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CITY OF SAN JACINTO
DEBT MANAGEMENT POLICY
This Debt Management Policy (the “Debt Policy”) of the City of San Jacinto (the “City”) was approved by the City Council on December 3, 2024. The Debt Policy may be amended by the City Council as it deems appropriate from time to time in the prudent management of the debt of the City.
The Debt Policy has been developed to provide guidance in the issuance and management of debt by the City or its related entities and is intended to comply with Government Code Section 8855, as amended by Senate Bill 1029, effective January 1, 2017. References to codes, statutes, and other legal provisions contained herein are provided solely for convenience, are subject to change and amendment, and shall not be deemed comprehensive or limiting. The main objectives of this Debt Policy are to establish conditions for the use of debt; to ensure that debt capacity and affordability are adequately considered; to minimize the City’s interest and issuance costs; to maintain the highest possible credit rating; to provide complete financial disclosure and reporting; and to maintain financial flexibility for the City.
Debt, properly issued and managed, is a critical element in any financial management program. It assists in the City’s effort to allocate limited resources to provide the highest quality of service to the public. The City understands that poor debt management can have ripple effects that hurt other areas of the City. On the other hand, a properly managed debt program promotes economic growth and enhances the vitality of the City.
1. Findings. This Debt Policy shall govern all debt undertaken by the City and its related entities. The City hereby recognizes that a fiscally prudent debt policy is required in order to:
• Maintain the City’s sound financial position.
• Ensure the City has the flexibility to respond to changes in future service priorities, revenue levels, and operating expenses.
• Protect the City’s credit-worthiness.
• Ensure that all debt is structured in order to protect both current and future constituents of the City.
• Ensure that the City’s debt is consistent with the City’s planning goals and objectives and capital improvement program (CIP) or budget, as applicable.
2. Policies.
A. Purposes For Which Debt May Be Issued. The City will consider the use of debt financing primarily for the City’s CIP when the project’s useful life will equal or exceed the term of the financing and when resources are identified sufficient to fund the debt service requirements. An exception to this CIP driven focus is the issuance of short-term instruments, 09960.00000\42888861.2
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such as tax and revenue anticipation notes, which are to be used for prudent cash management purposes. Bonded debt should not be issued to finance normal operating expenses.
Due to changes in the law affecting California redevelopment agencies with the passage of AB X1 26 (as subsequently amended by Assembly Bill 1484), the Redevelopment Agency of the City of San Jacinto was dissolved as of February 1, 2012, and its operations substantially eliminated except for the continuation of certain enforceable obligations to be administered by Successor Agency to the Redevelopment Agency to the City of San Jacinto. The terms of AB X1 26 and subsequent legislation require successor agencies to administer the outstanding bond obligations, including debt service, reserve set-asides, and any other obligations required under the bond indentures, and provide limited opportunities to refinance outstanding bonds.
The Finance Director shall be responsible for analyzing a financing proposal to determine if it is beneficial to the City and conforms to the City’s long-term financial planning objectives.
An analysis of proposed debt may include, but shall not be limited to: (i) confirmation that the capital project is eligible for bond financing; (ii) review of all available financing instruments for the project and determination of the most cost-effective option; (iii) estimates of total cost of the capital project including its design, construction cost, cost of furnishings, fixtures, and equipment; (iv) source of revenue to fund the annual debt service; (v) analysis of the municipal bond market, including economic and interest rate trends; (vi) alternative bond structures; (vii) cost analysis of bond insurance; and (viii) evaluation of timing of when the City, or related entity, should enter the bond market.
B. Types of Debt. The Finance Director will investigate all possible project financing alternatives including, but not limited to, bonds, loans, state bond pools and grants. • 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.
• Interfund Borrowing: The City may borrow internally from other funds with surplus cash in lieu of issuing bonded debt. Warranting the use of this type of borrowing could include short-term cash flow imbalances due to grant terms, interim financing pending the issuance of bonds, or long-term financing in lieu of bonds. 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. The Finance Director shall also exercise due diligence to ensure that it is financially prudent for the fund making the loan.
Interfund loans will be evaluated on a case-by-case basis. The purpose of interfund borrowing is to finance high priority needs and to reduce costs of interest, debt issuance and/or administration.
• Bank Loans/Lines of Credit: Although the City does not typically utilize lines of credit for the financing of capital projects, financial institution credit is an option for municipal issuers and may be evaluated as a financing option. 09960.00000\42888861.2
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• Other Loans: The City will evaluate other loan programs, including but not limited to State loans such as the Water Resources Control Board’s revolving fund loans for the construction of water and wastewater infrastructure projects. • Lease-Purchase Obligations: The City may enter into lease-purchase obligations provided that the final maturity of equipment obligations will be limited to the average useful life of the equipment to be financed and the final maturity of real property obligations will be determined by the size of the financing: 10-15 years for small issues, 20-25 years for large issues and 30 years for exceptional projects or those with a direct revenue component, such as a special tax. Principal shall generally be amortized to result in level annual lease payments; however, more rapid principal amortization may occur where permissible to meet debt repayment goals. The obligations should be callable in no later than 10 years.
• Bond Financing: The City may issue any bonds which are allowed under federal and State law, including but not limited to general obligation bonds, certificates of participation, revenue bonds, assessment district bonds, and special tax bonds.
While conduit financings do not constitute a general obligation of the issuer, the same level of due diligence prior to bond issuance is required. The City will consider requests for special district formation on a case-by-case basis.
Although short-term borrowing has not been part of the City’s past practice, notes are common in the municipal market and may be issued by the City. • Joint Powers Authority: The City may also consider joint arrangements with other governmental agencies when a project serves the public interest beyond City boundaries.
The City may, from time to time, find that other forms of debt would be beneficial to further its public purposes and may approve such debt without an amendment of this Debt Policy.
C. Relationship of Debt to Capital Improvement Program and Budget. The City intends to issue debt for the purposes stated in this Debt Policy and to implement policy decisions incorporated in the City’s budget and the CIP.
The City shall integrate its debt issuances with the goals of its CIP 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.
D. Policy Goals Related to Planning Goals and Objectives. The City is committed to financial planning, maintaining appropriate reserves levels and employing prudent practices in governance, management and budget administration. The City intends to issue debt 09960.00000\42888861.2
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for the purposes stated in this Debt Policy and to implement policy decisions incorporated in the City’s annual operating budget. It is a policy goal of the City to protect its constituents by utilizing conservative financing methods and techniques so as to obtain the highest practical credit ratings (if applicable) and the lowest practical borrowing costs. The City will comply with applicable State and federal law as it pertains to the maximum term of debt and the procedures for levying and imposing any related taxes, assessments, rates, and charges. • Term of Debt: Debt will be structured for the shortest period possible, consistent with a fair allocation of costs to current and future users. The standard term of long-term debt borrowing is typically 15-30 years.
Consistent with its philosophy of keeping its capital facilities and infrastructure systems in good condition and maximizing a capital asset’s useful life, the City will make every effort to set aside sufficient current revenues to finance ongoing maintenance needs and to provide reserves for periodic replacement and renewal. Generally, no debt will be issued for periods exceeding the useful life or average useful lives of projects to be financed. • Debt Repayment Structure: In structuring a bond issue, the City will manage the amortization of the debt and, to the extent possible, match its cash flow to the anticipated debt service payments. In addition, the City will seek to structure debt with aggregate level debt service payments over the life of the debt.
Structures with uneven debt service will be considered when one or more of the following exist: (i) natural disasters or extraordinary unanticipated external factors make payments on the debt in the early years prohibitive; (ii) such structuring is beneficial to the City’s aggregate overall debt payment schedule; and (iii) such structuring will allow debt service to more closely match project revenues during the early years of the project’s operation. • Interest Rate Structure: To maintain a predictable debt service burden, the City will give preference to debt that carries a fixed interest rate. The City may choose in the future to issue securities that pay a rate of interest that varies according to a pre-determined formula or results from a periodic remarketing of securities. When making the determination to issue bonds in a variable rate mode in the future, consideration will be given in regards to the useful life of the project or facility being financed or the term of the project requiring the funding, market conditions, credit risk, and third party risk analysis, and the overall debt portfolio structure when issuing variable rate debt for any purpose. • Method of Sale: Debt issues are sold to a single underwriter or to an underwriting syndicate, either through a competitive sale or a negotiated sale.
A negotiated sale may involve the sale of securities to investors through an underwriter or the private placement of the securities with a financial institution(s) or other sophisticated investor(s). The selected method of sale will be that which is most beneficial to the City in terms of lowest net interest rate, most favorable terms in financial structure, and market conditions. The overall 09960.00000\42888861.2
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objective is to obtain the lowest possible interest cost and provide pricing transparency.
• Credit Enhancement: Credit enhancement may be used to improve or establish a credit rating on a City debt obligation. Types of credit enhancement include letters of credit, bond insurance, and debt service reserve insurance policies.
The Finance Director will recommend the use of a credit enhancement if it reduces the overall cost of the proposed financing or if the use of such credit enhancement furthers the City’s overall financial objectives. • Derivatives: Derivative products may have application to certain City borrowing programs. In certain circumstances, these products can reduce borrowing costs and assist in managing interest rate risk. However, these products carry with them certain risks not faced in standard debt instruments.
The Finance Director shall evaluate the use of derivative products on a case-bycase basis to determine whether the potential benefits are sufficient to offset any potential costs.
• Refundings: The City shall refinance debt to achieve savings as market opportunities arise. The Finance Director (or designee) shall remain cognizant of fluctuations in interest rates for the purpose of identifying refunding opportunities and prepare a present value analysis identifying the economic effects of a refunding to determine the value of refunding. Refundings may be undertaken in order to: (i) take advantage of lower interest rates and achieve debt service costs savings; (ii) eliminate restrictive or burdensome bond covenants; and (iii) restructure debt to either lengthen the duration of debt or free up reserve funds.
Generally, the City shall strive to achieve a minimum of [three percent (3%)] net present value savings for a refunding. Upon the advice of the Finance Director and with the assistance of the financial advisor and bond counsel, the City will consider undertaking refundings for other than economic purposes upon a finding that such a restructuring is in the City’s overall best financial interest.
E. Internal Control Procedures. To ensure that bond proceeds are spent for their intended purposes, the Finance Director (or designee) shall be responsible for undertaking a review of expenditures for each bond issue to determine that bond proceeds were, in fact, spent in the manner detailed in the bond documents on the date of issuance. If bond proceeds were spent in a manner different than as set forth on the date of issuance (for example, because of substitution projects or change in scope of expected projects), the Finance Director (or designee) with the assistance of the City’s bond counsel, if necessary, will review the new expenditures to verify that expenditure of the bond proceeds is otherwise permitted to be financed. All projects being funded with bond proceeds shall be designated as such and included in the City’s 5-year CIP as approved or amended by the City Council. The Finance Director (or designee) shall maintain books and records of information showing how bond proceeds are spent. Whenever reasonably possible, 09960.00000\42888861.2
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proceeds of debt will be held by a third-party trustee, and the City will submit written requisitions for such proceeds.
F. Initial Disclosure Requirements. The City acknowledges its disclosure responsibilities with respect to public offerings of securities. Under the guidance of disclosure counsel, the City will distribute or cause an underwriter to distribute its preliminary official statement (the “Preliminary Official Statement”) and final official statement (the “Official Statement”).
The Finance Director and the City Manager, with the assistance of the financing team, shall be responsible for soliciting “material” information (as defined in Securities and Exchange Commission Rule 10b-5) from City departments and identifying contributors who may have information necessary to prepare portions of the Preliminary Official Statement and/or the Official Statement or who should review portions of the Preliminary Official Statement and/or the Official Statement. In doing so, the Finance Director and the City Manager shall confirm that the Preliminary Official Statement and/or the Official Statement accurately states all “material” information relating to the decision to buy or sell the securities and that all information in the Preliminary Official Statement and/or the Official Statement has been critically reviewed by an appropriate person.
In connection with an initial offering of securities, the Finance Director and the City Manager, with the assistance of the financing team, will: (i) identify material information that should be disclosed in the Preliminary Official Statement and/or the Official Statement; (ii) identify other persons that may have material information (contributors); (iii) review the Preliminary Official Statement and/or the Official Statement; and (iv) ensure the City’s compliance, and that of its related entities, with federal and State securities laws.
The Finance Director and the City Manager shall contact the individuals and departments identified as contributors as soon as possible in order to provide adequate time for them to perform their assigned tasks. Contributors shall assist in reviewing and preparing the Preliminary Official Statement and/or the Official Statement using their knowledge of the City and, if appropriate, by discussing the Preliminary Official Statement and/or the Official Statement with other members of the contributor’s department to ensure accuracy.
The Finance Director and the City Manager shall review the Preliminary Official Statement and/or the Official Statement, identify any material differences in the presentation of financial information from the financial statements, and ensure there are no misstatements or omissions of material information in any sections that contain information prepared by the City or of relevance to the finances of the City.
The City Attorney (or designee) shall review the Preliminary Official Statement and/or the Official Statement descriptions of (i) any material current, pending, or threatened litigation; (ii) any material settlements or court orders, and (iii) any other legal issues that are material information for purposes of the Preliminary Official Statement and/or the Official Statement.
Following receipt of the Preliminary Official Statement and/or the Official Statement, the Finance Director and, the City Manager, and the appropriate City staff (the “Disclosure Review 09960.00000\42888861.2
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Group”) shall critically evaluate the Preliminary Official Statement and/or the Official Statement for accuracy and compliance with federal and State securities laws, and shall, if appropriate, ask questions of the financing team and of any contributor or other person who reviewed or drafted any section of the Preliminary Official Statement and/or the Official Statement. The Disclosure Review Group may instruct the financing team to solicit information or review from additional contributors before approving the Preliminary Official Statement and/or the Official Statement.
Once the Disclosure Review Group has completed its evaluation and the financing team has responded appropriately, the Preliminary Official Statement and/or the Official Statement must be presented to the City Council for approval.
The approval of an Official Statement shall be placed on the City Council agenda and shall not be considered as a consent calendar item. The staff report will summarize the City Council’s responsibilities with respect to the Preliminary Official Statement and/or the Official Statement and provide the City Council the opportunity to review a substantially final Official Statement.
The City Council shall undertake such review as deemed necessary by the City Council to fulfill the City Council’s securities law responsibilities.1
For any privately placed debt with no Preliminary Official Statement nor Official Statement, the Disclosure Review Group must be provided with the final staff report describing the issue and such other documents the Disclosure Review Group may request before the transaction is approved by the City Council.
G. Continuing Disclosure Compliance. The City shall comply with the requirements of its continuing disclosure undertakings entered into at the time of each bond issue.
The Finance Director and the City Manager shall be responsible for providing ongoing disclosure information to the Municipal Securities Rulemaking Board’s (MSRB) Electronic Municipal Market Access (EMMA) system, the central depository designated by the Securities and Exchange Commission for ongoing disclosure by municipal issuers.
The Finance Director and the City Manager will prepare the annual disclosure reports in accordance with the continuing disclosure undertakings. The Finance Director and the City Manager will identify material information that should be disclosed and identify other persons that may have knowledge of material information. Once the annual disclosure reports are in final draft form, the Finance Director and the City Manager will submit them for review by the Disclosure Review Group.
1 The Securities and Exchange Commission (the “SEC”), the agency with regulatory authority over the City’s compliance with the federal securities laws, has issued guidance as to the duties of the City Council with respect to its approval of the POS. In its “Report of Investigation in the Matter of County of Orange, California as it Relates to the Conduct of the Members of the Board of Supervisors” (Release No. 36761 / January 24, 1996) (the “Release”), the SEC stated that, if a member of the City Council has knowledge of any facts or circumstances that an investor would want to know about prior to investing in the bonds, whether relating to their repayment, tax-exempt status, undisclosed conflicts of interest with interested parties, or otherwise, he or she should endeavor to discover whether such facts are adequately disclosed in the Preliminary Official Statement and/or the Official Statement. In the Release, the SEC stated that the steps that a member of the City Council could take include becoming familiar with the POS and questioning staff and consultants about the disclosure of such facts. 09960.00000\42888861.2
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In addition to annual reports, Securities and Exchange Commission Rule 15c2- 12(b)(5)(i)(C)-(D) obligates the City to disclose, in a timely manner to the MSRB, notice of certain specified events with respect to the City’s securities, including the following:
(1) Principal and interest payment delinquencies;
(2) Non-payment-related defaults, if material;
(3) Unscheduled draws on debt service reserves reflecting financial difficulties; (4) Unscheduled draws on credit enhancements reflecting financial difficulties; (5) Substitution of credit or liquidity providers, or their failure to perform; (6) Adverse tax opinions; the issuance by the Internal Revenue Service of proposed or final determinations of taxability, notices of proposed issue (IRS Form 5701-TEB), or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of security;
(7) Modifications to rights of securities holders, if material; (8) Bond calls, if material, and tender offers;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the securities, if material;
(11) Rating changes;
(12) Bankruptcy, insolvency, receivership, or similar events of the obligated person;
(13) Consummation of a merger, consolidation, or acquisition or sale of substantially all of the assets of the obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (14) Appointment of a successor or additional trustee or the change of name of a trustee if material; and
(15) Incurrence of a financial obligation2of the obligated person, if material, or agreements to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material; 2 The term financial obligation means a: (a) debt obligation; (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) guarantee of (a) 09960.00000\42888861.2
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(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties; and
(17) Notice of a failure of any person specified in SEC Rule 15c2-12(b)(5)(i)(A) to provide required annual financial information on or before the date specified in the written contract or agreement.
The Finance Director and the City Manager may file notice with the MSRB of specified events listed in the continuing disclosure undertakings without prior review and approval of the Disclosure Review Group if the City is contractually obligated to file and the disclosure document contains no discretionary content.
If any member of the Disclosure Review Group concludes that an event may have occurred, the Finance Director shall be contacted and shall notify the Disclosure Review Group to discuss the potential event.
The Disclosure Review Group is an internal working group of City staff and not a decisionmaking or advisory body subject to the provisions of the Ralph M. Brown Act (Government Code section 54950 et seq.).
H. Compliance with Requirements for Tax-Exempt Obligations. These procedures apply to tax-exempt obligations issued by the City, unless the Finance Director otherwise directs for a particular issue on particular circumstances that relate to that issue, including changes in guidance promulgated by the Internal Revenue Service (“IRS”), changes in law, the advice of bond counsel, or other factors the Finance Director deems relevant.
These procedures are intended to supplement and explain certain general debt issuance procedures already followed by the City and to provide a more formal record of the procedures followed and to be followed by the City when it issues tax-exempt obligations. These procedures are also supplemented by various documents executed in connection with each individual bond issuance, including the certificate of the lead underwriter as submitted at the time of closing of the tax-exempt obligation, as well as the tax certificates executed by the City to represent various facts regarding federal tax law compliance, and the Form 8038-G (Information Return for Tax-Exempt Governmental Obligations) which is filed around the time of issuance of a tax-exempt obligation. • Arbitrage and Yield: Unless a tax certificate documents that bond counsel has advised that arbitrage rebate will not be applicable to an issue of tax-exempt obligations: (a) the City shall engage the services of a Rebate Service Provider, and the City or the trustee shall deliver periodic statements concerning the investment of proceeds of tax-exempt obligations to the Rebate Service Provider on a prompt basis; (b) upon request, appropriate City personnel shall provide to the Rebate Service Provider additional documents and information reasonably requested by the Rebate Service Provider; (c) Appropriate City personnel shall monitor efforts of the Rebate Service Provider and assure or (b). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with Rule 15c2-12. 09960.00000\42888861.2
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payment of required rebate amounts, if any, no later than 60 days after each 5- year anniversary of the issue date of the tax-exempt obligations, and no later than 60 days after the last tax-exempt obligation of each issue is redeemed; and (d) during the construction period of each capital project financed in whole or in part by the tax-exempt obligations, appropriate City personnel shall monitor the investment and expenditure of tax-exempt obligation proceeds and shall consult with the Rebate Service Provider to determine compliance with any applicable exceptions from the arbitrage rebate requirements during each 6- month spending period up to 6 months, 18 months or 24 months, as applicable, following the issuance date of the tax-exempt obligations. The City shall retain copies of all arbitrage reports and trustee statements as described below under “Record Keeping.”
• Procedures Regarding Use of Tax-Exempt Obligation Proceeds: After a taxexempt obligation sale, tax-exempt obligation proceeds are deposited into separate accounts (i.e., they are not commingled with revenues of the City).
Once the proceeds are deposited in such accounts, investment earnings are allocated to the same accounts. Set forth below are the procedures of the City to ensure the correct use of tax-exempt obligation proceeds.
Appropriate City personnel shall: (a) monitor the use of the proceeds, the use of financed assets (e.g., facilities, furnishings or equipment) and the use of output or throughput of financed assets throughout the term of the tax-exempt obligations (and in some cases, beyond the term of the tax-exempt obligations) to ensure compliance with covenants and restrictions set forth in applicable City resolutions and tax certificates; (b) maintain records identifying the assets or portion of assets that are financed or refinanced with proceeds of each issue of tax-exempt obligations; (c) consult with bond counsel prior to entering into any licenses, leases, management contracts, or other contracts or arrangements potentially resulting in the use of financed facilities by nongovernmental persons, in order to ensure compliance with all covenants and restrictions set forth in applicable City resolutions or tax certificates; (d) maintain records for any contracts or arrangements involving the use of financed facilities as might be necessary or appropriate to document compliance with all covenants and restrictions set forth in applicable City resolutions and tax certificates; (e) meet at least annually with personnel responsible for financed assets to identify and discuss any existing or planned use of financed assets, and the use of output or throughput of financed assets, to ensure that those uses are consistent with all covenants and restrictions set forth in applicable City resolutions and tax certificates. All relevant records and contracts shall be maintained as described below under “Record Keeping.”
• Ongoing Procedures: [This Debt Policy, the tax certificate for each issue of tax-exempt obligations, and to the extent incorporated in the tax certificates, Form 8038-G, will be reviewed by the Finance Director or designee: (a) on or prior to each 5-year anniversary date of the issue date of the tax-exempt obligations; (b) on or within 30 days of the date the tax-exempt are retired, 09960.00000\42888861.2
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defeased or refunded; (c) on or prior to the date of any rebate payment made if that date is not within 60 days of one of the dates mentioned in (a) above or the date the tax-exempt obligations are retired, defeased or refunded; (d) at the time of any change in use of any asset that was funded with a material amount of tax-exempt obligation proceeds; and (e) at the time of the occurrence or nonoccurrence of any other event that could affect the tax-exempt status of the obligations as indicated in the tax certificate (e.g., the occurrence of an event which the tax certificate represents will not occur or is not expected to occur, or the non-occurrence of an event the tax certificate represents will or is expected to occur).
This review will be made for the purposes of identifying any possible violation of federal tax requirements related to tax-exempt obligations and to ensure the timely correction of those violations for remedial action described in IRS regulations or through the IRS’s Tax-Exempt Bonds Voluntary Closing Agreement Program. If a possible violation is identified, the Finance Director will consult with the City’s bond counsel.]
• Record Keeping: Records necessary to support the status of obligations as taxexempt will be maintained for the life of the obligations, and any obligations that refund the initial obligations plus three years. These records may be maintained on paper, or by electronic media, or by any combination thereof.
I. Waivers of Debt Policy. There will be circumstances from time to time when strict adherence to a provision of this Debt Policy is not possible or not in the best interest of the City. If the City staff has determined that a waiver of one or more provisions of this Debt Policy should be considered by the City Council, it will prepare an analysis for the City Council describing the rationale for the waiver and the impact of the waiver on the proposed debt issuance.
Upon a majority vote of the City Council, one or more provisions of this Debt Policy may be waived for a debt financing. The failure of a debt financing to comply with one or more provisions of this Debt Policy shall in no way affect the validity of any debt issued by the City in accordance with applicable laws.