Finance Committee
October 23, 2024

Debt
Management
Policy
Finance Committee - September 25, 2024
Debt Management Policy
• Legally required:
▪ Complies with Government Code Section
8855(i)
• Fiscally prudent:
▪ Maintains sound fiscal position
▪ Ensures flexibility to respond to priorities
and fiscal changes
▪ Protects credit rating
▪ Ensures debt structure protects taxpayers,
ratepayers, and constituents of City
▪ Ensure debt is consistent with City’s goals
and objectives, CIP, and budget
Finance Committee - September 25, 2024
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
Refinancing goal is to realize savings ≥ 3% of refunded principal Finance Committee - September 25, 2024
Long-Term
Debt
Purpose:
• Capital financing of construction, acquisition, and
rehabilitation of City-owned facilities, equipment,
or land
▪ Necessary to provide basic services
▪ Provides benefit to constituents over years
▪ Refinancing of existing debt to realize savings
Conditions:
▪ Must be approved by City Council
▪ Sufficient revenues must be available to
service debt through maturity
▪ In compliance with all statutes and laws
Finance Committee - September 25, 2024
Long-Term
Debt Types
General Obligation Bonds
- Limited vs. Unlimited
Lease Revenue Bonds
Certificates of Participation
Lease-Purchase Transactions
Land-Secured Financing
- Ex: Mello-Roos Bonds
Tax Increment Financing
Conduit Financing
Finance Committee - September 25, 2024
Short-Term
Debt
Purpose:
• Cash flow
• Finance short-lived capital projects
Types:
• Tax and Revenue Anticipation Notes (TRAN)
• Bond Anticipation Notes (BAN)
Finance Committee - September 25, 2024
Relationship
of Debt to CIP
and Budget
Capital
Improvement
Program (CIP)
Debt
Finance Committee - September 25, 2024
Internal
Controls
• Ensure adherence to all policies regarding
debt reporting and compliance:
▪ SEC Rule 15c2-12 (underwriting and continuing
disclosures)
▪ Federal tax requirements
▪ City’s investment policies
• Debt proceeds held in:
▪ Third-party trust or fiscal agent
▪ Separate City fund or account
• Expenditure withdrawals carefully
documented by the City
Finance Committee - September 25, 2024
Debt Management Policy Adoption
Debt Management Policy
required to be adopted by
City Council pursuant to
Government Code Section
8855(i)
Council adopted
current policy in March
2018
Staff recommends no
changes to policy for
2024
Finance Committee - September 25, 2024