Finance Committee
July 26, 2023

Debt Management
Policy

FINANCE COMMITTEE
JULY 26, 2023
Debt Management Policy
Legally required
Fiscally prudent to:
◦ Maintain sound fiscal position
◦ Ensure flexibility to respond to priorities and fiscal changes ◦ Protect credit rating
◦ Ensure debt structure protects taxpayers, ratepayers, and constituents of City ◦ Ensure debt is consistent with City’s goals and objectives, CIP, and budget Purpose for Issuing Debt
Long Term Debt
◦ Project-related expenses – not operations
◦ Necessary for basic services and provide benefit to constituents ◦ Refinancing existing debt to realize savings
◦ Must be approved by City Council
◦ Maturity cannot exceed life of project by 20%
Short Term Debt
◦ Cash flow
◦ Finance short-lived capital projects
Types of Debt
General Obligation Bonds
Bond Anticipation Notes
Lease Revenue Bonds, Certificates of Participation, LeasePurchase Transactions Tax and Revenue Anticipation Notes
Land-Secured Financing (i.e. Mello-Roos Bonds)
Tax Increment Financing
Conduit Financing
Relationship of Debt to CIP and Budget
Commitment to long-term capital improvement plan (CIP)
Strive to maintain existing infrastructure; avoid debt for normal wear and tear
Coordinate debt issuances with CIP to have funding available for projects when needed
Avoid use of debt for infrastructure if sole purpose is to reduce annual budgetary expenditures
Seek to issue dent timely to avoid unplanned CIP
expenditures
Policy Goals
Committed to long-term financial planning; maintaining appropriate reserves; and sound governance and budget management
Protect taxpayers, ratepayers, and constituents by upholding high credit rating and lowest borrowing costs
Comply with state and federal law
For refinancing, goal is to realize savings ≥ 3% of refunded principal Internal Controls
Adhere to all policies regarding debt reporting and
compliance
Comply with:
◦ SEC Rule 15c2-12 (underwriting and continuing disclosures) ◦ Federal tax requirements
◦ City’s investment policies
Debt proceeds to be held by trustee or fiscal-agent with disbursement upon requisition by Finance Director
Adoption by Local Agency
Debt Management Policy to be adopted by City Council
Occurred in March 2018
Staff currently recommends no changes to policy
Thank You