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6.A. - Page 7 of 29 <br />costs of a public debt issuance, for debt obligations with short amortization schedules, or <br />for other valid reasons. Staff shall evaluate the cost-effectiveness of alternative financing <br />methods before the City conducts a private placement of debt. The City Council will seek <br />the advice of its professional managers, special legal counsel, andf qualified municipal <br />advisors in making the determination of the appropriate method of sale and the use of credit <br />ratings and/or credit enhancements on a case by case basis. <br />I. Enterprise Funds - It is the policy that each utility or enterprise should provide adequate <br />debt service coverage as required in the bond contract/agreement. Projected operating <br />revenues in excess of operating expenses, less capital expenditures, depreciation, and <br />amortization in the operating fund, should be at least 1.20 times the projected annual debt <br />service costs prier to the iss anno of d, -]A or such other coverage level approved by the <br />City Council. <br />Refundings - The City shall review its outstanding debt for the purpose of determining if the <br />financial marketplace will afford the City the opportunity to refund an issue and lessen its <br />debt service costs. For refundings undertaken to achieve debt service savings, the sum <br />total of all savings (net of expenses and funds contributed by the issuer at the time of <br />closing), discounted to the present at the bond true interest cost, should at a minimum <br />produce net present value savings equal to at least 3% of the par amount of refunding <br />bonds to be sold. Refundings may be undertaken for reasons other than to achieve debt <br />service savings, such as to remove restrictive covenants or restructure debt payments. <br />Such restructuring refundings do not need to achieve 3% net present value savings. <br />K. Conduit Debt - When appropriate the City will use special assessment debt (such as 1915 <br />Act bonds), special tax debt (such as Mello -Roos bonds), or mortgage revenue bonds so <br />that those uniquely benefiting from the improvements will absorb all or part of the cost of <br />the project financed. Those responsible for the repayment of such debt will also be <br />responsible for paying all ongoing administrative costs including credit enhancement fees, <br />trustee fees, and the cost of City staff and consultants deemed necessary for the proper <br />administration of the debt. <br />L. City Charter and State and Federal Laws - All debt issued must be in conformance with <br />applicable sections of the City Charter, as well as with applicable state and federal laws in <br />effect at the time of issuance. <br />M. Use of Public Financing Authorities - Depending upon the nature of the debt being <br />issued, the City may elect to use an existing public financing authority (or may elect to <br />create a new public financing authority) should doing so be to the City's advantage. <br />N. Interfund Borrowing - From time to time, there may be advantages for the City to enter <br />into loans between funds. Unless otherwise approved by the City Council, the interest <br />rates on such loans will not be lower than the rate that the fund providing the loan is able <br />to earn in the County Pool or Local Agency Investment Fund (whichever rate is higher) <br />when the loan is approved. <br />0. Arbitrage Rebate Monitoring - Staff will comply with the arbitrage rebate and monitoring <br />requirements as set forth by the U.S. Treasury Department. Should staff determine that <br />it is advisable to do so, arbitrage rebate analysis reports may be performed more <br />frequently than once every five years as is required by the U.S. Treasury Department. <br />P. Investment of Bond Proceeds - Bond proceeds will be invested only in investments as <br />4 <br />11 <br />