HomeMy WebLinkAboutResolution 2017-008 N.C.S. 01/09/2017Resolution No. 2017 -008 N.C.S.
of the City of Petaluma, California
RESOLUTION ESTABLISHING THE CITY'S DEBT MANAGEMENT POLICY
WHEREAS, the City has issued debt in the past for various reasons; and
WHEREAS, on September 12, 2016, a statute (SB 1029) was enacted that, among
other things, requires issuers of bonds after January 1, 2017, to have adopted a local debt policy;
and
WHEREAS, the debt policy is in compliance with Government Code Section 8855(1),
effective on January 1, 2017, and shall govern all debt undertaken by the City.
NOW, THEREFORE, BE IT RESOLVED that the City Council adopts the attached
Debt Management Policy in order to comply with statutory requirements.
Under the power and authority conferred upon this Council by the Charter of said City.
Exhibit A
CITY OF PETALUMA
DEBT MANAGEMENT POLICY
This Debt Management Policy (the "Debt Policy ") of the City of Petaluma (the "Issuer ")
was approved by the Petaluma City Council on January 9th, 2017. The Debt Policy may be
amended by the City Council as it deems appropriate from time to time in the prudent
management of the debt of the Issuer.
1. Findings
This Debt Policy is intended to comply with Government Code Section 8855(i), effective
on January 1, 2017, and shall govern all debt undertaken by the Issuer.
The Issuer hereby recognizes that a fiscally prudent debt policy is required in order to:
• Maintain the Issuer's sound financial position.
• Ensure the Issuer has the flexibility to respond to changes in future service
priorities, revenue levels, and operating expenses.
• Protect the Issuer's credit - worthiness.
• Ensure that all debt is structured in order to protect both current and future
taxpayers, ratepayers and constituents of the Issuer.
• Ensure that the Issuer's debt is consistent with the Issuer's planning goals and
objectives and capital improvement program or budget, as applicable.
2. Policies
A. Purposes For Which Debt May Be Issued
(i) 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 Issuer.
(a) Long -term debt financings are appropriate when the following conditions exist:
• When the project to be financed is necessary to provide basic services.
• When the project to be financed will provide benefit to constituents over
multiple years.
• When total debt does not constitute an unreasonable burden to the Issuer and
its taxpayers and ratepayers.
• When the debt is used to refinance outstanding debt in order to produce debt
service savings or to realize the benefits of a debt restructuring.
Resolution No. 2017 -008 N.C.S. Page 2
(b) Long -term debt financings will not generally be considered appropriate for current
operating expenses and routine maintenance expenses.
(c) The Issuer may use long -term debt financings subject to the following conditions:
• The project to be financed must be approved by the City Council.
• The weighted average maturity of the debt (or the portion of the debt
allocated to the project) will not exceed the average useful life of the project
to be financed by more than 20 %.
• The Issuer estimates that sufficient revenues will be available to service the
debt through its maturity.
• The Issuer determines that the issuance of the debt will comply with the
applicable state and federal law.
(ii) Short-term debt. Short-term debt may be issued to provide financing for the
Issuer's operational cash flows in order to maintain a steady and even cash flow balance.
Short-term debt may also be used to finance short-lived capital projects; for example, the
Issuer may undertake lease - purchase financing for equipment.
(iii) Financings on Behalf of Other Entities. The Issuer may also find it beneficial to
issue debt on behalf of other governmental agencies or private third parties in order to further
the public purposes of Issuer. In such cases, the Issuer shall take reasonable steps to confirm
the financial feasibility of the project to be financed and the financial solvency of any
borrower and that the issuance of such debt is consistent with the policies set forth herein.
B. Types of Debt
The following types of debt are allowable under this Debt Policy:
• general obligation bonds
• bond or grant anticipation notes
• lease revenue bonds, certificates of participation and lease - purchase
transactions
• other revenue bonds and certificates of participation
• tax and revenue anticipation notes
• land- secured financings, such as special tax revenue bonds issued under the
Mello -Roos Community Facilities Act of 1982, as amended, and limited
obligation bonds issued under applicable assessment statutes
• tax increment financing to the extent permitted under state law
• conduit financings, such as financings for affordable rental housing and
qualified 501 c3 organizations
Resolution No. 2017 -008 N.C.S. Page 3
The Issuer may from time to time find that other forms of debt would be
beneficial to further its public purposes and may approve such debt without an
amendment of this Debt Policy.
Debt shall be issued as fixed rate debt unless the Issuer makes a specific
determination as to why a variable rate issue would be beneficial to the Issuer in a
specific circumstance.
C. Relationship of Debt to Capital Improvement Program and Budget
The Issuer is committed to long -term capital planning. The Issuer intends to issue
debt for the purposes stated in this Debt Policy and to implement policy decisions
incorporated in the Issuer's capital budget and the capital improvement plan.
The Issuer shall strive to fund the upkeep and maintenance of its infrastructure
and facilities due to normal wear and tear through the expenditure of available operating
revenues.
The Issuer shall integrate its debt issuances with the goals of its capital
improvement program by timing the issuance of debt to ensure that projects are available
when needed in furtherance of the Issuer's public purposes.
The Issuer shall seek to avoid the use of debt to fund infrastructure and facilities
improvements in circumstances when the sole purpose of such debt financing is to reduce
annual budgetary expenditures.
The Issuer shall seek to issue debt in a timely manner to avoid having to make
unplanned expenditures for capital improvements or equipment from its general fund.
D. Policy Goals Related to Planning Goals and Objectives
The Issuer is committed to long -term financial planning, maintaining appropriate
reserves levels and employing prudent practices in governance, management and budget
administration. The Issuer intends to issue debt for the purposes stated in this Policy and
to implement policy decisions incorporated in the Issuer's annual operations budget.
It is a policy goal of the Issuer to protect taxpayers, ratepayers and constituents by
utilizing conservative financing methods and techniques so as to obtain the highest
practical credit ratings (if applicable) and the lowest practical borrowing costs.
The Issuer will comply with applicable state and federal law as it pertains to the
maximum term of debt and the procedures for levying and imposing any related taxes,
assessments, rates and charges.
When refinancing debt, it shall be the policy goal of the Issuer to realize,
whenever possible, and subject to any overriding non - financial policy considerations, (i)
minimum net present value debt service savings equal to or greater than 3.0% of the
refunded principal amount, and (ii) present value debt service savings equal to or greater
than 100% of any escrow fund negative arbitrage.
Resolution No. 2017 -008 N.C.S. Page 4
E. Internal Control Procedures
When issuing debt, in addition to complying with the terms of this Debt Policy,
the Issuer shall comply with any other applicable policies regarding initial bond
disclosure, continuing disclosure, post- issuance compliance, and investment of bond
proceeds.
The Issuer will periodically review the requirements of and will remain in
compliance with the following:
• any continuing disclosure undertakings under SEC Rule 15c2 -12,
• any federal tax compliance requirements, including without limitation
arbitrage and rebate compliance, related to any prior bond issues, and
• the Issuer's investment policies as they relate to the investment of bond
proceeds.
Whenever reasonably possible, proceeds of debt will be held by a third -party
trustee and the Issuer will submit written requisitions for such proceeds. The Issuer will
submit a requisition only after obtaining the signature of the Finance Director. In those
cases where it is not reasonably possible for the proceeds of debt to be held by a third -
party trustee, the Finance Director shall retain records of all expenditures of proceeds
through the final payment date for the debt.
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