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The proposed updated Debt Management Policy is attached to this report for review; <br />Attachment 1 is the proposed policy for adoption; Attachment 2 provides a strikeout text <br />version to highlight the changes made to the existing policy. <br />. <br />The proposed policy is organized into three primary areas: Purpose, Responsibility, and <br />Policy. Additions to the policy include formalizing existing practices, and administrative <br />updates to language and format, including adherence to the requirements in SB 1029. <br /> <br />Material changes include: <br />1. Requiring debt transactions to be on a City Council agenda as a staff report item <br />(formalizing existing practice) <br />2. Debt indebtedness limit of 3.75% (an existing practice and well below the State’s <br />statutory regulation of 15% limit) <br />3. Types of debt/debt structures, and further clarify the practice of using municipal <br />advisors and legal counsel in determining method of sale for each bond and <br />ensuring compliance with covenants and restrictions set forth in the Tax <br />Certificates <br />4. Reference to the City’s Continuing Disclosure Policy (new policy adopted in <br />2016) <br />5. Internal controls and procedures for the use of bond proceeds (formalizing <br />existing practices, required per SB 1029) <br />6. Annual Debt Transparency Report Submission (new per SB 1029) <br />7. Relationship of debt to the City’s goals and capital improvement program/budget <br />(formalizing existing practices, required per SB 1029). <br /> <br />On December 4, the Finance and Audit Sub-Committee discussed the updated policy <br />and recommended approval by the full City Council. <br /> <br />ALTERNATIVES <br />The Council may amend the policy further, or not approve the amendments. If the <br />Council does not approve the updated policy, it would not be compliant with state law; it <br />is in the best interest of the City to periodically review and update this important policy <br />to ensure the City is compliant with SB 1029. <br /> <br />FISCAL IMPACT <br />There is no fiscal impact associated with updating the City’s Debt Management Policy. <br />In the past, the City has obtained high quality ratings for its debt, which has resulted in <br />favorable borrowing costs. Adopting this policy should likely not result in the lowering of <br />the City’s credit rating. <br /> <br />ENVIRONMENTAL REVIEW <br />This activity is not a project under CEQA as defined in CEQA Guidelines, section <br />15378, because it has no potential for resulting in either a direct or a reasonably <br />foreseeable indirect physical change in the environment. <br /> <br /> <br />6.1.C. - Page 2