Report to Mayor and City Council
Tuesday, March 21, 2017
Discussion
SUBJECT:
Title
CONSIDER DEBT MANAGEMENT POLICY (CITY COUNCIL)
Body
I. SUMMARY
Effective January 1, 2017, new state law requires issuers to adopt a local debt policy. The proposed Debt Management Policy presented with this report was drafted by the City Attorney's office and satisfies the requirements of the new state law.
II. RECOMMENDATION
Recommendation
ADOPT the proposed Debt Management Policy.
Body
III. ALTERNATIVES
TAKE another action deemed appropriate by City Council.
IV. BACKGROUND
On September 12, 2016, the Governor approved SB 109 (Herzberg). The new state law became effective January 1, 2017. It requires that all proposed debt include a certification by the issuer that it has adopted a local debt policy, which includes specified provisions concerning the use of debt, and that the debt issuance is consistent with the local policy.
The Successor Agency is in process of refunding the 2009 Lease Revenue Bonds, using proceeds of the 2017A Tax Allocation Refunding Bonds. The $12.2 million refunding bonds went to market on February 28, 2017, and the transaction will close on March 28, 2017. The bond refunding resulted in net present value savings of $875,785 (7.922% of refunded principal), and releases the City's Community Center obligation related to the 2009 Lease Revenue Bonds.
The Series 2017A refunding bonds are subject to the new state law; and therefore, a locally adopted debt policy is required. The proposed policy was drafted by the City Attorney's office to comply with the new state law (Exhibit A). The policy is to be adopted by the City Council on behalf of the City and its related entities (e.g. Successor Agency).
The proposed policy:
* Outlines the purposes for using debt, and the types of debt allowable;
* States that long-term debt may be used to finance capital projects, capital equipment, land, affordable housing, and redevelopment of blighted areas;...
Click here for full text