ACTION:
____________________________
Clerk/Secretary
Department: Finance Item No: C11
Prepared by: Mike Sylvia, Director/Treasurer Meeting Date: December 10, 2024 Approved by: John Conley, City Manager Agenda Location: Consent Calendar SUBJECT: AMENDMENT TO CITY COUNCIL POLICY 700-12 BOND ISSUANCE AND DEBT
INCURRENCE AND APPROVAL OF FINANCING TEAM
RECOMMENDATION: Adopt City Council Resolution No. 2024- , amending City Council Policy 700-12, Bond Issuance and Debt Incurrence, and authorization of a Bond Financing Team.
CORRELATION TO CITY COUNCIL GOALS: Fiscal Responsibility.
PRIOR ACTION: On January 13, 1998, adopted City Council Resolution 98-7, approving of a Bond Issuance and Debt Incurrence Policy of the City of Vista (Vote: 5-0).
STATEMENT ON THE SUBJECT: City Council Policy 700-12 outlines the principles and guidelines for issuing bonds and incurring debt to support the City’s financial goals and capital improvement projects.
Periodic updates are necessary to ensure alignment with best practices, evolving financial regulations, and the City's strategic priorities. This policy was initially adopted by City Council in January 1998 and has not been updated since that time. During the ensuing 26 years, a number of updates to federal and state requirements have created a need to amend the policy.
The proposed amendment to Policy 700-12 incorporates:
1.Updated language to ensure compliance with current federal and state regulatory standards, particularly California Senate Bill (SB) 1029.
2.Clearer criteria for evaluating potential debt instruments, prioritizing cost-effectiveness, and risk mitigation.
3.Enhanced disclosure requirements to maintain transparency with stakeholders.
Additionally, the City Manager recommends appointing the following bond financing team to support upcoming bond issuance and refunding projects: Municipal Advisor: NHA Advisors, LLC; Bond and Disclosure Counsel: Stradling Yocca Carlson & Rauth LLP; Investment Banker/Underwriter: Oppenheimer & Co., Inc. consistent with Policy 700-12, and recommends the team list be maintained for five years (from 12/10/2024 to 12/9/2029.) Contracts with each consultant will be provided at a future date when a refunding opportunity is imminent.
The proposed amendment to Policy 700-12 reflects the City’s commitment to fiscal responsibility and strategic financial management. Approving the recommended bond financing team will ensure the timely and successful execution of future bond issuances with the refunding of the City’s 2015 Lease Revenue AGENDA
REPORT
CITY COUNCIL
COMMUNITY DEVELOPMENT COMMISSION
SUCCESSOR AGENCY
BUENA SANITATION DISTRICT
JOINT POWERS FINANCING AUTHORITY
Approved above recommendation, adopted City Council Resolution No. 2024-197. Vote: 5-0
MEETING DATE: December 10, 2024 PAGE 2
SUBJECT: AMENDMENT TO CITY COUNCIL POLICY 700-12 BOND ISSUANCE AND DEBT
INCURRENCE AND APPROVAL OF FINANCING TEAM
Refunding Bonds being the initial effort. Staff anticipate a successful refunding of these bonds will provide a multi-million-dollar savings over the final 12 years of the bonds’ debt service schedule given current market conditions. An initial review of refunding debt service structures will be provided by staff and the bond financing team at an upcoming City Council meeting.
FISCAL IMPACT: There is no direct fiscal impact associated with the staff recommendation.
EXHIBITS:
1.City Council Resolution No. 2024- , amending City Council Policy 700-12, Bond Issuance and Debt Incurrence, and authorization of a Bond Financing Team
2.Policy 700-12, Bond Issuance and Debt Incurrence – Redline version 12/10/2024 C11 2 of 26
00029213 7
RESOLUTION NO. 2024-
A RESOLUTION OF THE CITY COUNCIL OF THE CHARTERED CITY OF VISTA, CALIFORNIA, AMENDING CITY COUNCIL POLICY 700-12, BOND
ISSUANCE AND DEBT INCURRENCE, AND AUTHORIZATION OF A BOND
FINANCING TEAM
The City Council of the City of Vista does resolve as follows:
1. Findings. The City Council hereby finds and declares the following:
A. In anticipation of future municipal debt issuance, City Council Policy 700-12, requires amendments from its original 1998 form to comply with current federal and state requirements.
B. Per Policy 700-12, a Bond Financing Team is required to be designated to position the City to utilize advantageous financial market conditions in an effort to minimize the cost of the City’s bonded indebtedness, in congruence with City Council’s goal of Fiscal Responsibility.
2. Action.
A. City Council Policy No. 700-12, Bond Issuance and Debt Incurrence, is amended and approved as identified on Exhibit 2, attached to the Agenda Report for this item.
B. Consistent with Policy 700-12 and City Manager recommendations, the Bond Financing Team is authorized as follows: Municipal Advisor: NHA Advisors, LLC; Bond and Disclosure Counsel: Stradling Yocca Carlson & Rauth LLP; Investment Banker/Underwriter:
Oppenheimer & Co., Inc. for the period December 10, 2024 to December 9, 2029.
3. Adoption. PASSED AND ADOPTED at a meeting of the City Council of the City of Vista held on December 10, 2024, by the following vote:
AYES:
NOES:
ABSTAIN:
APPROVED AS TO FORM:
WALTER CHUNG, CITY ATTORNEY
By:
APPROVED
Walter C. Chung
20241127161011
JOHN B. FRANKLIN, MAYOR
ATTEST:
KATHY VALDEZ, CITY CLERK
By:
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EXHIBIT 1
Vista City Council Policy
700-12 (1)
4879-7950-6431v1/200168-00044924-5888-1537, v. 1
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700-12 BOND ISSUANCE AND DEBT INCURRENCE
PURPOSE
The purpose of this policy is to establish guidelines and procedures for the issuance of bonds and the incurrence of debt by the City of Vista and on by entities the governing boards of which are comprised of the City Council of the City of Vista (or other related issuesentities from time to time as may adopt these policies by resolution or other official action). As used herein, references to the “City” include such related entities of the City.
Typically, debt is incurred as a result of issuing bonds for public purposes. Generally, these bonds are tax-exempt, meaning that investors (purchasers of the bonds) do not have to pay federal or state income taxes on the interest they earn from the bonds. There are also debt obligations in forms other than bonds. Certificates of participation and secured loans are examples of other forms of debt obligations.
This Debt Management Policy is intended to comply with Government Code Section 8855(i), effective on January 1, 2017, and shall govern all debt undertaken by the City.
The City hereby recognizes that a fiscally prudent debt policy is requiredshould seek to:
Maintain the City’s sound financial position;
Establish parameters for issuing debt;
Achieve lowest cost of capital;
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 to protect both current and future taxpayers, ratepayers and constituents of the City; and
Ensure that the City’s debt is consistent with the City’s planning goals and objectives and capital improvement program or budget, as applicable.
1. DIRECT AND INDIRECT DEBT
Bonds issued by the City may be classified as either direct or indirect obligations. For purposes of this Policy, a “direct” obligation exists when the City and the general fund are directly liable for debt repayment. An “indirect” obligation exists when the City, or one of its subordinate entities, has issued the debt, but neither the City nor the general fund revenues are directly liable for debt repayment. In other words, the debt agreements are structured so that the bond obligation does not provide that the City will be liable for repayment of the debt, nor does the obligation include a pledge of the City’s general fund revenues to secure the debt. Indirect debt obligations are recorded within the City’s financial statements, however, and the City may have complete administrative oversight responsibility for the debt.
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EXHIBIT 2
Vista City Council Policy
700-12 (2)
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Examples of typical indirect obligations include tax allocation bonds issued by the Successor Agency to the Community Development Commission (the “CDC”) (when only the tax increment revenue is pledged to repay the debt); lease-revenue bonds (when only the revenues received under the lease agreements are pledged to repay the debt, although the title to the leased property may be pledged to secure the debt), certain types of assessment bonds and special tax bonds (when only the assessment or special tax revenues are pledged, although the debt may be secured by tax liens on the assessed/taxed property), and the revenue bonds (when secured entirely by revenues from enterprise fund operations). Note however, that any of these types of obligations may be structured as direct debt, if the debt agreements include promises by the City to repay the debt, or pledges of the general fund revenues.
2. CONDUIT FINANCING
Another category of bonds or debt is commonly referred to as “conduit bonds.” Conduit financing bonds are bonds issued by the City for a public purpose, often as tax exempt bonds, but the proceeds are loaned to a third party “Borrower” who is responsible for debt repayment. Conduit bonds typically are used for housing or industrial development, or to construct facilities or provide capital to operate or manage programs of non-profit corporations. A public hearing pursuant to the Tax Equity and Fiscal Responsibility Act (TEFRA) usually is required when conduit bonds are issued.
POLICY
This policy includes 16 separate policy and procedure statements organized into five categories, a general category and four specific categories of bonds based upon the nature of the debt. These five categories are:
I. General Policies – All Debt Obligations
II. Direct Debt Obligations
III. Indirect Debt Obligations
IV. Conduit Bond Obligations
V. Bond Debt Issued by Statewide Financing Authorities
I. GENERAL POLICIES – ALL DEBT BOND OBLIGATIONS
It is a policy goal of the City to protect taxpayers, ratepayers and constituents by utilizing conservative financing methods and techniques to obtain the highest practical credit ratings (if applicable) and the lowest practical borrowing costs.
These policies and procedures apply to all categories of debt issuance, regardless of the nature of the debt or bonds issued. These policies are necessary to assure adequate control by the City Council, to properly manage debt liability, and to keep risk exposure to a minimum. These policies and procedures are applicable to all categories of debt, and are organized into the following nine sub-categories:
A. Standards for Use of Debt Financing; Refinancing Outstanding Debt A.B. Competitive, versus Negotiated and Private Placement Bond Sales B.C. Formation of the Financing Team
C.D. Rating Agencies
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Vista City Council Policy
700-12 (3)
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D.E. Bond Insurance
E.F. Optimum Pricing
F.G. Initial Full Disclosure Obligation; Compliance with Federal Securities Laws G. Continuing Disclosure
H. City Officials Authorized to Represent City on Bond Matters H. Authority and Responsibility for Evaluation and Recommendations Respecting Bond Issuance and Debt Incurrence
I. Internal Control Policies
A. Standards for Use of Debt Financing; Refinancing Outstanding Debt The City is committed to long-term financial planning, maintaining appropriate reserves levels and employing prudent practices in governance, management and budget administration. New debt issues, and refinancing of existing debt, must be analyzed for compatibility within the City’s budget.
Purposes for Which Debt May Be Issued
Long-Term Debt. Long-term debt may be issued to finance the construction, acquisition, and rehabilitation of capital improvements and facilities, equipment and land to be owned and operated by the City. Long-term debt financings are generally appropriate when the following conditions exist:
1. When the project to be financed is necessary to provide municipalbasic services.
2. When the project to be financed will provide a benefit to constituents over multiple years.
3. When total debt does not constitute an unreasonable burden to the City and its taxpayers and/or ratepayers.
4. When the debt is used to refinance outstanding debt to produce debt service savings or to realize the benefits of a debt restructuring. Short-term debt. The City may utilize short-term debt to serve as a bridge for anticipated revenues, construction financing or future bond issues.
Refinancing Outstanding Debt
The Director of FinanceFinance Director in consultation with the City Manager and the Council, as applicable, shall have the responsibility to evaluate potential refunding opportunities. The City will consider the following issues when analyzing potential refinancing opportunities:
Debt Service Savings – Absent any non-economic factors, the City shall establish a target savings level greater than or equal to 3% of the par of debt refunded on a net present value (NPV) basis. This target serves as a guideline; the City shall evaluate each refunding opportunity on a case-by-case basis.
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Vista City Council Policy
700-12 (4)
4879-7950-6431v1/200168-00044924-5888-1537, v. 1
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Vista City Council Policy
700-12 (5)
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B. A. Competitive, Versus Negotiated and Private Placement Bond Sales
1. Policy:
There are three principal methods for the initial sale of Bonds: (i) competitive, (ii) negotiated, and (iii) private placement. The City shall utilize the method of sale that (a) is reasonably expected to produce the most advantageous debt service cost with respect to the Bonds, and (b) provides the City with the flexibility necessary or desirable in connection with the structuring, timing or terms of such sale.
All bonds issued by the City of Vista, or its subordinate agencies, shall be sold through either a competitive or negotiated procedure according to the following criteria:
The City will determine, on a case-by-case basis, the most advantageous method of sale based upon, but not limited by, the following factors:
Issuer/Issue Recognition: competitive sales are easier for an issuer that investors and underwriters are familiar with. If extensive marketing is needed to educate the market about the issuer, a negotiated sale may be more appropriate. Similarly, even if the issuer is well known, if the issue itself has a “story” that needs to be told, a negotiated sale may be needed to enhance the marketing and acceptance of the debt at the desired rates and terms.
Issue Size: very large or very small deals may benefit from a negotiated sale over a competitive sale.
Debt Type: GO bonds and other well-known and accepted debt structures are suitable for competitive sales. Others such as CFDs, variable rate, or innovative structures may benefit from a negotiated sale.
Credit Ratings: issuers with high credit ratings lend themselves to competitive sales. Uninsured or lower rated issues are often more suitable for negotiated sales.
Sale Timing and Terms: during times of market uncertainty when conditions are volatile, the flexibility of a negotiated sale may allow an issuer to adjust the sale date and capture additional interest rate savings. A negotiated sale may also allow for certain pricing terms (i.e. non-standard redemption). a. Competitive sale procedures shall be used when the transaction is expected to have adequate market interest to assure competitive pricing.
b. Negotiated sale procedures shall be used whenever the transaction possesses characteristics which are not readily understood by the market so that competitive pricing is not anticipated, and generally should be used for most refunding transactions.
As an alternative to a public bond sale, a private placement sale may be considered if it is demonstrated to result in cost savings or provide other advantages relative to other methods of debt issuance, or if it is determined that Formatted: Font: 11 pt
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Vista City Council Policy
700-12 (6)
4879-7950-6431v1/200168-00044924-5888-1537, v. 1
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access to the public market is unavailable or inefficient at the given point in time and timing considerations require that a financing be completed.
Explanation:
There are generally two procedures used for sale of bonds: competitive sales and negotiated sales. Competitive bond sales involve an open bidding procedure among prospective underwriters who submit bids for the purchase of the bonds, usually for subsequent resale to their clients and investors. Typically, the underwriter submitting the lowest interest rate bid is awarded a contract for the purchase of the bonds.
Negotiated bond sales involve a procedure in which the underwriter, or team of underwriters, are pre-selected by the City, and the City negotiates terms for the sale of the bonds, including the interest rates and the bond discount price.
Private placement sale involves the sale of bonds to pre-selected investors and institutions rather than selling bonds in a public sale.
Competitive sales procedures generally are preferred when the bond transaction and financing structure are standard and well understood by the market placemarketplace, and where there are enough competitive bidders expected to provide fair competition and pricing in the sale. General Obligation (GO) bonds and standard utility revenue bonds are examples of debt typically sold by a competitive sale procedure. The revenue stream to service the debt should be reliable and predictable. These bonds may be insured and may be expected to receive AAA ratings from the rating agencies, oragencies or may be uninsured bonds but still expect high credit ratings (e.g., AA-). A strong market usually exists for highly rated bonds which will justify a competitive sale process. When these conditions are not present, and it is deemed desirable nevertheless to issue bonds, a negotiated sale procedure should be utilized.
2. Policy:
When a competitive bond sale process is used, a financial municipal advisor shall be retained to advise the City on the financing structure of the sale transaction, and to prepare the preliminary official statement. When a negotiated sale procedure is used, a financial municipal advisor shall be retained to evaluate the proposal, and to represent the City in negotiating the terms and price of the bond sale. The lead underwriter may initially propose the financing structure and prepare the preliminary official statements.
Explanation:
Negotiated sales should be used whenever the financing structure may not be sufficiently understood by the market placemarketplace to ensure adequate competition, or there is some credit risk. Negotiated sales are also often used for refunding (refinancing) transactions to enable the issuer to move in and out of the market until the desired interest rate savings can be achieved.
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Vista City Council Policy
700-12 (7)
4879-7950-6431v1/200168-00044924-5888-1537, v. 1
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In a competitive bid sale, the procedures for advertising and opening bids are precise as to a time schedule, and the City does not have the flexibility to move in and out of the market place. As a result, competitive sales may not be efficient for refunding transactions, although they may work very effectively under certain circumstances (e.g. where the economy and interest rates are stable and a familiar financing transaction is proposed).
Negotiated sales are also appropriate for use in issuing tax allocation bonds, certain types of assessment bonds, and revenue bonds having complex financing structures. This type of financing transaction may involve complex characteristics such as fluctuating real estate values, concentrated revenue flow (i.e. not diversified), unusual project features (e.g. innovative or untested engineering and design features), or dependence upon a new or unproven revenue flow.
C. B. Formation of the Financing Team
Policy:
The City Manager shall recommend, and the City Council shall approve and authorize the financing team for all bond transactions from a pre-approved list of underwriters, financial municipal advisors, and bond counsel firms. A financial municipal advisor shall be used for all bond transactions, including negotiated bond sales. Trustee services and bond printing services shall be selected based upon the competitive bids for each bond issue. Investment advisors (if needed) and disclosure counsel shall be selected and approved on an individual case by case basis, based upon the recommendation of the City Manager. The City will engage disclosure counsel to represent the City in connection with any transaction for which an offering document will be prepared and distributed to potential investors or bond purchasers, and such disclosure counsel (and not counsel to the underwriter) will be responsible for preparation of the offering document (provided that the City has primary responsibility for the material accuracy and completeness of any offering document describing a City debt issuance).
Explanation:
Whenever bonds are issued, qualified professional services should be relied upon to facilitate the transaction, to assure compliance with various state and federal laws and regulations, and to ensure that both the City’s and bond investors’ interests are protected. These professionals form what is commonly referred to as “the financing team.” The primary members of the team include: a financial municipal advisor, who provides expert assistance and independent advice to the City, and who assures the financing structure is most advantageous to the City; a bond counsel, who provides the legal expertise necessary to conform the financing to various state and federal laws and regulations related to tax exempt secured transactions, and who generally prepares the bond documents and provides the impartial legal opinion relied upon by bond investors; and, in the case of negotiated transactions, the underwriter, who provides the expert evaluation of the state of the bond market.
Other members of the financing team may include, depending on circumstances, a disclosure counsel, bond trustee or fiscal agent, investment advisor. The City’s Formatted: List Paragraph, Justified, Numbered + Level: 1 + Numbering Style: A, B, C, … + Start at: 1 + Alignment: Left + Aligned at: 0.25" + Indent at: 0.5"
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Vista City Council Policy
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disclosure counsel who advises the parties City on the federal securities law legal requirements for full public disclosure of material information relating to a particular bond issuancein the preliminary and final official statements, and who may also advise the City on the its continuing disclosure obligations. of the City, as issuer; tThe bond trustee who receives and distributes the bond proceeds, receives and distributes the annual debt service payments over the life of the bonds, and who may represent the bond holders in enforcing the terms and conditions of the bonds. ; tThe printer, who prints the preliminary and final official statement and for the bonds. ; and, aAn investment advisor, who advises the City on the investment of bond proceeds and funds deposited in escrow deposits until used for the intended purposes, or to redeem the bonds, as applicable. Certain bond issuances may also require the services of other consultants such as a special tax consultant or fiscal consultant to prepare reports or otherwise compile third party information for offering documents.
It is important that the City Council select and approve the members of the financing team to assure that there is an appropriate combination of experience, integrity, and reliability, to achieve the City’s optimum financing objectives, and to minimize the risks to the City. For this reason, underwriters, financial municipal advisors, and bond counsel firms shall be selected only from a pre-approved list by the City Council. This list should be reviewed and updated by the City Council at least once every three five years, consistent with public procurement best practices.
This policy shall apply to all conduit bond issues. While it may be commonplace in other jurisdictions that prospective borrowers proposing conduit bond financing for their projects are provided the opportunity to select their own financing team, this practice is not acceptable to the City of Vista. Even though the risk and exposure of the City may be minimal, both experience and the law indicate that the issuer may be held directly responsible to the bond holders and to the state or federal regulatory agencies for any violations. Any debt issued by the City of Vista or its agencies exposes the City to certain risks, regardless of whether the debt issued is direct, indirect, or secured conduit financing debt. These risks range from the possibility of a tarnished reputation or a lowered credit rating resulting from a default by a borrower to actual liability for damages resulting from violations of the Securities and Exchange Act or Internal Revenue Code caused by a borrower or by any of the principals associated with the transaction. The most prudent method for the City Council to assure that the transaction is structured appropriately and fairly and to protect itself from the actions of other principals in the transaction is to control the appointment of the financing team, based on the pre-approved list and other aspects of this policy.
D. C. Rating Agencies
1. Policy:
Every effort shall be made to obtain an investment grade rating (i.e. "”A-BBB“, -", or better) for any bond issue of the City of Vista.
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Explanation:
Three major credit rating agencies currently evaluate and rate municipal debt for the benefit of their clients and prospective investors. These include Standard and Poor’s, Moody’s Investors Services, and Fitch Investor’s Services. Generally, the higher the bond rating (“AAA” is the highest), the lesser will be the implied credit risk to the investor and, thus, the lower the rate of interest that will be required to sell the bonds. Therefore, maintaining a high credit rating has significant public benefits of: (1) assuring continued access of the City to the tax exempttax-exempt credit market, and (2) realizing substantial savings in the cost of bonded debt.
Under current market conditions, unrated debt or ratings below “BBBA-“ (e.g. “B+”, or “B”) will typically result in having to pay the highest interest rates in the market in order to sell the bonds.
2. Policy:
Rating agencies for City bonds should be selected based upon the criteria of: (1) market acceptance of the rating agency; (2) the experience of the rating agency with the particular type of financing transaction; and (3) the quality of the methods used for research and analysis by the rating agency.
Explanation:
Unusual and/or innovative transactions may lend themselves to a rating agency who performs much in-depth research and approaches each financing on a case by casecase-by-case basis. Routine and straight-forward transactions lend themselves to a rating style which is very structured and standardized.
E. D. Bond Insurance
Policy:
The City will consider the use of bond insurance on a case-by-case basis if and as applicable. Only when clearly demonstrable savings can be realized shall credit enhancement be utilizedProvided the ratio of the cost of premiums to interest rate savings are favorable, every effort shall be made to insure bonded indebtedness of the City.
Explanation:
Bond insurance provides a guarantee to the investors that their principal and interest payments will be paid in the event of default by the bond issuer or borrower. Bonds that are insured usually expect to receive the highest credit ratings available (“AAA”, or equivalent to the rating of the insuring entity). The analysis regarding whether or not to purchase bond insurance should focus on two factors: (1) does the bond issue qualify for insurance, and if so, (2) will the anticipated interest rate savings justify the added cost of insurance. If the present value calculation for the anticipated interest savings exceeds the cost of the insurance, the insurance would be considered “cost effective” and should be included in the transaction.
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F. E. Cost of Debt and Optimum Pricing
Policy:
Whenever the issuance of bonds or incurrence of debt are proposed, the full cost of the issuance and debt service shall be identified and disclosed. At, or prior, to presenting recommendations for final approval or authorization of any bond or debt, the City Council shall be fully informed of the anticipated and maximum amounts of debt, costs of issuance, net interest costs, and total debt service obligation over the term of the debt. Bonds or debt authorized by the City Council shall not be sold or issued when the net interest costs or cost of issuance materially exceeds the prevailing market conditions for similar debt. The City of Vista shall seek to obtain the lowest available bond and debt interest cost and cost of issuance available, under current market conditions.
Explanation:
While the goal of achieving the lowest available interest rates and costs of issuance for City debt is implied elsewhere in this policy, a specific policy statement is established. When a competitive bond sale procedure is used properly, that procedure generally assures optimum pricing. For negotiated sales, the financial municipal advisor should be relied upon to provide guidance and advice to the City on the competitiveness of the anticipated net interest cost and costs of issuance.
G. F. Full Disclosure Obligation; Compliance with Federal Securities Laws
Policy:
Whenever City debt or bonds are issuedissues securities, City officials, agents and representatives shall make full and complete disclosure of all material facts relating to the issuance in order to comply fully with applicable state and federal disclosure laws and regulations. The purpose of this Section F (the “Disclosure Policy”) is to memorialize and communicate the policies and procedures in connection with obligations, including notes, bonds and certificates of participation, issued by the City and its related entities to ensure that the City continues to comply with all applicable disclosure obligations and requirements under the federal securities laws.
Explanation and Background:
The City occasionally issues certificates of participation, assessment bonds, notes or other obligations (collectively, “Obligations”) in order to fund or refund capital investments, or other long-term programs. In offering Obligations to the public, and at other times when the City makes certain reports, the City must comply with the “anti-fraud rules” of federal securities laws (the “anti-fraud rules” includes Section 17 of the Securities Act of 1933 [15 U.S.C. § 77a, et seq.] and Section 10(b) of the Securities and Exchange Act of 1934 [15 U.S.C.A. § 78j], and regulations promulgated by the Securities and Exchange Commission under those Acts (particularly “Rule 10b-5” under the 1934 Act at 17 C.F.R. § 240.10b–5).
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The core requirement of these rules is that potential investors in Obligations must be provided with all “material” information relating 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.
When the City issues Obligations, the two central disclosure documents which are prepared are a preliminary official statement (“POS”) and a final official statement (“OS”; collectively with the POS, “Official Statement”). The Official Statement generally consists of (i) a description of the specific transaction including maturity dates, interest rates, redemption provisions, the specific type of financing, the leased premises (in certificate of participation financings) and other matters particular to the financing; (ii) information on the source of payment for the Obligations (discussed in the next paragraph); and (iii) various other appendices, including the City’s audited financial report, form of the proposed legal opinion, and form of continuing disclosure undertaking. Investors use the Official Statement as one of their primary resources for making informed investment decisions regarding the City’s Obligations.
The City issues Obligations payable from different sources, including the City’s General Fund. The Official Statement for a given transaction must reflect the particular source of payment. In General Fund-backed financings, the Official Statement will include a section which provides information on the financial condition of the City’s General Fund and other relevant City financial data (the “City Section”).
Engagement of Outside Disclosure Counsel:
The City engages outside legal counsel with expertise in securities laws for advice with respect to the City’s disclosure obligations and requirements under the federal securities laws (“Disclosure Counsel”). Disclosure Counsel assists the City in preparing the Official Statement and reviews all new data and updates to the Official Statement. Throughout the process of receiving and incorporating material, Disclosure Counsel provides advice as to standards of materiality and other securities law issues. Disclosure Counsel has a confidential, attorney-client relationship with the City.
Disclosure Counsel provides a negative assurance letter to the underwriters as to the disclosure set forth in the Official Statement for each Obligation. The letter advises the underwriters that, as a matter of fact and not opinion, no information came to the attention of the attorneys working on the transaction which caused them to believe that the Official Statement as of its date and as of the date of their letter (except for any financial, statistical, economic or demographic data or forecasts, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, and other customary exclusions), contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
Disclosure Process:
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When the City determines to issue Obligations, the Director of FinanceFinance Director/City Treasurer (“Director of FinanceFinance Director”) requests involved City Department Directors to commence preparation of the portions of the Official Statement for which they are responsible. While the general format and content of the Official Statement secured by a particular revenue source does not normally change substantially from offering to offering, except as necessary to reflect major events, the City Manager, Director of FinanceFinance Director, and City Attorney (or their designees) are separately responsible for reviewing and preparing or updating certain portions of the Official Statement which are within their particular area of knowledge. Additionally, all participants in the disclosure process are separately responsible for reviewing the entire Official Statement.
Disclosure Counsel and the City’s Municipal Advisor assist the Director of FinanceFinance Director and City Manager in determining the materiality of any particular item, and the development of specific language in the Official Statement.
Disclosure Counsel also assists the City in the development of a “big picture” overview of the financial condition of the General Fund or particular enterprise included in the Official Statement. This overview highlights particular areas of concern. Disclosure Counsel has a confidential, attorney-client relationship with the City.
The Director of FinanceFinance Director schedules one or more meetings or conference calls of the financing team working group (which includes City officials, the City’s municipal advisor, Bond and Disclosure Counsel, the underwriter of the Obligations, and its counsel), and new drafts of the Official Statement are circulated and discussed. During this part of the process, there is substantial contact among City Department Directors (or their designees), other members of the financing team and Disclosure Counsel, to discuss issues which may arise, determine the materiality of particular items and ascertain the prominence in which the items should be disclosed.
Before distributing a POS to potential investors, there is a formal meeting which includes City officials involved in the preparation of the POS and the underwriters and their counsel, during which the Official Statement is reviewed in its entirety, page by page or section by section, to obtain final comments and to allow the underwriters to ask questions of the City’s senior officials. This is referred to as a “due diligence” meeting.
A substantially final form of the POS is provided to the City Council and, if applicable, the Board of Directors of the Vista Joint Powers Financing Authority (the “Authority”) 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 approved by the City Council which generally authorizes certain senior staff to make additional corrections, changes and updates to the POS in consultation with the City Attorney and Disclosure Counsel.
At the time the POS is posted for review by potential investors, senior City officials execute certificates deeming certain portions of the POS complete (except for Formatted: Font: 11 pt
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certain pricing terms) as required by Securities and Exchange Commission (“SEC”) 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 changes and developments will have been 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, supplements will be prepared and published.
In connection with the closing of the transaction, one or more senior City officials execute certificates stating that certain portions of the OS, as of the date of each OS and as of the date of closing, do not contain any untrue statement 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. The City Attorney also provides an opinion letter for underwriters.
Generally, that opinion letter will inform underwriters that information contained in the section of the OS relating to the City and its operations (or specified portions thereof) as of the date of the opinion letter did not, and as of the date of the closing, does not, contain any untrue statement of a known material fact or omitted or omits to state any known material fact necessary to make the statements within the OS, in light of the circumstances under which they were made, not misleading. The City Attorney does not opine to any financial, statistical, economic or demographic data or forecasts, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, and certain other customary matters.
Development of Information for the Obligations:
The information contained in the City Section is developed by City personnel under the direction of the Director of FinanceFinance Director, with the assistance of the financing team. In certain circumstances, additional City officials will be involved, as necessary. The following principles govern the work of the respective City personnel that contribute information to the City Section:
• City employees involved in the disclosure process are responsible for being familiar with federal securities laws as they relate to disclosure.
• City employees involved in the disclosure process should be instructed to err on the side of raising issues when preparing or reviewing information for disclosure. Officials and other personnel are encouraged to consult with Disclosure Counsel 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 Policy on an ad hoc basis. However, the Policy is 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.
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• The process of updating Official Statements 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 Official Statements secured by a particular revenue source at the time of each update, everyone 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 that the particular officials involved in the disclosure process are of sufficient seniority such that it is reasonable to believe that, collectively, they are in possession of material information relating to the City and its finances.
Distribution Of Procedures; Training:
The Procedures must be provided to all senior City officials and any other member of the City staff that is involved in the City’s disclosure obligations and must also be provided to the members of the City Council and the members of the Board of Directors of the Authority.
Periodic training for the personnel involved in the preparation of the Official Statement is coordinated by the office of the Director of FinanceFinance Director, with the assistance of Disclosure Counsel. These training sessions are provided to assist staff members involved in identifying relevant disclosure information to be included in Official Statements. The training sessions also provide an overview of federal laws relating to disclosure, situations in which disclosure rules apply, the purpose of the Official Statement, a description of previous SEC enforcement actions and a discussion of recent developments in the area of municipal disclosure. Attendees at the training sessions are provided the opportunity to ask questions of Disclosure Counsel concerning disclosure obligations and are encouraged to contact Disclosure Counsel at any time if they have questions.
Annual Continuing Disclosure Requirements:
In connection with issuing of Obligations, the City entered into a number of agreements (“Continuing Disclosure Certificates”) to provide annual reports related to its financial condition (including its audited financial statements) as well as notice of certain events relating to the Obligations specified in the Continuing Disclosure Certificates. The City must comply with the specific requirements of each Continuing Disclosure Certificate. The City’s Continuing Disclosure Certificates generally require that the annual reports be filed within nine months after the end of the City’s fiscal year, and event notices are generally required to be filed within 10 days of their occurrence.
Specific events which require “enumerated event” notices are set forth in each particular Continuing Disclosure Certificate.
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under the caption “Secondary Market Disclosure.” Particular care must be paid to the timely filing of any changes in credit ratings on Obligations (including changes resulting from changes in the credit ratings of insurers of particular Obligations).
The City Attorney or Director of FinanceFinance Director will provide written notice to the City Council and the Board of Directors of the Authority of any receipt by the City or the Authority of any default, event of acceleration, termination event, modification of terms (only if material or may reflect financial difficulties), or other similar events (collectively, a “Potentially Reportable Event”) under any agreement or obligation to which the City is a party and which may be a “financial obligation” as discussed below. Such written notice should be provided by the City Attorney or Director of FinanceFinance Director to the City Council and the Board of Directors of the Authority as soon as the City Attorney or Director of FinanceFinance Director is provided written notice or otherwise informed by knowledgeable City personnel, consultants, or external parties of such event. The Director of FinanceFinance Director, with the assistance of Bond and Disclosure Counsel, will determine whether notice of such Potentially Reportable Event is required to be filed on the Electronic Municipal Market Access (“EMMA”) pursuant to the disclosure requirements of SEC Rule 15c2-12 (the “Rule”). If filing on EMMA is required, the filing is due within 10 business days of such Potentially Reportable Event to comply with the continuing disclosure undertaking for the various debt obligations of the City. The Director of FinanceFinance Director will notify the City Council and the Board of Directors of the Authority of such events.
The City Attorney or Director of FinanceFinance Director will report to the City Council and the Board of Directors of the Authority regarding the execution by the City of any agreement or other obligation which might constitute a “financial obligation” for purposes of the Rule. Amendments to existing City agreements or obligations with “financial obligation,” which relate to covenants, events of default, remedies, priority rights, or other similar terms, should be reported to the City Council and the Board of Directors of the Authority as soon as the City Attorney or Director of FinanceFinance Director is provided written notice or otherwise notified by knowledgeable City personnel, consultants, or external parties of such event.
The Director of FinanceFinance Director will determine, in consultation with the City Attorney and with the assistance of Bond and Disclosure Counsel, whether such agreement or other obligation constitutes a material “financial obligation” for purposes of the Rule. If such agreement or other obligation is determined to be a material “financial obligation” or a material amendment to a “financial obligation” described above, notice thereof would be required to be filed on EMMA within 10 business days of execution or incurrence. The types of agreements or other obligations that could constitute “financial obligations” and would need to be reported on EMMA include:
1. Bank loans or other obligations which are privately placed;
2. State or federal loans;
3. Commercial paper or other short-term indebtedness for which no offering document has been filed on EMMA;
4. Letters of credit, surety policies or other credit enhancement with respect to the City’s publicly offered debt;
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5. Letters of credit, including letters of credit which are provided to third parties to secure the City’s obligation to pay or perform (an example of this is a standby letter of credit delivered to secure the City’s obligations for performance under a mitigation agreement);
6. Capital leases for property, facilities, fleet or equipment; and
7. Agreements which guarantee the payment or performance obligations of a third party (regardless of whether the agreements constitute guarantees under California law).
Types of agreements that could be a “financial obligation” under the Rule include:
1. Payment agreements which obligate the City to pay a share of another public agency’s debt service (for example, an agreement with a joint powers agency whereby the City agrees to pay a share of the joint powers agency’s bonds, notes or other obligations); and
2. Service contracts with a public agency or a private party pursuant to which the City is obligated to pay a share of such public agency or private party’s debt service obligation (for example, certain types of Public-Private Partnership arrangements).
Types of agreements that may be a “financial obligation” subject to the Rule include:
1. Any agreement the payments under which are not characterized as an operation and maintenance expenses for accounting purposes if such agreement could be characterized as the borrowing of money;
The Director of FinanceFinance Director will continue to work with the City Attorney and Bond and Disclosure Counsel to refine the definition of financial obligation going forward based on future SEC guidance.
Secondary Market Disclosure:
On February 7, 2020, the SEC released a staff legal bulletin (the “Bulletin”) concerning secondary market disclosure in the municipal bond market. The Bulletin included SEC views on a variety of matters including, without limitation, the applicability of the federal securities law to public agency websites, reports delivered to governmental and institutional bodies and statements made by public officials including elected board members. Documents, reports and other written statements of the City which contain current financial and operational conditions of the City will be included in a section of the City’s website appropriately identified.
The City and its Bond and Disclosure Counsel have reviewed the Bulletin and have incorporated certain SEC staff recommendations into this Policy and into disclosure training for staff and City Council members. The City and its Bond and Disclosure Counsel will be cognizant of those reviews and will consider whether those reviews require the City to make secondary market disclosures.
The disclosure counsel should be made fully aware of all relevant matters which must be disclosed in the official statement. City staff and officials should cooperate fully and make diligent efforts to provide complete, timely, and accurate information to the disclosure counsel.
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For the purposes of issuing debt or bonds, “full and complete disclosure” shall comply with the following statement:
The information contained in the Official Statement (to the extent such information relates to the issuer) is true and correct in all material respects and such information does not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they are made, not misleading.
G. Continuing Disclosure Obligation
Policy:
City Officials shall, at all times, comply fully with the continuing disclosure requirements of Rule 15c.2-12 of the Securities and Exchange Commission.
Explanation:
As a result of the 1994 Orange County financial crises and other debt related problems of local government, the Securities and Exchange Commission adopted Rule 15c.2-12 which imposes a continuing disclosure requirement upon all issuers of tax exempt bonds and other debt, similar to the obligations imposed upon officers of publicly traded corporations. Rule 15c.2-12 requires that an annual disclosure filing be made of eleven specified financial factors relating to any bonds issued after July 1, 1995, and an immediate disclosure filing upon the occurrence of any material events which could affect the credit rating or marketability of the bonds. This requirement is intended to protect investors who purchase bonds on the secondary market (often, years after the original bond issue).
Because of the importance of Rule 15c.2-12, and due to the effort required to gather data for the annual filings, it is prudent and efficient for the City to contract with professional services who are qualified and experienced to perform this function.
Such services would be especially appropriate for conduit bond issues.
H. Authorized City Representatives on Matters Concerning Debt Issues
Policy:
The City Manager, the Finance Director, the City Clerk, and the City Attorney (or their respective designees, when expressly authorized in writing) are the only representatives of the City, except for the City Council acting as the governing body, who are authorized to represent the City or its subordinate agencies on matters related to the issuance or incurrence of debt. All other City officials and staff shall refrain from making or giving comments, statements or information related to the policies, practices, or position of the City regarding any debt issued or contemplated by the City, and shall refer any inquiries, questions or comments from any members of the public to one or more of the authorized representatives.
Explanation:
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Because of the unusually complex and highly sensitive nature of debt issued or contemplated by the city or its subordinate agencies, City officials, staff and employees should refrain from making any statements or comments to members of the public regarding such matters unless expressly authorized under this policy.
Casual or uninformed comments or remarks made by City officials or employees may have unintended impacts upon the City’s credit rating or may cause concern or uncertainty among holders or investors of City bonds. Prospective borrowers interested in conduit financing debt issuance by the City or its subordinate agencies may be misinformed or misled by casual statements. The limiting effect of this policy shall be broadly construed and in particular, shall apply to inquiries or comments received from, appearances before, or representations made to any representatives, agents or employees of federal or state regulatory bodies, statewide or regional financing authorities, credit-rating agencies, investment or financial institutions, and interested or prospective conduit borrowers.
H. I. Authority and Responsibility for Evaluation and Recommendations Respecting Bond Issuance and Debt Incurrence
Policy:
The City Manager, the Finance Director, and City Attorney (or their respective designees, when expressly authorized in writing) are hereby designated as a committee and are authorized and directed to review and recommend upon any inquiries, requests, or proposals made to the City or its subordinate agencies for any bond issuance or debt incurrence, including conduit financing, bond or debt refunding or reissuance, or new issues. Any such inquiries, requests or proposals received by or presented to any City official shall immediately be referred to the City Manager, who shall inform and consult with both the Finance Director and City Attorney.
Explanation:
In order to properly coordinate and evaluate proposals or suggestions for issuance of any bonds or incurrence of any debt by the City, the City Manager shall be responsible and accountable for recommendations made to the City Council. The City Manager shall consult with and rely upon the advice of both the Finance Director and the City Attorney. The City Manager, Finance Director and City Attorney may rely upon advice and information received from other sources, including sources outside the City organization. However, any such reliance will be held subject to the duty and responsibility of “due diligence.” In evaluating any proposals received or recommendations made regarding the issuance of bonds or the incurrence of debt by the City or its subordinate agencies, the City Manager, Finance Director and City Attorney should be concerned exclusively with the highest and best interest of the City with particular concern for the City’s financial well-being, credit-rating, and the accomplishment of the City goals and objectives as approved and authorized by the City Council.
I. Internal Control Procedures
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When issuing debt, in addition to complying with the terms of these Debt Management Policies, the City shall comply with any other 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:
the City’s Disclosure Policies and Procedures,
any federal tax compliance requirements, including without limitation arbitrage and rebate compliance, related to any prior bond issues, and the City’s investment policies as they relate to the investment of bond proceeds.
It is the policy of the City to ensure that proceeds of debt are spent only on lawful and intended uses. Whenever reasonably possible, proceeds of debt will be held by a third-party trustee and the City will submit written requisitions for such proceeds. The City will submit a requisition only after obtaining the signature of the City Manager or the Finance Director (or their respective designees, when expressly authorized in writing). In those cases where it is not reasonably possible for the proceeds of debt to be held by a third-party trustee, the City shall retain records of all expenditures of proceeds through the final payment date for the debt.
II. DIRECT DEBT OBLIGATIONS
Policy:
Revenues of the General Fund of the City of Vista may be pledged to secure bonded debt only when necessary to finance essential and worthwhile public projects. Before determining to issue direct debt, all reasonable alternatives and options should be evaluated to determine if other funds or entities may reasonably incur the debt.
Explanation:
Because of the risk that the direct debt service obligation upon the City’s General Fund could severely impact the City’s ability to maintain essential public services, given the limitations imposed by California laws and Constitutional amendments against raising General Fund revenues, issuance of direct debt obligations of the City should be avoided whenever other reasonable alternatives are available. Under certain limited circumstances, it will be appropriate to issue direct General Fund debt, such as for certificates of participation (COP’s) or certain lease revenue bonds, used to acquire or construct necessary capital equipment or improvement of City-wide benefit.
III. INDIRECT DEBT OBLIGATIONS
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Vista City Council Policy
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Policy:
Indirect debt shall be issued or incurred by the City of Vista: (1) only for worthwhile public purposes; (2) shall be adequately secured by sources of revenue or assets independent from the General Fund; and (3) shall be structured so that revenues of the City’s General Fund are not legally obligated to principal repayment or interest expense.
Explanation:
Tax exempt bond financing and other forms of indirect debt which may be issued by the City of Vista often provide needed capital and a means of financing worthwhile public projects. The City may reap substantial benefits from this form of debt financing. Indirect tax exempt bonds and other forms of debt are appropriate for redevelopment projects, when secured by adequate tax increment or other revenues; for assessment district or other similar special improvements, when properly authorized under Proposition 218 by property owner or voter approval; and for utility and other enterprise improvements, when adequate revenues to be derived from such improvements are available. The City shall exercise administrative control over, and is held responsible for such debt, but the City should not be legally obligated for repayment of the debt or annual interest cost from the General Fund. When reasonable, revenues from annual appropriations of the City’s General Fund may be used for debt service or principal retirement of indirect debt, if the authorization for such appropriations remains at the discretion of the City Council.
This policy declares the intent of the City Council to avoid any commitment or obligation of general Fund revenues in the future for securing indirect debt. All indirect debt must be adequately secured by resources other than those of the General Fund.
IV. CONDUIT BOND OBLIGATIONS
1. 1. Policy:
The City may sponsor privately-owned projects qualifying for tax exempt financing under state and federal laws and regulations, and may act as a conduit for financing such projects by issuing tax exempt bonds, provided that: (1) the proceeds of such bonds shall be used solely for qualified projects that promote the attainment, and are wholly consistent with, the City’s approved development goals, policies and regulations; and (2) the borrower of the proceeds of such bonds, or the developer, adequately and completely indemnifies and holds the city harmless from all risk and liability, and provides adequate security for such indemnity. No funds of the City will be pledged to or made available for the repayment of any conduit bonds.
Explanation:
State and local governments (including counties and cities) are authorized under federal and state law to issue bonds and other forms of debt in order to provide funding for private projects serving recognized public purposes such as housing or economic development.
Such bond issues are subject to requirements for public hearings to be held in the community in which the project is to be developed, under federal legislation known as “TEFRA.” TEFRA supports the principal that tax exempt financing of private development Formatted: Justified, Indent: Left: 0.5", Numbered + Level:
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Vista City Council Policy
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should be authorized only for private projects that further the development goals and policies of the community, and which comply fully with all applicable development regulations.
Typically, the proceeds of the government bond issue are loaned to the private developer which then repays the bond principal and provides for the annual debt service obligation through loan repayments. Thus, “sponsoring” local government (i.e. City) act as a “conduit” for the “third party” borrower. However, third party borrowers frequently desire to designate their own financing team to arrange for the issuance of the bonds or debt.
Under the City’s general policies, this practice is not authorized for the City of Vista. The City of Vista reserves the right in all instances to approve and appoint its own financing team for conduit financing.
Although the City requires the third party borrower to fully indemnify and hold the City harmless against any liability, certain risks remain. In the event of a default in payment, the City’s credit rating may be affected. In the event a violation of Internal Revenue Code requirements or IRS regulations occurs during the life of the bonds, the City as issuer will be held responsible and liable for tax payments by the IRS, and possibly the bond investors. Thus, the indemnification and hold harmless provisions protecting the City should be adequately secured.
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Vista City Council Policy
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2. 2. Policy:
A conduit financing fee of 50 basis points of the par value of the bonds shall be charged by the City of Vista for the initial proceedings to issue conduit financing debt. This fee shall be payable and collected from the conduit borrower when the bonds are sold.
However, a non-refundable deposit in an amount specified by resolution of the City Council shall be received by the City and credited toward the fee at the time of the borrower’s initial application. In addition to the fee, the conduit borrower shall bear responsibility for payment of the cost of issuance of the bonds. Upon approval by the City Council, the fee may be reduced to 25 basis points if the conduit borrower is a non-profit tax-exempt entity and the purpose of the borrowing is to finance a public benefit project.
Additional fees may be established on a case by case basis by the City Council for refunding or other actions required of the City with respect to a conduit financing. The City Manager shall establish a procedure and provide forms for receiving all applications for conduit financing.
Explanation:
There is a considerable cost involved in the issuance of conduit financing bonds. In addition, the City incurs some risks associated with the issuance of bonds. The City is entitled to collect a reasonable fee for undertaking this risk and to defray its costs of proceedings. In addition, the borrower should bear the cost of issuance of the bonds, in addition to the repayment of principal and annual debt service cost. Where the borrower is a bona fide non-profit entity and the project provides a public benefit, the City will reduce the fee by 50 percent. Where additional services of the City are required, as in the case of a refunding, additional fees may be charged and collected.
“Basis points” are the smallest units of measurement used in bond transactions. One basis point is equivalent to 0.01%. Thus, 50 basis points is equivalent to 0.50%. A fee of 50 basis points is equivalent to $5,000 for each $1 million in par value (0.0050 x $1,000,000 = $5,000).
The City Manager is designated as the City Official responsible for coordinating and managing the application procedure. Because of recent changes in regulations of the Securities and Exchange Commission, and the Internal Revenue Service, conduit borrowers shall be required to bear the cost of the City retaining a qualified firm to monitor and comply with continuing disclosure requirements, under Rule 15c.2-12.
V. BOND DEBT ISSUED BY STATEWIDE FINANCING AUTHORITIES
Policy:
When adequate opportunities exist for conduit financing from statewide or regional financing authorities, conduit borrowers shall be encouraged and assisted in obtaining financing from such entities. The City Manager shall arrange to be notified and informed Formatted: Justified, Indent: Left: 0.25", Numbered +
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Vista City Council Policy
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in advance by statewide financing authorities for projects proposed to be financed within the City of Vista, and shall actively monitor the review of such projects. TEFRA hearings for such projects shall be conducted either by the City Council, or by the statewide authority within the City of Vista. Local governments should not seek to compete with statewide authorities, nor should statewide authorities be used to by-pass local development policies and regulations.
Explanation:
This policy is intended to achieve cooperation and avoid competition between statewide and regional financing agencies and local governments and promote efficiency in the use of these scarce public resources. In addition to cities and counties having been authorized to issue conduit debt financing, numerous local, regional, and statewide entities known as “joint exercise of powers authorities” or “JPAs” have been formed throughout the state (such as the California Communities Statewide Development Authority (CSCDA) and the California Municipal Finance Authority (CMFA), among others), the State Legislature has recently established certain regional and statewide agencies and consortia, notably the California Economic Development Finance Agency (CEDFA), for the purpose of providing conduit financing for public and private projects. In addition, the State Legislature created the Infrastructure and Economic Development Bank (IBank), which provides conduit financing as well as direct loans for public and private projects in the state.
It is the stated policy of CEDFA and other statewide financing authorities to keep local governments informed and involved in the decision process for projects within the local community, recent experience has demonstrated that appropriate local community officials are not always informed of such activities. Cities and counties may not learn of these projects until after the decisions have been made and approval actions have been taken in Sacramento. In addition, the potential now exists that third party borrowers may seek to engender competition between the statewide entities and the local authorities. A purpose of this policy is to express the concern of the City of Vista regarding these potential problems, and to seek cooperation and support from the staff and officials of the statewide financing entities.
The City of Vista asserts its right to be informed, through proper channels and in both a timely and adequate manner, of all pending conduit financing proposals, and to be actively involved in the decision processes of financing projects having impacts upon the community. The City of Vista also desires that the TEFRA hearing process either be conducted by the appropriate financing authority within the community affected by the project, or that the City Council itself conduct the proceeding, in order to carry out the purposes for which TEFRA was enacted. The City believes it is both necessary and desirable that statewide and regional financing authorities conduct their review and approval procedures for these financing proposals with effective participation from local government.
HISTORY
Adopted January 13, 1998
Revised Amended December 10, 2024
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