outlined in this document are intended to assist the City in the following:

A. Evaluating critical debt issuance options
B. Promoting sound financial management and that the issuance of debt is consistent with policy goals and objectives and the capital plan or budget of the City
C. Provide accurate and timely information on financial conditions D. Maintaining appropriate capital assets for present and future needs E. Protecting and enhancing the City's credit rating
F. Ensuring the legal use of City bonding authority through an effective system of financial security and internal controls to ensure that debt proceeds will be directed to the intended use in accordance with all applicable statutory and policy requirements
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G. Promoting cooperation and coordination with other public entities and the private sector in the financing and delivery of services
H. Ensuring compliance with all applicable federal and state laws II. Approach to Debt Management
The City is committed to long-term financ ial planning, mainta ining appropriate reserves levels and employing prudent pr actices in governance, management and budget administration in a manner that protects the public interest. The City intends to issue debt for the purposes stated in th is Policy and to implement policy decisions incorporated in the City’s annual operations budget.

In managing its debt, the City’s greatest priorities are to:
 Achieve the lowest cost of capital
 Ensure high credit quality
 Assure access to credit markets, and
 Preserve financial flexibility
A. Relationship of Debt to Capital Plan and Budget . The City is committed to long-term capital planning. The City intends to issue debt for the purposes stated in this Policy and to implement policy decis ions incorporated in the City’s capital budget and capital plan (the “Capital Plan ”). The City will int egrate its debt issuances with the goals of its Capital Plan by timing the issuance of debt to ensure that projects are available when needed in furtherance of the City’s public purposes. The City shall seek to issue debt in a timely manner to avoid having to make unplanned expenditures for capital improvements or equipment from its general fund.

B. Capital Plan Integration. A sound debt management program begins with a well-devised capital plan. Therefore, a multi-year capital pl an, which integrates pay-as-you-go projects and the projects to be financed, is critical. The multi-year Capital Plan shall be for a minimum of a 5-year period and shall be updated to coincide with the budgeting cycle. In addition to capital pr oject costs, the Capital Plan shall include the following elements:
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1. Qualified capital projects

2. Description of all sources of funds

3. Availability of current re venues (non-debt sources) wh ich are reflected in the City’s multi-year forecast

4. Timing of capital projects

5. A financing plan or methodology and debt service requirements C. Review of Capital Plan. It is anticipated that the Ca pital Plan will be modified from time to time. Modifi cations to the Capital Plan shall be accompanied by a report from the City’s Direc tor of Finance that discusses the impact of the proposed borrowing on the Capital Plan. The Capital Plan is reviewed and presented to the City Council to coincide with the budget cycle.

D. Qualified Capital Projects. Generally, the City will not issue bonds for capital improvements with a cost less than $250,000. The Cit y shall not construct or acquire a public facility if it is unable to adequately provide for the subsequent annual operation and maintenance costs of the facility throughout its life.

E. Cash Financing of Capital Outlays. To demonstrate the City's commitment to a continued capital program, ensure carefu l consideration of capital expenditure levels, and enhance the City's overall credi t worthiness, the City shall seek to fund at least between two and five percent of the overall capi tal program from current resources, dependi ng upon the specific pr ojects and annual budgetary constraints.

F. Authorization for Issuance. Debt issuance for capital projects shall not be considered unless such issuance has bee n incorporated into the Capital Plan adopted by City Council.

G. Affordability Targets. The ratios, standards, and limi ts identified below are primarily intended to restrict the use of debt financing in order to facilitate long- term access to capital while ensuring t hat financial leveraging decisions do not negatively impact the City’s annual operations.

1. Debt Capacity - The City’s approach to its financ ings is to ensure continued market access at the lowest cost of borrowing. As such, the Debt Policy suggests affordability or capacity target s which are established by the rating agencies (Moody’s Investor Service, St andard & Poor’s, and Fitch). Debt capacity is defined as debt service pay ments as a percent age of operating expenditures and debt service payments. The debt capacity ratio will be calculated each year. Below are the debt capacity ranges:
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 Low debt capacity <5%
 Moderate debt capacity 5% - 15%
 High debt capacity >15%

A separate Debt Affordability Study wil l be presented when new debt is being considered.

A presentation of the Cit y’s debt capacity shall be made to the City Council with the proposed approval of any debt, lease financing or other instruments of installment repayments with maturities longer than three years.

2. Self-supporting Debt - In some cases, the Cit y will issue debt for which there is an identified repayment source. For debt to be characterized as self- supporting, the repayment source must support the issue through its maturity.

Bond issues where interest has been capitalized are not considered to be self-supporting.

3. Overlapping Debt - (including debt from all other jurisdictions, which tax City taxpayers) will be taken into consideration in planning debt issuance.

H. Credit Quality. All City debt management activities will be conducted to receive the highest credit ratings possible for eac h issue, consistent with the City’s financing objectives, and to maintain the current credit ratings assigned to the City's debt by the major credit rating agencies.

III. Debt Administration
This Policy will govern the issuance and management of debt issued by the City.

This Policy will be reviewed by the Financ e Department on an annual basis and reviewed by the Finance and Audit St anding Committee every two years.. Any changes to the Policy will be approved by the City Council. The City Council is responsible for overall policy direction of th is Policy, as well as the authorization of each debt financing. The City Manager and Dir ector of Finance will be responsible for implementation of the Policy.

A. Debt Administration Activities. The Finance Department is responsible for the City's debt administration activities including investment of bond proceeds, monitoring compliance with bond covenant s, implementing internal control procedures to ensure the use of proceeds of bonds or other debt will be directed to the intended use, monitori ng use of facilities financed with tax- exempt debt, continuing disclosure, monitoring arbitrage compliance for tax- exempt debt, and ongoing interactions wit h credit rating agencies. Departments implementing debt-financed c apital programs will work in partnership with the Finance Department to provide information and otherwise facilitate the issuance and administration of debt.

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B. Internal Controls. The Finance Director will regularly review internal control procedures to ensure that the proceeds of any debt issuance are directed to the intended use. Such procedures will assi st the City in maintaining the effectiveness and efficiency of debt administration activities, properly expending funds, reliably reporting debt incurred by the City and the use of the proceeds, complying with all laws and regulations, preventing fraud, and avoiding conflict of interest. The Finance Director or designee will:

 Monitor the use of debt proceeds and t he use of debt-financed assets (e.g., facilities, furnishings or equipment) throughout the term of the debt to ensure compliance
 Maintain all relevant documents and records in connection with each debt issuance to document compliance
 Employ appropriate internal contro ls and redundancy of review to ensure all approved contracts and expenditures are consistent with the terms of the bond sale
 Ensure that all bond proceeds and inve stments are tracked in a manner which facilitates timely and accurate calculations
 Monitor funds and accounts of trust ee and review statements and records for bond expenditures
 Confirm compliance with tax ce rtificate covenants for debt  Consult with bond counsel and other profe ssional expert advisers to assist the City in its debt issuance and debt administrative processes as needed

C. Compliance. When issuing debt, the City will comply with all applicable policies regarding initial bond disclosure, continuing disclosure, post-issuance compliance, and investment of bond proceeds. The City will periodically review the requirements of and will remain in compliance with the following:
 Federal securities law, including any continuing disclosure undertakings entered into by the City in accordance with Securities and Exchange Commission Rule 15c2-12
 Any federal tax compliance requirem ents, including, without limitation, arbitrage and rebate compliance
 Regulations set forth in Government Code Section 8855; the City will comply with all annual reporting requi rements to the California Debt and Investment Advisory Commission (CDIAC) and related regulations  The City’s investment policies as they relate to the use and investment of bond proceeds

IV. Standards for Use of Debt Financing
The City’s debt management program will promote the use of debt only in those cases where public policy, equity, and econom ic efficiency favor debt over cash (pay-as-you-go) financing. Whenever possible, the debt shall be self-supporting. 445

A. Long-Term Capital Projects. Debt will be used primarily to finance long-term capital projects — paying for the facilities or equipment over some or all of their useful life and concurrent wit h the stream of benefits from these facilities. The City will consider the debt capacity in determining the use of debt financing.

B. Special Circumstances for Non-Capital-Project Debt Issuance. Debt may be used in special circumstances for projec ts other than long-term capital projects such as pension obligations, only after careful policy evaluation by the City.

C. Debt Financing Mechanisms. The City will evaluate t he use of all financial alternatives available, including, but not limited to: long-term debt, pay-as-you-go, joint financing, reserve fund releases, lease-purchase, authorit y sponsored debt, special districts, community facility dist ricts, special assessments, Mello Roos bonds, state and federal aid, certificates of participation, ta x increment, private placement, master lease programs, and interfund borrowing. The City will utilize the most cost advantageous financing alter native available while limiting the General Fund’s risk exposure.

D. Record-Keeping. All debt related records shall be maintained with the Finance Department and City Clerk. At a minimum, this repository will include all official statements, bid documents, ordinances, indentures, trustee reports, leases, etc., for all City debt. To the extent that official transcripts incorporate these documents, possession of a transcript will su ffice (transcripts may be in hard copy or stored on CD-ROM). The Treasur y Division will maintain all available documentation for outstanding debt and will develop a standar d procedure for archiving transcripts for any new debt.

E. Rebate Policy and System . The City will accurately account for all interest earnings in debt-related funds. These records will be designed to ensure that the City is in compliance with all debt co venants, and with State and Federal laws.

The City will maximize the interest earni ngs on all funds withi n the investment parameters set forth in each respective in denture. The City will calculate and report interest earnings that relate to In ternal Revenue Code rebate, yield limits, and arbitrage.

V. Financing Criteria
The Finance Director and/or designated staf f will investigate all possible project financing alternatives including, but not limited to, bonds, loans, state bond pools, and grants. The City has also implement ed an impact fee program whereby new development pays its fair share for the increased capital and operating costs that result from new construction. Although impact fee pay ments may be restricted to specific projects or types of projects , the use of these payments can be an important source of financing for certain capital projects. 446

A. Types of Debt. When the City determines that t he use of debt is appropriate, the following criteria will be utilized to evaluate the type of debt to be issued.

1. Cash Funding. The City funds a significant portion of capital improvements on a “pay-as-you-go” basis. As part of a “pay as you go” strategy, the City will first look for grant funding for capital projects.

2. Interfund Borrowing. The City may borrow internally from other funds with surplus cash in lieu of incurring third- party debt. Purposes that could warrant the use of this type of borrowing incl ude short-term cash flow imbalances, interim financing pending the issuance of debt, or long-term financing in lieu of debt. The City funds from which the money is borrowed shall be repaid with interest based upon the earning rate of the City’s investment pool – Local Agency Investment Fund (LAIF). The Finance Director shall also exercise due diligence to ensure that it is financially prudent for the fund making the loan.

The purpose of interfund borrowing is to finance high priority needs and to reduce costs of interest, debt issuance, and/or administration. Interfund loans will be evaluated on a case by case basis. Any borrowing between two City funds will require a repayment schedule approved by City Council.

3. Long-Term Debt . The City may issue long-term debt (e.g., general obligation bonds, revenue bonds, tax incr ement bonds, lease obligations, or variable rate bonds) when required capital improvements cannot be financed from current revenues. The proceeds derived from long-term borrowing will not be used to finance current operations or normal maintenance. Long-term debt will be structured such that the obligations do not exceed the expected useful life of the respective projects.

The City shall not use any debt, lease financing or other instruments of installment repayments with terms l onger than two years to finance the operating costs. Exceptions to t he policy may be made on a case-by-case basis by City Council approval.

4. Short-Term Debt. Short-term borrowing may be utilized for the temporary funding of operational cash flow deficits or anticipated revenues (defined as an assured source with the anticipat ed amount based on conservative estimates). The City will determine and ut ilize the least costly method for short-term borrowing. The City may issue short-term debt when there is a defined repayment source or amortization of principal, subject to the following policies:
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a) Bond Anticipation Notes (BANs) may be issued instead of capitalizing interest to reduce the debt service during the construction period of a project or facility. The BANs shall mature not more than 3 years from the date of issuance. BANs shall mature within 6 months after substantial completion of the financed facility.
b) Tax and Revenue Anticipation Notes (TRANs) shall be issued only to meet projected cash flow needs consistent with a finding by bond counsel that the sizing of the issue fully conforms to Federal IRS requirements and limitations.
c) Bank Loans/Lines of Credit shall be considered as an alternative to other short-term borrowing options. The lines of credit shall be structured to limit concerns as to the Internal Revenue Code.
d) Other Short-Term Debt, including commercial paper notes, may be used.

5. Lease-Purchase Debt. Lease-purchase debt, incl uding certificates of participation, shall be considered as an alternative to long-term vendor leases. Such debt shall be subject to annual appropriation. In order to reduce the cost of lease borrowing and to improve control over leases, the City may adopt a master lease program.

6. Variable Rate Debt. To maintain a predictable debt service burden, the City may give preference to debt that carries a fixed interest rate. Variable rate debt, which is synthetically fixed, shall be considered fixed rate debt through the maturity of the swap. The City, how ever, may consider variable rate debt in certain instances, such as:
a) High Interest Rate Environment . Current interest rates are above historic average trends.
b) Variable Revenue Stream . The revenue stream for repayment is variable, and is anticipated to move in the same direction as market- generated variable interest rates, or the dedication of revenues allows capacity for variability.
c) Adequate Safeguards Against Risk. Financing structure and budgetary safeguards are in place to prevent adv erse impacts from interest rate shifts; such structures could include, but are not limited to, interest rate swaps, interest rate caps and the matching of assets and liabilities. d) Finance Analysis. The Finance Director will provide to the Finance Committee an analysis evaluating and quantifying the risks and returns 448

involved in the variable rate financi ng and recommending variable rate as the lowest cost option.
e) As a Component to Synthetic Fixed Rate Debt. Variable rate bonds may be used in conjunction with a financial strategy, which results in synthetic fixed rate debt. Prior to using synthetic fixed rate debt, the City shall certify that the interest rate co st is lower than traditional fixed rate debt.
f) Variable Rate Debt Capacity. Consistent with rating agency guidelines, the percentage of variable rate debt outstanding (not including debt which has been converted to synthetic fixed rate debt) shall not exceed 20% of the City’s total outstanding debt.

VI. Terms and Conditions of Bonds
The City shall establish all terms and condi tions relating to the issuance of bonds, and will control, manage, and invest all bond proceeds. Unless otherwise authorized by the City, the following shall serve as bond requirements:

A. Term. All capital improvements financed through the issuance of debt will be financed for a period not to exceed the useful life of the impr ovements, but in no event greater than thirty-five years.

B. Capitalized Interest. Certain types of financings such as certificates of participation and lease-secured financings will require the use of capitalized interest from the issuance date until the City has beneficial use and occupancy of the financed project. Interest shall not be funded (capitalized) beyond a period of three years, or a shorter period if furt her restricted by stat ute. The City may require that capitalized interest on the initial series of bonds be funded from the proceeds of the bonds. Interest earnings may, at the City's discretion, be applied to extend the term of capitalized inte rest but in no event beyond the term statutorily authorized.

C. Debt Service Structure. Debt issuance shall be planned to achieve relatively rapid repayment of debt whil e still matching debt service to the useful life of facilities. The City shall avoid the use of bullet or balloon maturities except in those instances where these maturities serve to levelize existing debt service.

D. Call Provisions. In general, the City’s securities will include a call feature, which is no later than 10 years from the date of delivery of the bonds. The City will avoid the sale of non-callable bonds absent careful evaluation by the City of the value of the call option.
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E. Original Issue Discount. An original issue discount will be permitted only if the City determines that such discount result s in a lower true interest cost on the bonds and that the use of an original issu e discount will not adversely affect the project identified by the bond documents.

F. Deep Discount Bonds. Deep discount bonds may provide a lower cost of borrowing in certain markets. The City will carefully consider their value and effect on any future refinancings as a result of the lower-than-market coupon.

G. Derivative Structures. The City will consider the use of derivative structures as a hedge against future interest rate risk when appropriate. The City will avoid the use of derivative structures for speculat ive purposes. The Cit y will consider the use of derivative structures when it is able to gain a comparative borrowing advantage of 10 or more basis points, and is able to reasonably quantify and understand potential risks.

The City shall not use derivative structur es for the sole purpose of generating operating or capital proceeds, without a det ermination that such structure will accrue interest rate and borrowing costs benefits for the City.

H. Multiple Series. In instances where multiple series of bonds are to be issued, the City shall make a final determination as to which facilitie s are of the highest priority and those facilities which will be financed first, pursuant to funding availability and the proposed timing of facilities development, and which will generally be subject to the earliest or most senior lien.

VII. Credit Enhancements
The City will consider the use of credit enhancement on a case-by-case basis, evaluating the economic benefit versus cost for each case. Only when a clearly demonstrable savings can be shown shall enhancement be considered. The City will consider each of the following enhancements as alte rnatives by evaluating the cost and benefit of such enhancement.

A. Bond Insurance. The City shall have the authority to purchase bond insurance when such purchase is deemed prudent and advantageous. The predominant determination shall be based on such insurance being less costly than the present value of the differ ence in the interest on insured bonds versus uninsured bonds.

1. Provider Selection. The Director of the Finance or his/her designee will solicit quotes for bond insurance from intere sted providers, or in the case of a competitive sale submit an application fo r pre-qualification on insurance. In a negotiated sale, the Director or his/her designee shall have the authority to select a provider whose bid is most cost effective and whose terms and conditions governing the guarantee are satisf actory to the City. The winning 450

bidder in a competitive sale will dete rmine whether it chooses to purchase bond insurance for the issue.

B. Debt Service Reserves. When required, a reserve fund shall be funded from the proceeds of each series of bonds, subject to federal tax regulations and in accordance with the requirements of cr edit enhancement providers and/or rating agencies.

The City may purchase reserve equivale nts (i.e., the use of a reserve fund surety) when such purchase is deemed prudent and advantageous. Such equivalents shall be evaluated in comparison to cash funding of reserves on a net present value basis.

C. Letters of Credit. The City may enter into a letter-of-credit (“LOC”) agreement when such an agreement is deemed prudent and advantageous. The Director of the Finance or his/her designee shall pr epare (or cause to be prepared) and distribute to qualified financ ial institutions as descr ibed in paragraph 2 below, a request for qualifications which includes terms and conditions that are acceptable to the City.

1. Provider Selection. Only those financial institutions with long-term ratings greater than or equal to t hat of the City, and short-te rm ratings of VMIG 1/A-1 F1, by Moody’s Investors Service, Standard & Poor’s and Fitch Inc., respectively, may be solicited.

2. Selection Criteria. The selection of LOC providers will be based on responses to a City-issued request for qua lifications; criteria will include, but not be limited to, the following:
a) Ratings at least equal to or better than the City’s
b) Evidence of ratings (including “Outlook”)
c) Trading value relative to other financial institutions d) Terms and conditions acceptable to the City; the City may provide a term sheet along with the request for qualif ications to which the financial institution may make modifications
e) Representative list of clients for w hom the bank has provided liquidity facilities
f) Fees, specifically, cost of LOC, dr aws, financial institution counsel and other administrative charges
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VIII. Refinancing Outstanding Debt
The Finance Director shall have the re sponsibility to analyze outstanding bond issues for refunding opportunities that may be presented by underwriting and/or financial advisory firms. The Finance Dire ctor will consider the following issues when analyzing possible refunding opportunities:

A. Debt Service Savings. The City establishes a minimum savings threshold goal of three percent of the refunded bond principal amount or at least $200,000 in present value savings (including for egone interest earnings) unless there are legal reasons for defeasance. The present value savings will be net of all costs related to the refinancing. The decision to take savings on an upfront or deferred basis must be explicitly approved by t he City Manager or th e Director of the Finance.

B. Restructuring. The City will refund debt when in its best interest to do so.

Refundings will include restructuring to meet unanticipated revenue expectations, terminate swaps, achieve cost savings, mi tigate irregular debt service payments, release reserve funds, or remove unduly restrictive bond covenants.

C. Term of Refunding Issues. The City may refund bonds within the term of the originally issued debt. However, the City may consider maturity extension, when necessary to achieve a desired outcome, pr ovided that such extension is legally permissible. The City may also consider shortening the term of the originally issued debt to realize greater savings. The remaining useful life of the financed facility and the concept of inter-generational equity should guide this decision.

D. Escrow Structuring. The City shall utilize the least co stly securities available in structuring refunding escrows. The City will examine the viability of an economic versus legal defeasance on a net pres ent value basis. A certificate will be required from a third party agent who is not a broker-dealer, stating that the securities were procured through an arms-length, competitive bid process (in the case of open market securities), that such securities were more cost effective than State and Local Government Obligations (SLGS), and that the price paid for the securities was reasonable withi n Federal guidelines. Under no circumstances shall an underwriter, agent or financial advisor sell escrow securities to the City from its own account.

E. Arbitrage. The City shall take all necessary steps to optimize escrows and to avoid negative arbitrage in its refundings. Any resulting positive arbitrage will be rebated as necessary according to Federal guidelines.
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IX. Methods of Issuance
The City will determine, on a case-by-ca se basis, whether to sell its bonds competitively or through negotiation. General Obligation Bonds and Tax and Revenue Anticipation Notes will be issued on a competitive basis.

A. Competitive Sale. In a competitive sale, the City’s bonds shall be awarded to the bidder providing the lowe st true interest cost as long as the bid adheres to the requirements set forth in the official notice of sale.

B. Negotiated Sale. The City recognizes that some securities are best sold through negotiation. In its consideration of a negotia ted sale, the City shall assess the following circumstances:

1. Bonds issued as variable rate demand obligations

2. A complex structure which may require a strong pre-marketing effort

3. Size of the issue which may limit the number of potential bidders

4. Market volatility is such that the City would be better served by flexibility in timing its sale in changing interest rate environments
C. Private Placement. From time to time the City may elect to privately place its debt. Such placement shall only be consid ered if this method is demonstrated to result in a cost savings to the City relative to other methods of debt issuance.

D. Issuance Method Analysis. The City shall evaluate each method of issuance on a net present value basis.

E. Feasibility Analysis. Issuance of self-supporting revenue bonds will be accompanied by a finding that demonstrates the projected revenue stream's ability to meet future debt service payments.

X. Underwriter Selection
Senior Manager Selection: The Director of the Finance and/or his/her designee shall recommend to the Cit y Manager the selection of a senior manager for a proposed negotiated sale. Request for Proposals (RFP) or Request of Qualifications (RFQ) will be used to determine the selection and appointment of the senior managers and co-managers on the debt issuances.

A. General. The criteria for selection as reflec ted in the RFP or RFQ shall include but not be limited to the following:
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1. The firm’s ability and experience in managing complex transactions

2. Prior knowledge and experience with the City

3. The firm’s willingness to risk capital and demonstration of such risk

4. The firm’s ability to sell bonds

5. Quality and experience of personnel assigned to the City’s engagement

6. Financing plan presented
B. Co-Manager Selection. Co-managers will be selected on the same basis as the senior manager. In addition to thei r qualifications, co-managers appointed to specific transactions will be a function of transaction size and the necessity to ensure maximum distribution of the City’s bonds.

C. Selling Groups. The City may establish selling gr oups in certain transactions.

To the extent that selling gr oups are used, the Director of Finance at his or her discretion, may make appointments to se lling groups from within the pool of underwriters or from outside the pool, as the transaction dictates.

D. Underwriter’s Counsel. In any negotiated sale of City debt in which legal counsel is required to represent the underwriter, the appointment will be made by the lead underwriter.

E. Underwriter’s Discount.
a) The Director of the Finance and/or hi s/her designee will evaluate the proposed underwriter’s discount against comparable issues in the market. If there are multiple underwriters in the transaction, the Director will determine the allocation of fees with respect to the management fee. The determination will be based upon participation in the structuring phase of the transaction. b) All fees and allocation of the management fee will be determined prior to the sale date; a cap on management fee, expenses and underwriter’s counsel will be established and communicated to all par ties. The senior manager shall submit an itemized list of expenses c harged to members of the underwriting group. Any additional expenses must be substantiated.

F. Evaluation of Financing Team Performance. The City will evaluate each bond sale after its completion to assess the following: costs of issuance including underwriters’ compensation, pricing of the bonds in terms of the overall interest cost and on a maturity-by-maturity basis, and the distribution of bonds and sales credits.
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G. Syndicate Policies. For each negotiated transaction, syndicate policies will be prepared that will describe the designation policies governing the upcoming sale.

H. Designation Policies. To encourage the pre-marketing efforts of each member of the underwriting team , orders for the City’s bon ds will be net designated, unless otherwise expressly stated. The City shall require the senior manager to:

1. Equitably allocate bonds to other managers and the selling group

2. Comply with MSRB regulations governing the priority of orders and allocations

3. Within 10 working days after the sale date, submit to the Director of Finance a detail of orders, allocations and other relevant information pertaining to the City’s sale
XI. Market Relationships
A. Rating Agencies and Investors. The City Manager and Director of the Finance shall be responsible for maintaining the City’s relationships with Moody’s Investors Service, Standard & Poor’s and Fitch Inc. The City may, from time to time, choose to deal with only one or tw o of these agencies as circumstances dictate. In addition to general comm unication, the City Manager and the Director of Finance shall meet with or offer conference calls with agency analysts in connection with the planned sale.

B. City Council Communication. The City Manager shall report to the City Council feedback from rating agencies a nd/or investors regarding the City’s financial strengths and weaknesses and recommendations for addressing any weaknesses.

C. Continuing Disclosure. The City shall remain in compliance with Rule 15c2-12 by filing its annual financial statements and other financ ial and operating data for the benefit of its bondholders wit hin 270 days of the close of the fiscal year. The inability to make timely filings mu st be disclosed and would be a negative reflection on the City. While also relyi ng on timely audit and preparation of the City’s annual report, the Director of Finance will ensure the City’s timely filing with each Nationally Recognized Municipal Securities Information Repository.

The City shall ensure compliance with Government Code Section 8855 including notification to the CDIAC of proposed debt. At least 30 days prior to the sale of any debt issue, the City shall submit a report of th e proposed issuance to the CDIAC by any method approved by CDIAC . Such report shall include a self- certification that the City has adopted a policy concerni ng the use of debt that complies with law and that the contemplated debt issuance is consistent with that policy. The City shall submit a report of final sale to CDIAC by any method 455

approved by CDIAC no later than 21 days after the sale of the debt. The report shall include the information required by CDIAC.

The City shall submit an annual report to CDIAC for any issuance of debt for which it has submitted a report of final sale on or after J anuary 21, 2017. On or before January 31 of each year, the City shall s ubmit a report to t he CDIAC regarding the debt authorized, the debt outstanding, and the use of proceeds of the issued debt for the period from July 1 to J une 30. The annual report shall comply with the requirements of Government Code Section 8855 and related regulations.

D. Rebate Reporting. The use of bond proceeds and t heir investments must be monitored to ensure compliance with arbitr age restrictions. Existing regulations require that issuers calculate annual rebat es, if any, related to each bond issue, with rebate, if due, paid every five years. Therefore, the Director of Finance shall ensure that proceeds and investments are tracked in a manner which facilitates accurate calculation, that calculations are completed, and rebates, if any, are made in a timely manner.

E. Other Jurisdictions. From time to ti me, the City will issue bonds on behalf of other public or private entities (“conduit” issues). While the City will make every effort to facilitate the desires of thes e entities, the Director of the Finance will ensure that the highest quality financings are done and that the City is insulated from all risks. The City shall require that all conduit financings achieve a rating at least equal to the City’s ratings or that credit enhancement is obtained.

XII. Fees. The City will charge an administrative fee equal to direct costs plus indirect costs as calculated by the City’s OMB A87 model to reimburse its administrative costs incurred in debt issuance on behalf of other governmental entities.

XIII. Consultants
The City shall select its primary consult ant(s) by competitive process through a Request for Proposals (RFP).

A. Selection of Financing Team Members. The City Manager and/or the Director of Finance will make recommendations for financial advisors, underwriters, and bond counsel. Final approval will be provided by the City Council.

B. Financial Advisor. A pool of financial advisors will be created to assist the City in its debt issuance and debt administration processes. Selection of the City’s financial advisor(s) shall be based on, but not limited to, the following criteria:
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1. Experience in providing consulting services to complex issuers

2. Knowledge and experience in structuring and analyzing complex issues

3. Experience and reputation of assigned personnel

4. Fees and expenses
C. Financial Advisory Services. Financial advisory services provided to the City shall include, but shall not be limited to the following:

1. Evaluation of risks and opportunities associated with debt issuance

2. Monitoring marketing opportunities

3. Evaluation of proposals submitted to the City by investment banking firms

4. Structuring and pricing

5. Preparation of request for proposals for other financial services (trustee and paying agent services, printing, credit fa cilities, remarketing agent services, etc.)

6. 6. Advice, assistance and preparation for presentations with rating agencies and investors
D. Conflicts of Interest. The City also expects that its financial advisor will provide the City with objective advice and analysis, maintain the confidentiality of City financial plans, and be free from any conflicts of interest.

E. Bond Counsel. City debt will include a written opinion by legal counsel affirming that the City is authorized to issue t he proposed debt, that the City has met all constitution and statutory requirem ents necessary for issuance, and a determination of the proposed debt’s federal income tax status. The approving opinion and other documents relating to the issuance of debt will be prepared by counsel with extensive experience in public finance and tax issues.

Compensation will be based on a fixed fee schedule and will vary based on the complexity of the transaction.

F. Disclosure by Financing Team Members. All financing team members will be required to provide full and complete di sclosure, relative to agreements with other financing team members and outside parties. The extent of disclosure may vary depending on the nature of the transaction. However, in general terms, no agreements shall be permitted which coul d compromise the firm’s ability to 457

provide independent adv ice which is solely in the City’s best interests or which could reasonably be perceived as a conflict of interest.

G. Financing Team Se lection Process. The City shall conduct a request for qualifications from all red-book firms and other potential candidates of qualified underwriters, financial advisors, bond couns el and other consultants for each of the following areas:

 General Obligation Bonds, asse ssment bonds and other bond issuances based on voter-approval revenues;
 Redevelopment tax-increment bonds (including low and moderate income housing);
 Revenue bonds, lease financing and other obligations on existing City revenues.

Selected candidates may at the City’s discr etion provide financial services for a period not to exceed three years.

Glossary
Arbitrage. The difference between the interest paid on the tax-exempt securities and the interest earned by investing the secu rity proceeds in higher-yielding taxable securities. IRS regulations govern arbi trage on the proceeds from issuance of municipal securities.

Balloon Maturity. A later maturity within an issue of bonds which contains a disproportionately large percentage of the principal amount of the original issue.

Bond Anticipation Notes (BANs). Notes issued by the government unit, usually for capital projects, which are paid from the proceeds of the issuance of long term bonds.

Bullet Maturity. A maturity for which there are no sinking fund payments prior to the stated maturity date.

Call Provisions. The terms of the bond contract giving the issuer the right to redeem all or a portion of an outstanding issue of bonds prior to their stated dates of maturity at a specific price, usually at or above par.

Capitalized Interest. A portion of the proceeds of an issue which is set aside to pay interest on the securities for a specif ic period of time. Interest is commonly 458

capitalized for the construction period of the project.

Certificates of Participation (COP). A bond from an issue, which is secured by lease payments made by the party leasing the facilities, financed by the issue. Typically certificates of participation ("COPs") are used to finance construction of facilities (i.e., schools of office buildings) used by a state or municipality, which leases the facilities from a financing authority. Often the leasing municipa lity is legally obligated to appropriate moneys from its general tax revenues to make lease payments.

Commercial Paper. Very short-term, unsec ured promissory notes issued in either registered or bearer form, and usually backed by a line of credit with a bank.

Competitive Sale. A sale of securities by an iss uer in which underwriters or syndicates of underwriters submit sealed bids to purchase the securities in contrast to a negotiated sale.

Continuing Disclosure. The principle that accurate and complete information material to the transaction wh ich potential investors would be likely to consider material in making investment decisions with respec t to the securities be made available on an ongoing basis.

Credit Enhancement. Credit support purchased by the i ssuer to raise the credit rating of the issue. The most common credit enhancements consist of bond insurance, direct or standby letters of credit, and lines of credit.

Debt Service Reserve Fund. The fund in which moneys are placed which may be used to pay debt service if pledged rev enues are insufficient to satisfy the debt service requirements.

Deep Discount Bonds. Bonds which are priced for sale at a substantial discount from their face or par value.

Derivatives. A financial product whose value is derived from some underlying asset value.

Designation Policies. Outline of how an investor’s order is filled when a maturity is oversubscribed when ther e is an underwriting syndicate. The senior managing underwriter and issuer decide how the bonds will be allocated among the syndicate.

There are three primary classifications of orders, which form the designation policy.

The highest priority is given to Group Net or ders; the next priority is given to Net Designated orders and Member orders are given the lowest priority.

Escrow. A fund established to hold moneys pledged and to be used to pay debt 459

service on an outstanding issue.

Expenses. Compensates senior managers for ou t-of-pocket expenses including:
underwriters’ counsel, DTC charges, travel, syndicate expenses, deal er fees, overtime expenses, communication expenses, computer time and postage.

Lease-Purchase. A financing lease which may be sold publicly to finance capital equipment, real property acquisition or construction. The lease may be resold as certificates of participation or lease revenue bonds.

Letters of Credit. A bank credit facility wherein the bank agrees to lend a specified amount of funds for a limited term.

Management Fee. The fixed percentage of the gro ss spread which is paid to the managing underwriter for the structuring phase of a transaction.

Members. Underwriters in a syndicate other than the senior underwriter.

Moody’s Median. Key financial, debt, economic and tax base statistics with median values for each statistic presented. Moody’ s uses audits for both rated and unrated cities to ensure that the medians presented are representative of all cities.

Negotiated Sale. A method of sale in which the i ssuer chooses one underwriter to negotiate terms pursuant to which such underwriter will purchase and market the bonds.

Original Issue Discount. The amount by which the or iginal par amount of an issue exceeds its public offering price at the time it is originally offered to an investor.

Overlapping Debt. That portion of the debt of other governmental units for which residents of a particular municipality are responsible.

Pay-As-You-Go. An issuer elects to finance a project with existing cash flow as opposed to issuing debt obligations.

Present Value. The current value of a future cash flow.

Private Placement. The original placement of an is sue with one or more investors as opposed to being publicly offered or sold.

Rebate. A requirement imposed by Tax Reform Act of 1986 whereby the issuer of the bonds must pay the IRS an amount equal to its profit earned from investment of bond proceeds at a yield above the bond yield ca lculated pursuant to the IRS code together with all income earned on the accumulated profit pending payment.

460

Selling Groups. The group of securities dealers w ho participate in an offering not as underwriters but rather who receive securities less the selling concession from the managing underwriter for distribution at the public offering price.

Special Assessments. Fees imposed against properties, which have received a special benefit by the cons truction of public improvements such as water, sewer and irrigation.

Syndicate Policies. The contractual obligations placed on the underwriting group relating to distribution, price limitations and market transactions.

Tax Increment. A portion of property tax revenue received by a redevelopment agency, which is attributable to the increase in assessed valuation since adoption of the project area plan.

Underwriter. A dealer that purchases new issues of municipal securities from the Issuer and resells them to investors.

Underwriter’s Discount. The difference between the price at which bonds are bought by the Underwriter from the Issuer and the price at which they are reoffered to investors.

Variable Rate Debt. An interest rate on a security, which changes at intervals according to an index or a formula or other standard of measurement, as stated in the bond contract.
461
City of Goleta

Debt Management Policy
Post-Issuance and Continuing Disclosure Procedures

(Last Updated March 2, 2020)

462
City of Goleta

Post-Issuance and Continuing Disclosure Procedures

PURPOSE
The purpose of these Disclosure Procedures (hereinafter “Procedures”) is to memorialize various procedures to be followed in connection with the public offering of obligations, including notes, bonds and certificates of participation, by the City of Goleta, the Successor Agency to the Redevelopment Agency for the City of Goleta, and other entities related to, or controlled by, the City (collectively re ferred to in these Procedures as the “City”) so as to ensure that the City complies with all applicable disclosure obligations and requirements under the federal securities laws.

BACKGROUND
The City from time to time causes bonds, notes or other obligations to be issued and certificates of participation to be executed and delivered (c ollectively, “Obligations”) in order to finance or refinance capital im provements, other long-term programs and working capital needs. In offering Obligations to the public, and at other times when the City makes certain reports, the City must comply with the “ant i-fraud rules” of federal securities laws. “Anti-fraud rules” refers to Section 17 of the Securities Act of 1933 and Section 10(b) of the Securi ties and Exchange Act of 1934, and regulations adopted by the Securities and Exchange Commission under those Acts, par ticularly “Rule 10b-5” under the 1934 Act.

The core requirement of these rules is that potential investors in Obligations must be provided with all “material” information re lating to the offered Obligations. The information provided to investors must not contain any material misstatements, and the City must not omit material information which would be necessary to provide to investors a complete and transparent description of the Obligations and the City’s financial condition. In the context of the sale of securities, a fact is considered to be “material” if there is a substantial likelihood that a reasonable investor would consider it to be important in determining whether or not to purchase the securities being offered.

When the City offers Obligations for sale to the public, the two central disclosure documents which are prepared are a preliminary official statement (“POS”) and a final official statement (“OS”, and collectively wi th the POS, the “Off icial Statement”). The Official Statement generally consists of (i) a section describing the specifics of the 463

Obligations (including maturity dates, interest rates, redemption provisions, the specific type of financing, the security and source of repayment for the Obligations and other matters particular to the financing), (ii) a se ction which provides information on the City, including its financial conditi on (both historical and bu dgetary) as well as certain operating information (which may be ad valo rem tax collections, the State funding process, enrollment, employee counts, mate rial litigation and other post-employment benefit and pension plan descriptions, dependi ng on the type of Obligations being issued) (the “City Section”), and (iii) various other appendices, including the City’s audited financial report, form of the propos ed legal opinion, and form of continuing disclosure undertaking. Invest ors use the Official Statement as one of their primary resources for making informed investment decisions regarding a purchase of the Obligations.

DISCLOSURE PROCESS

When the City determines to issue Obligat ions, the City Manager and/or Finance Director has a discussion with Bond Counsel, Disclosure Coun sel, the lead underwriter and any City financial advisor to determine t he type of Obligations to be sold and the information required to be gathered by the City for inclusion in the Official Statement.

The Finance Director will involve other members of the City staff who are knowledgeable with City oper ations to assist in the re view and updating of the City Section. The Finance Director then requests the relevant City employees to gather the information necessary for the preparation of the portions of the Official Statement (including particularly the City Section) fo r which they are responsible. Any major financial or operational changes since the date of the last issue of Obligations should be analyzed and included in the Cit y Section if material. The Finance Director is responsible for reviewing and preparing or updating the portions of the City Section which are within his or her par ticular area of k nowledge. Once the Official Statement has been substantially updated, the entire Offi cial Statement is shared with the City Manager for review and input. Additionally, all participants in the disclosure process are separately responsible for reviewing the entire Official Statement.

Members of the financing team, includi ng the Bond Counsel and Disclosure Counsel, assist staff in determining the mate riality of any particular item, and in the development of specific language to be incl uded in the City Section. Members of the financing team also assist the City in the deve lopment of a “big picture” overview of the City’s financial condition, to be included in the City Section. This overview highlights the City’s current financial condition and any developing trends in City budgets or operations, including pot ential areas of financial stress or concern. Bond Counsel and Disclosure Counsel have a confi dential, attorney-client rela tionship with officials and staff of the City, so all matters may initially be shared confidentially before decisions are reached as to required disclosures.

The City Manager, Finance Director, or a member of the financing team at the direction of either of such officials, schedul es one or more meetings or conference calls of the financing team (which in cludes City officials, Bond Counsel, Disclosure Counsel, the underwriter of t he Obligations, any underwriter’s counsel, and any City financial 464

advisor), and new drafts of t he forepart of the Official St atement and the City Section are circulated and discussed. Such communications may occur via electronic means rather than by meetings or conference calls. During this part of the process, there is substantial contact among City staff and ot her members of the financing team to discuss issues which may arise, determine the materiality of particular items and ascertain the prominence in which the items should be disclosed.

Prior to distributing a POS to potential investors, there is typically a formal conference call which includes City officials involved in the prep aration of the POS, members of the financing team, includin g Bond Counsel, Disclosure Counsel, the underwriter or underwrit ers and any underwriter’s counsel, during which due diligence questions are asked regarding the Official Statement to allow the underwriter or underwriters to obtain information from the City’s senior officials and to discharge their obligation under federal securities laws to determine that they may reasonably rely on the statements in the POS. This is referred to as a “due diligence” meeting.

A substantially final form of the POS is provided to the City Council in advance of approval to afford the City Council an opportunity to review the POS, ask questions and make comments. The substantially final form of the POS is appr oved by the City Council which generally authorizes certain senior staff to make additional corrections, changes and updates to the POS in consulta tion with the City’s Bond Counsel and Disclosure Counsel.

At the time the POS is posted for review by potential invest ors, a senior City official executes a certificate deeming the POS complete (except for certain pricing terms) as required by Securities and Exchange Commission Rule 15c2-12.

Between the posting of the POS for review by potential investors and delivery of the final OS to the underwriter for redelivery to actual investors in the Obligations, any material changes and developments will be incorporated into the POS, including particularly the City Section, if required. If necessary to reflect developments following publication of the POS or OS, as applicable, supplem ents will be prepared and published if needed to ensure th at the POS or OS, as applic able, does not contain any material misstatement of facts or omit to state a material fact.

In connection with the closing of the transaction, a senior City official executes a certificate stating that the OS (excluding certain limited portions), as of its date did not, and as of the date of closing does not, contain any untrue stat ement of material fact or omit to state any material fact necessary to make the statements contained in the OS in light of the circumstances under which they were made, not misleading.

CITY SECTION
The information contained in the City Se ction is developed by personnel under the direction of the Finance Director with the assistance of the financing team. In certain circumstances, additional officials will be involved, as necessary. The following principles govern the work of the respective staff members that contribute information to 465

the City Section:
 City staff involved in the disclosure process is responsible for being familiar with the City’s responsibilities under federal securities laws as described above.  City staff involved in the disclosure process should err on the side of raising issues when preparing or reviewing information fo r disclosure. Officials and staff are encouraged to consult the City’s Bond Counsel, Disclosure Counsel, other legal counsel retained by the City and other members of the financing team if there are questions regarding whether an issue is material or not.  Care should be taken not to shortcut or eliminate any steps outlined in the Procedures on an ad hoc basis. Howeve r, the Procedures are not necessarily intended to be a rigid list of procedural requirements, but instead to provide guidelines for disclosure review. If warranted, based on experience during financings or because of additional SEC pronouncements or other reasons, the City should consider revisions to the Procedures.
 The process of updating the City Section from transaction to transaction should not be viewed as being limited to updating tables and numerical information. While it is not anticipated that there will be major changes in the form and content of the City Section at the time of each update, ev eryone involved in the process should consider the need for revisions in the form, content and tone of the sections for which they are responsible at the time of each update.
 The City must make sure to involve sta ff with sufficient senior ity and knowledge to ensure that, collectively, they are in possession of all material information relating to the City, its operations and its finances.

TRAINING
Periodic training for the staff involved in the preparation of t he Official Statement (including the City Section) is coordinated by the finance team and the City Manager.

These training sessions are provided to assi st staff members involved in identifying relevant disclosure information to be included in the City Sect ion. The training sessions also provide an overview of federal laws re lating to disclosure, situations in which disclosure rules apply, the purpose of the Official Stat ement and the City Section, a description of relevant SEC enforcement actions and a discussion of recent developments in the area of municipal disclo sure. Attendees at the training sessions are provided the opportunity to ask question s of finance team members, including Bond Counsel and Disclosure Counsel, concer ning disclosure obl igations and are encouraged to contact members of the finance team at any time if they have questions.

CONTINUING DISCLOSURE REQUIREMENTS
In connection with the issuance of Oblig ations, the City has entered into a number of contractual agreements (“Continui ng Disclosure Agreem ents”) to provide 466

annual reports related to its financial condi tion (including its audited financial statements) as well as notice of certain events relating to the Obligations specified in the Continuing Disclosure Ag reements. These Continui ng Disclosure Agreements are entered into in order to allow the underwriters of t he Obligations sold to the public to comply with SEC Rule 15c2-12. Each new o ffering of Obligations to the public will require an additional Continui ng Disclosure Agreement. The City must comply with the specific requirements of each Continuing Disclosure Agreement.

Additionally, each Official Statement mu st contain disclosure as to whether, during the previous five year s, the City has complied in all material respects with its Continuing Disclosure Agreem ents. If the City has not complied with its previous undertakings in all material respects withi n the last five years, then the Official Statement must describe the in stances in which the City has not complied. Prior to finalizing a POS, the City staff should take st eps to review the status of compliance and discuss with Disclosure Counsel, the underwr iter and any underwriter’s counsel what steps it has taken to review the City’s compliance and whether any noncompliance has been noted. This review may be done by reviewing a report from a third-party consultant engaged by the City to assist it in complying with its continuing disclosure obligations or a report from the underwriter or a third party engaged by the underwriter.

If noncompliance is found, steps should be tak en to disclose in the POS the instances of material noncompliance within the last five years and cure the noncompliance before the issuance of the Obligations.

The City’s Continuing Disclosure Agr eements generally requ ire that the annual report for a fiscal year be filed by the Marc h 31 following the end of such fiscal year.

Event notices are generally required to be filed within 10 business days of their occurrence. Specific events which requ ire event notices are set forth in each Continuing Disclosure Agreement. Particular care shall be paid to the timely filing of any changes in credit ratings on Obligations (including c hanges resulting from changes in the credit ratings of insurers of particu lar Obligations) and to timely filing of defeasance notices. Additiona lly, all Continuing Disclos ure Agreements entered into after February 27, 2019 will include two new event notices related to financial obligations of the City in order to comply with amendment s to Rule 15c2-12 which took effect on such date. These amendments defi ne “financial obligation” as a (i) debt obligation; (ii) derivative in strument entered into in c onnection with, or pledged as security or a source of payment for, an existing or planned debt ob ligation; or (iii) guarantee of (i) or (ii); however, the term “financial obligation” does not include municipal securities as to which a final official stat ement has been provided to the Municipal Securities Rulemaking Board c onsistent with Rule 15c2-12. To ensure compliance with these amendments the Finance Di rector will identify the City’s financial obligations and provide any required event notice related to the City’s financial obligations.

The Finance Director is the official re sponsible for ensuring compliance by the City with its Continuing Disclosure Agreements, and will assign trained City personnel to oversee the preparation of t he annual repo rts and will determine whether to retain the services of one or more consultants to assi st in the preparation of the annual reports 467

and event notices. The Finance Director will eit her assign trained City personnel to file the annual reports and event notices with t he Electronic Municipal Market Access (“EMMA”) system of the Munici pal Securities Rulemaking Board (emma.msrb.org) or will engage the services of one or more dissemination agents to file the annual reports and material event notices required pursuant to the Continuing Disclosure Agreements.

Third party dissemination agents shall be c ontractually obligated to provide written confirmation to the City of the date of filing of the annual reports with EMMA.

468
ATTACHMENT 8:

CIP Budget Workshop PowerPoint Presentation
469
FY 2024/25 (Mid-Cycle)
Preliminary CIP Budget
Review
City of Goleta
City Council Workshop
April 2, 2024
470
Capital Improvement Program (CIP)
Comprehensive CIP Project List (Attachment 1)
Five-Year CIP Project List (Attachment 2)
 Annual Work Program Projects
CIP Budget (Attachments 3-5)
 CIP Summary by Fund
 CIP Summary by Project
 CIP Project Detail Sheets
2Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 471
Recently Completed CIP Projects
 9007 San Jose Creek Bike Path - Middle Extent
 9067 Seismic Retrofit of GCC (GS)
 9084 Community Gardens*
 9099 Crosswalk at Calle Real/Fairview Center -
Pedestrian Hybrid Beacon Project
 9111 JDW Neighborhood Park Phase 2 -
Splashpad*
 Concrete Program - Dearborn Armitos ADA upgrade
Project
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 3 *Anticipated to be completed by June 30, 2024
472
CIP Projects FY23/24
Projects Out to Bid or in Construction
4Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review ProjectProject
Number
Project Connect (EF & HAB) &
Hollister Avenue Old Town Interim Striping
9002/
9033
Goleta Train Depot & S. La Patera Improvements*9079
Mathilda Park Improvements9113
Evergreen Park Drainage Repair9120
2023 Annual Pavement Rehabilitation5800-1
2023 Miscellaneous Concrete Repair5800-2
473
CIP Projects FY23/24
Projects in Final Design
5Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review ProjectProject
Number
San Jose Creek Bike Path - Northern & Southern Segments9006 Cathedral Oaks Crib Wall9053
Storke/Hollister Transit, Bike/Ped, and Median Imp. 9062 Improvements to Athletic Field at GCC (Bioswale improvements)9071 Stow Grove Park Master Plan & Renovation 9074
Winchester II Park Improvements (Warwick Entrance)9108
Traffic Signal Upgrades9083
Pickleball Entry/Waiting area at GCC*9126
2024 Annual Pavement Rehabilitation5800-1
2024 Miscellaneous Concrete Repair5800-2
474
CIP Projects FY 23/24
Projects in Conceptual Design
6Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review ProjectProject
Number
Vision Zero Plan9086
Old Town Full Trash Capture 9107
Ellwood Mesa/Sperling Preserve Butterfly Management Plan9112 San Jose Creek Channel Fish-Passage Modification Project9117 Ellwood Coastal Trails and Habitat Restoration 9118
Goleta Community Center ADA Improvements9121
475
CIP Projects – Not in FY 23 – 25
Workplan (Future) (GS)
New Project Sheets (GS)
7Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review ProjectProject Number
Facilities Capital Renewal (Future Reserve Category)9134 Stow House Preservation9135
Goleta Community Center Portable Replacement9136
Source: Goleta Valley Historical Society, Stewards of Rancho La Patera & Stow House, Jocelyn & Spencer Photography 476
CIP Projects – Not in FY 23 – 25
Workplan (Future) (GS)
9134 – Facilities Capital Renewal (Future Reserve Category) - DRAFT 8Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review  Future reserve category that
the city should start setting
aside funds for when funding
becomes available
 Approximately $2.5 million - $3
million will need to be set aside
annually to reach targeted goals
identified
 Finance to continue work with
General Service in the next two-
year cycle
477
CIP Projects – Not in FY 23 – 25
Workplan (Future) (GS)
9135 – Stow House Preservation
9Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review  Unfunded in future
years
 Costs to be further
refined in future years
 Recommended to be
included now, should
additional funds
become available or
grant funds become
available
478
CIP Projects – Not in FY 23 – 25
Workplan (Future) (GS)
9136 – Goleta Community Center Portable Replacement Project 10Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review  Costs to be further refined in
future years
 Recommended to be included
now, should additional funds
become available or grant funds
become available
 General fund may not be
available
 Funding could be structured
against long-term lease
revenues, but would need further
evaluation
479
Questions?
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 11 480
CIP Budget Overview
Preliminary CIP project budget reflects updated estimated amounts Changes will continue to be made after the workshop, including incorporation of City Council input
Construction and building cost inflation, resulting in new funding gaps (projects once funded, now unfunded)
Majority of CIP’s funded through Non-General Fund sources  Special Revenue Funds and Development Impact Fees
 Local, State and Federal Grants
Project Prioritization
 Five-Year CIP Project List
 FY 24/25 Annual Work Program
• Priorities based on grant deadlines, compliance with state and federal law, public safety concerns, and public expectations
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 12 481
CIP Budget Summary
CIP Summary by Fund (Attachment 3)
 Funding sources compared to costs and timing of funds available  Reconciliation of fund balances
 TBD and Unfunded Amounts
CIP Summary by Project (Attachment 4)
 Organized by project and summarizes the funding amounts utilized to support the project
CIP Project Detail Sheets (Attachment 5)
 Updated pictures, descriptions, status and timing of expenditures Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 13 482
Economic Outlook –
California Construction Cost Index
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 14 5000
5500
6000
6500
7000
7500
8000
8500
9000
9500
10000
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

COST INDEX
10-Year New Construction Inflation
 Up 59% in the past 10 years
 Up 47% since 2018 (pre-pandemic)
 Up 5% compared to last year
 Drivers of increased construction costs:
 Increased labor costs (labor shortages, high cost of living, smaller market)
 Material cost increases (supply chain issues and inflation)  Regulatory costs
 Increased demand
 Will remain an ongoing challenge for City budget
Source: Department of General Services – California Construction Cost Index (CCCI), 2024 Information graphed by the Finance Department, January 2024 The California Construction Cost Index (CCCI) is developed based upon Building Cost Index (BCI) cost indices average for San Francisco and Los Angeles ONLY as produced by Engineering News Record (ENR) and reported in the second issue each month. 483
CIP Budget Summary
Five-Year Outlook CIP Budget Summary (All Project Sheets)  Includes all projects with a project sheet and number (does not include other major maintenance items, like pavement maintenance or concrete program)
 Total CIP Project Costs include actual costs in prior fiscal years and projected future costs over the next five-year period
 Total Project Costs to Complete represent the estimated expenditure amounts left to complete the project  Total Funded Amount is the current programmed budget over the next five years  Total Unfunded Amount represent the current estimated amount of funding that has yet to be confirmed funding source with grants or funding not yet identified
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 15 April 2, 2024
Workshop
June 20, 2023
Budget Adoption
May 23, 2023
WorkshopTotal CIP Budget Summary
$ 701,179,310 $ 441,307,069 $ 436,145,168 Total CIP Project Costs:
$ 624,020,891 $ 378,334,075 $ 379,729,793 Total Project Costs to Complete:
$ 152,364,706 $ 152,992,788 $ 159,117,782 Total Funded Amount:
$ 471,656,185 $ 225,341,287 $ 220,612,011 Total Unfunded Amount:
484
CIP Budget Summary
Five-Year Outlook CIP Priority Projects Only (Annual Work Program) Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 16 Total Est.

Unfunded Amount
Total CIP
Project Costs
# of Priority
ProjectsCIP - Priority Projects
$ 2,649,276 $ 31,639,068 6General Services $ 26,909,820 $ 73,678,615 13Neighborhood Services $ 49,029,979 $ 190,638,080 12Public Works $ 78,589,075 $ 295,955,763 31All Departments 485
CIP Budget Summary –
General Services
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 17 Notes and Funding
Strategy
Current Funding
Sources
Total
UnfundedTotal Project CostProject PhaseProject Name
Project
No.#
Near completion this FY . General Fund, CDBG, FEMA
HMGP Grant$ -$ 6,614,950 Construction Goleta Community
Center Seismic
Upgrades
90671
General Fund, CDBG,
Federal Community Project
Grant Funding
$ -$ 4,171,569 Conceptual
Design
Goleta Community
Center ADA
Improvements
91212
General Fund, Goleta
Library Special Funds,
California State Library
Grant
$ -$ 5,348,200 Not startedGoleta Valley Library ADA & Building Refresh91303
To be deferred until funding
available. Pay-go, possible
sources: Grants, General
Fund, DIF
General Fund$ 700,000 $ 1,050,000 Not startedHistoric Train Station Preservation91314
To be deferred until funding
available. DIFs, General
Fund
General Fund, Ibank
Financing Lease, Public
Admin DIF , Sheriff DIF
$ 1,949,276 $ 14,149,918 Conceptual
Design
City Hall Purchase &
Improvements91015
General Fund$ -$ 304,431 Not started Goleta Community
Center Campus
Refresh
91276
$ 2,649,276 $ 31,639,068 Total GS Annual Work Program CIP 486
CIP Budget Summary –
Neighborhood Services
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 18 Notes and Funding
StrategyCurrent Funding SourcesTotal
UnfundedTotal Project CostProject PhaseProject NameProject No.#
If addiitonal funds needed,
possible LRDP funds.

Consideration of lease
revenue bond against the
facility
General Fund, Trasportation
DIF , Public Admin DIF ,
Developer Agreement, Bike &
Ped DIF, TIRCP Grant
$ -$ 26,039,997 Design 95%
Goleta Train Depot and
S. La Patera
Improvements
90791
Near completionPark DIF$ -$ 2,424,547 Construction Jonny D. Wallis
Neighborhood Park
Phase 2 Splash Pad
91112
Near completion Park DIF$ -$ 2,213,144 ConstructionCommunity Garden90843 Park DIF , Donations, CDBG
Grant$ -$ 185,000 Final Design Pickleball
Entry/Waiting area at
GCC
91264
General Fund, State Park
Grant, CDBG Grant$ -$ 524,252 ConstructionMathilda Park Improvements91135
Park DIF , Grants. Projects
may need to be phased or
deferred until additional
funding is available, and
ongoing funding for
maintenance
Park DIF $ 4,500,000 $ 9,450,000 Final DesignStow Grove Park Master Plan & Renovation90746
487
CIP Budget Summary –
Neighborhood Services (continued)
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 19 Notes and Funding
StrategyCurrent Funding SourcesTotal
UnfundedTotal Project CostProject PhaseProject NameProject No.#
Park DIF$ -$ 310,000 Final DesignWinchester II Park91087 Park DIF , HCD State Grant$ -$ 601,109 Final Design (Bioswale)
Improvements to
Athletic Field at GCC90718
Deferred until funding
available. Additional DIF
may not be elgible.

Park DIF$ 5,000,000 $ 5,280,000 Not StartedEvergreen Park Improvements90639
Park DIF$ -$ 305,000 Not StartedSanta Barbara Shores Park Improvements909410
Park DIF$ -$ 675,000 Not StartedSan Miguel Park Improvements909311
On hold. No capacity for
debt financing. Will need to
raise additional revenue or
create capacity of $1.5 -
$2.0M
General Fund, Public Admin
DIF , Fire DIF , Developer
Agreement, County Fire DIF
$ 17,409,820 $ 25,570,566 DesignFire Station No. 10902512 Park DIF$ -$ 100,000 Not StartedPickleball Courts 911613 $ 26,909,820 $ 73,678,615 Total NS Annual Work Program CIP 488
CIP Budget Summary –
Public Works
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 20 Notes and Funding StrategyCurrent Funding SourcesTotal
UnfundedTotal Project CostProject
PhaseProject NameProject
No.#
Consider COP financing, leveraging
Measure A to reduce the General
Fund component of $10.1 million,
to be programmed entirely to
Cathedral Oaks Crib Wall
General Fund, Gas Tax, Measure A,
Measure A Grants, Transportation
DIF , LRDP , STIP - State Grant, CDBG,
STIP - Federal Grant, ARPA,
Redevelopment Funds, Other
Measure A*
$ -$ 66,619,541 ConstructionEkwill Street & Fowler Road Extensions Project90021
Consider COP financing, leveraging
Measure A to reduce the General
Fund component of $2.6 million, to
be programmed entirely to
Cathedral Oaks Crib Wall
General Fund, Measure A,
Transportation DIF , Storm Drain DIF ,
HBP Federal Grant, Redevelopment
Funds
$ -$ 31,819,911 ConstructionHollister Avenue Bridge Replacement90332
Consider combination of COP
financing, leveraging Measure A and
General Fund, interfund borrowing,
and possible use of LRDP
Measure A, Measure A Grants, TDA,
Transportation DIF , Bicycle &
Pedestrian DIF , RSTP - State Grant,
ATP - State Grant, TCSP Federal
Grant, Redevelopment Funds
$ 19,233,276 $ 47,237,000 Final Design
San Jose Creek Bike Path
Northern & Southern
Extent
90063
General Fund, Measure A, HSIP -
Federal Grant$ -$ 3,552,000 Final DesignTraffic Signal Upgrades90834 489
CIP Budget Summary –
Public Works (continued)
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 21 Notes and Funding StrategyCurrent Funding SourcesTotal
UnfundedTotal Project CostProject
PhaseProject NameProject
No.#
MBHMP grant balance exists, though
long-term unfunded portion exists. Will
need to be further evaluated.

General Fund, MBHMP - State
Grant $ 5,716,226 $ 10,958,110 Conceptual
Design
Ellwood Mesa/Sperling
Preserve Open Space
Plan
91125
DeferredMeasure A, Measure A Grant$ 600,784 $ 1,378,855 Design/Const ruction
Hollister Class 1 Bike
Path Lighting91106
Still being evaluated and will be
followed up at a future meeting. Project
has a grant associated with it and
property acquisition needed to move
forward.

Transportation DIF , LRDP ,
Measure A Grant$ 1,000,000 $ 1,792,000 Design Storke Road/Hollister
Avenue Transit, Bike/Ped,
and Median
Improvements
90627
Funding needed in FY 25/26.

Recommend setting aside funds, and
interfund borrowing
General Fund$ 1,992,723 $ 3,440,000 Conceptual Design
San Jose Creek Channel
Fish Passage
Modification Project
91178
Emergency related project.

Recommend COP financing 9002 and
9033 with Measure A, and transferring
all General Fund to 9053
General Fund, Measure A,
Transportation DIF , FHWA-FEMA $ 15,511,770 $ 17,770,164 Final DesignCathedral Oaks Crib Wall Interim Repair Project90539
490
CIP Budget Summary –
Public Works (continued)
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 22 Notes and Funding StrategyCurrent Funding SourcesTotal
UnfundedTotal Project CostProject
PhaseProject NameProject
No.#
Funds needed by FY 25/26. Storm Drain
DIF , interfund borrowing if needed to.

Evaluate long-term funding needs of
stormwater and pursue funding study
General Fund$ 871,200 $ 1,114,200 Conceptual Design
Ellwood Beach Drive
Drainage Repair911910
Emergency related projectGeneral Fund $ -$ 202,300 ConstructionEvergreen Park Drainage Repair 912011
Evaluate and update solid waste fees to
fund trash capture devicesStorm Drain DIF$ 4,104,000 $ 4,754,000 Conceptual Design
Old Town South Fairview
Avenue, High Flow Trash
Capture Devices
910712
$ 49,029,979 $ 190,638,080 Total PW Annual Work Program CIP  Other unfunded CIP projects in the Five-Year CIP Document, however not considered active annual work program item  Staff has excel worksheet that can be shared if Council would like to discuss other projects not on this list  Staff has project detail sheets available
491
CIP Budget Summary –
Recap - Unfunded Only
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 23 Notes and Funding Strategy
Grant Deadlines or Other
RequirementsCurrent Funding Sources
Total
Unfunded
Total Project
CostProject Name
Project
No.#
To be deferred until funding available.

Pay-go, possible sources: Grants,
General Fund, DIF
No grant deadlinesGeneral Fund$ 700,000 $ 1,050,000 Historic Train Station Preservation91311
To be deferred until funding available.

Start setting aside eligible DIFs and
General Fund.

No grant deadlines. However,
ADA access and
improvements are needed
General Fund, IBank Financing
Lease, Public Admin DIF ,
Sheriff DIF
$ 1,949,276 $ 14,149,918 City Hall Purchase &
Improvements91012
Park DIF and future grants. May need to
be deferred until additional funding
available and continued with phased
project approach
12/2026 - $750k grant funds
for Universal PlaygroundPark DIF $ 4,500,000 $ 9,450,000 Stow Grove Park
Master Plan &
Renovation
90743
Deferred until funding available.

Additional DIF may not be eligible. No grant deadlinesPark DIF$ 5,000,000 $ 5,280,000 Evergreen Park Improvements90634
On hold. No capacity for debt financing.

Will need to raise additional revenue or
create capacity.

No grant deadlines.

General Fund, Public Admin
DIF , Fire DIF , Developer
Agreement, County Fire DIF
$ 17,409,820 $ 25,570,566 Fire Station No. 1090255
Consider combination of COP financing,
leveraging Measure A and General Fund,
interfund borrowing, and possible use of
LRDP
9/2024 (ATP - Award of
Contruction), 12-month ATP
extension available
12/2025 (Timely Use of Funds
Measure A, Measure A Grants,
TDA, Transportation DIF ,
Bicycle & Pedestrian DIF , RSTP
- State Grant, ATP - State Grant,
TCSP Federal Grant,
Redevelopment Funds
$ 19,233,276 $ 47,237,000
San Jose Creek Bike
Path Northern &
Southern Extent
90066
492
CIP Budget Summary –
Recap - Unfunded Only (Continued)
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 24 Notes and Funding Strategy
Grant Deadlines or Other
Requirements
Current Funding
Sources
Total
Unfunded
Total Project
CostProject Name
Project
No.#
MBHMP grant balance exists, though
long-term unfunded portion exists. Will
need to be further evaluated for future
funding.
2/2025 - Grant funds expirationGeneral Fund, MBHMP -
State Grant $ 5,716,226 $ 10,958,110
Ellwood
Mesa/Sperling
Preserve Open Space
Plan
91127
Deferred6/2024 - (Timely Use of Funds)Measure A, Measure A Grant$ 600,784 $ 1,378,855 Hollister Class 1 Bike Path Lighting91108
Still being evaluated and will be followed
up at a future meeting. Project has a grant
associated with it and property
acquisition needed to move forward.
6/2024 (Timely Use of Funds)
12-month extension available
Transportation DIF , LRDP ,
Measure A Grant$ 1,000,000 $ 1,792,000
Storke Road/Hollister
Avenue Transit,
Bike/Ped, and Median
Improvements
90629
Funding needed in FY 25/26.

Recommend setting aside funds, and
interfund borrowing
Fall 2025 - Approx Construction
Schedule. Must do. General Fund$ 1,992,723 $ 3,440,000 San Jose Creek
Channel Fish Passage
Modification Project
911710
Emergency related project. Recommend
COP financing with Measure Funds
against 9002 and 9033, and transferring
$12.7 million of General Fund to 9053
TBD - Must do.

General Fund, Measure A,
Transportation DIF ,

FHWA-FEMA
$ 15,511,770 $ 17,770,164
Cathedral Oaks Crib
Wall Interim Repair
Project
905311
Funds needed by FY 25/26. Storm Drain
DIF , interfund borrowing if needed to.

Evaluate long-term funding needs of
stormwater and pursue funding study
No grant funds. General Fund$ 871,200 $ 1,114,200 Ellwood Beach Drive Drainage Repair911912
493
CIP Budget Summary –
How do we fund the unfunded?
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 25  Updated Draft CIP, Capital Maintenance and Other Priorities Funding Plan  Living document (excel model) and subject to frequent updates when new information is known  Developed from the original Long Range Financial Forecast (December 2020)  Unfunded CIP evaluated for either pay-as-you-go (utilizing one-time savings) or debt financing • Main focus on the Annual Work Program projects and must-do projects with grant deadlines • Each project reviewed by type, future use, useful life, source of funds, timing of funding needed and construction
• Continued challenges:
• Construction cost inflation, bids and timing resulting in continued significant funding challenges and competing priorities • Contract city with limited revenues, will remain challenged with large CIP funding gap, in addition needing to ensure financial stability
• Need to address emergency projects and must do projects • Combination of short-term and long-term solutions being recommended to address these challenges 494
CIP Financing Options and
Recommendations
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 26 Pay-as-You-Use (Debt)
-borrowing money
Pay-as-You Go (Cash)
-using fund balance or other one-time funds
 An agency may not have the fiscal capacity to provide sufficient funds from current revenue, especially for large assets
 Avoids imposing costs on future residents who have little or no say in the matter
 Payment of costs can be synchronized with enjoyment of the benefits, or the useful life of the asset that is financed  Reduces the amount of debt outstanding, or interest costs on future projects
 In an inflationary economy, the average dollars in which funds are repaid may be lesser than those that are
borrowed.
 The substantial savings in issuance and interest costs can be used to pay for operations or additional facilities overtime.  Prudent use of debt financing allows a municipality more opportunities to use cash on hand
 Use of current revenues to save for future assets needs is good financial management and planning
 A greater legacy in the form of paid-up facilities is provided to future residents
 Debt financing not always most cost-effective way, important considerations in deciding to pursue debt or not:
495
CIP Financing Options and
Recommendations
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 27 ConsPros List of Current Short-Term Solutions#
Measure A revenues will be limited.

However, considering the benefits
versus the General Fund, staff
recommends pursuing this option.

Generate up to $12.4M - $16.7M
(estimate)
Secured by the Measure A revenues
No lease asset or General Fund
required
Direct staff to pursue tax exempt financing through use of Certificate of Participations (COPs) secured by Measure A funds, to free up General Fund and apply the General Fund to Cathedral Oaks Crib Wall Repair Project
Note: Staff will continue to evaluate General Fund for COPs with its municipal advisor and financing team as an option for San Jose Creek Bike Path Northern & Southern Segment 1 Increased fees
Limited to what is related specific to
trash, would still need to consider long-
term solutions for stormwater
Secured by solid waste fees
Direct staff to pursue evaluation and update of solid waste fees to incorporate funding needed for trash capture devices2
Upfront costs supported by limited DIFs
Only one-time fees
Increased DIF revenues from future
development.

Direct staff to prioritize and pursue updated DIF nexus study3 While cities should always strive for full
cost recovery when it can, may be
issues for those that don’t agree.

Increased cost recovery rates.

Justification for full cost recovery and
capture all support service costs for
updated overhead rate.

Direct staff to pursue updated cost allocation plan and comprehensive user fee study. The City last had its major update based on its structure in 2018.4
Heavy workload upfront. Will need to
plan accordingly with contracted staff.

Possible uptick in appeals.

Potential for one-time revenues , in
addition future revenues if been
reporting wrong
Finance staff has in its work program to pursue tax audits on franchise fees, TOT, cannabis and pursue back tax and penalty collections on STR operators for TOT 5 Service levels or program funding gets
impacted.

Can possibly free up capacity to
address deferred maintenance and
infrastructure.

Re-evaluate previous established funding allocations in the General Fund and continue to defer projects or programs that are not feasible at this time. 6 Will be challenging to fund due to
competing priorities, continued rising
costs and unfunded liabilities.

Clear and transparent funding amount
from the General Fund set aside for
future CIP . Instead of relying on the
unassigned fund balance.

Establish funding policy for future Capital Improvement Program (e.g., $200k annually). Staff will continue to evaluate and may bring back a future recommendation if feasible. At this time, it is not anticipated with continued rising costs anticipated.
7 496
CIP Financing Options and
Recommendations
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 28 ConsPros List of Current Long Term Solutions#
Special funds stay flat since no CPI
adjustment. Will require continued
use of the General Fund
Dedicated funding source to maintain the
city street light infrastructure.

Direct staff to pursue updating its streetlighting assessment rates that were inherited when the City incorporated. Will require updated engineers assessment and going to voters.
1 Huge work effort and ongoing
education component. Will be
subject to voter approval.

Will secure ongoing dedicated funding
mechanism. Continued deferred
maintenance and costly infrastructure
the General Fund does not have
Direct staff to pursue a comprehensive study for stormwater funding, to address the unfunded mandates. Need to understand all stormwater infrastructure needs, evaluate all funding options, determine cost of services, potential revenue and rates, methodology and funding mechanism (e.g., stormwater utility fee, special tax, or forming a JPA) 2 Will be subject to voter approval.

Depending on the option, can raise
significant revenues earmarked for the
CIP and address other unfunded
priorities.

In a few years, consider evaluating potential future revenue enhancement options that is programmed towards CIP
• TOT rate
• Business Tax
• Utility User Tax
• Parcel Tax
• General Obligation Bonds
3 Note: Revenue enhancement workshop materials attached to staff report packet for reference 497
CIP Financing Options and
Recommendations
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 29  Certificate of Participations (COP) Financing with Measure A  City’s Measure A local return for 2022
 $2,133,620 (2022 Audited ACFR)
 January 2024 scenarios below are based on current market conditions
 Assumes an ‘A+’ Rating
 Zero growth in revenues assumed the over life of the
financing
 Scenarios show proceeds at various coverage levels
 This mechanism falls in line with the City’s Debt Management Policy, specifically as it relates to preserving financial flexibility, and limits the use of tying up a physical asset and the general fund.

Estimated TRIP Bond Capacity for Goleta
Estimated Bonding Capacity for Goleta
January 2024
200%175%150%Coverage Scenarios:
$12,430,209 $14,241,965 $16,649,978 Net Proceeds Generated 204020402040Final Maturity
$2,133,620 $2,133,620 $2,133,620 Measure A Pledge

3.60%3.60%3.60%True Interest Cost
$11,535,000 $13,190,000 $15,390,000 Par Amount
$17,025,194 $19,467,754 $22,711,588 Total Debt Service
$1,064,075 $1,216,735 $1,419,474 Annual Debt Service
$1,069,545 $916,885 $714,146 Excess Annual Measure A
Revenue
Impact on Net Proceeds in Various Rate Environments
$12,044,273 $13,800,658 $16,135,242 +50 Basis Points (+0.50%) $12,831,817 $14,701,194 $17,185,617 -50 Basis Points (-0.50%)

ACTUAL RESULTS WILL CHANGE BASED ON MARKET CONDITIONS
498
CIP Financing Options and
Recommendations
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 30  Next Steps if moving forward with pursuing COP financing  Direct staff to continue work with municipal financial advisor and putting together the financing team for
issuance of COPs (similar approach to when the City
refunded its successor agency bonds in 2020)
 Staff to work with municipal advisor and financing
team in determining most cost-effective mechanism
and lowest cost of issuance
 Bring back draft financing documents for City Council review and approval
 Timeline could be 3 to 6 months, City would enter into a reimbursement agreement
Issuer (City)
• Selects financing team
• Determines borrowing needs
and key parameters of debt
• Authorizes issuance of bonds
Underwriter
• Underwrites or functions as
placement agent
• Structures financing, sets
prices, sells certificates to
investors
Financial Advisor
• Advises issuer on pricing,
terms, etc.
• Solicits and evaluates
proposals for other financing
team members
Bond Counsel
• Provides legal advice to issuer
on financing and drafts
primary bond documents
Disclosure Counsel
• Prepares Official Statement
describing the security and its
risks for investors
T rustee/Fiscal Agent
• Commercial bank who
administers payments and
redemptions
• May hold funds in trust on
behalf of certificate owners
Rating Agency
• Provides credit rating for the
certificates, if applicable
Who’s Who on the Financing Team:
499
CIP Budget Summary – Unfunded
Projects
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 31  Funding Plan – Continued Discussions and Evaluation of Unfunded 5-Year CIP  Continued discussion as further information is known and developed through the budget process
 Priority ranking and funding source eligibility for potential grants  Scope of the project and timing of construction, including truing up current project budget when actual costs are known when bids are received on active projects  Cost estimates and understanding of new DIF (e.g., Bicycle and Pedestrian, Storm Drain)  Competing demands with new sales tax revenue, City revenues may not be sufficient for either pay-go or debt financing, without reducing ongoing expenditures,  City still needs to know how much new revenues will actually generate 500
CIP Budget Recommendations
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 32  Preliminary budgets are still in draft forms and in the development process  Changes will continue to be made after the workshops, including incorporation of City Council input and will be finalized before the recommended budget is released in June  Staff will be recommending future budget adjustments and future discussions on any financing method pursued.
 Recommendations:

A.Receive a presentation on the Preliminary Capital Improvement Program Budget for Fiscal Year 2024/25
B.Direct staff to continue work with municipal fina ncial advisor, putting together the financing team for issuing certificates of participations or other similar financing option C. Provide input, feedback and policy directly related to short-term and long-term strategies related to funding unfunded Capital Improvement Program
501
Looking Ahead
Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 33 DescriptionDate
FY 24/25 Mid-Cycle Budget Workshop – Operating & CIPMay 21, 2024 FY 24/25 Mid-Cycle Budget AdoptionJune 18, 2024
FY 23/24 Fourth Quarter Financial Review
(July 1, 2023 – June 30, 2024)
September 17, 2024
502
Questions?
34Tuesday, April 2, 2024 - FY 2024/25 Preliminary CIP Budget Review 503