R-002-17 Adopting the City of Colton Debt Policy and Procedures

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City of Colton Debt Policy and Procedures Adopted by City Council February 7, 2017 9 COMPLIANCE INVESTMENT OF PROCEEDS The City shall comply with all applicable Federal, State and contractual restrictions regarding the investment of bond proceeds. This includes compliance with restrictions on the types of investment securities allowed, restrictions on the allowable yield of invested funds as well as restriction on the time period over which the proceeds may be invested. USE OF PROCEEDS AND INTERNAL CONTROL PROCEDURES To ensure that bond proceeds are spent for their intended purposes, the Finance Director shall be responsible for undertaking a review of expenditures for each bond issue to determine that bond proceeds were in fact spent in the manner detailed in the bond documents on the date of issuance. If bond proceeds were spent in a manner different than as set forth on the date of issuance (for example, because of substitution projects or change in scope of expected projects), the Finance Director, with the assistance of the City’s bond counsel, if necessary, will review the new expenditures to verify that expenditure of the bond proceeds is permitted to be financed. All projects being funded with bond proceeds shall be designated as such and included in the City’s CIP. The Finance Director shall maintain books and records of information showing how bond proceeds are spent, including the following: • Requisitions to the bond trustee from the project fund; • Bond trustee records relating to other funds and accounts; • Verifiable information showing payments to third parties. • An accounting of all bond proceeds spent on an approved capital project. ARBITRAGE REBATE Due to the complexity of arbitrage rebate regulations and the severity of noncompliance penalties, the City shall contract with an independent consultant for preparation of the arbitrage rebate calculation in accordance with the IRS code and regulations. The City shall maintain an internal system for tracking expenditure of bond proceeds and investment earnings by each issue with the assistance from its fiscal agent(s). DISCLOSURE REQUIREMENT The City established its Disclosure Policy (Appendix B) outlining its responsibilities as the issuer to make all reasonable efforts to assist underwriters in their efforts to comply with Security Exchange Commission or SEC Rule 15c2-12 and MSRB Rule G-36. The City will file or will retain a consultant to file Continuing Disclosure reports and/or certificates with the Electronic Municipal Market Access (EMMA) system, the official repository for information on all municipal bonds. The City will also provide a copy of its Comprehensive Annual Financial Reports (CAFR) upon request and will disseminate other information that it deems pertinent to the market as required. While initial bond disclosure requirements pertain to bond offering statements, the City will provide financial information and notices of material events on an ongoing basis throughout the