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 10 life of the issue in accordance with agreements to do so on a transaction-by-transaction basis. Material events are defined as those events, which are considered likely to reflect on the credit supporting the securities. The events considered material according to the SEC at this time are: • Rating changes • Non-payment related Defaults • Adverse tax opinions or events affecting the tax exempt status • Unscheduled draws on Debt Service reserves or Credit Enhancements reflecting financial difficulties • Modifications to the rights of securities holders • Defeasances • Optional, unscheduled or contingent bond calls • Release, substitution, or sale of property securing repayment of the securities • Substitution of credit or liquidity providers, or their failure to perform • Principal and interest payment delinquencies • Bankruptcy, insolvency or receivership • Merger, acquisition or sale of all issuer assets • Appointment of successor trustee POST-ISSUANCE COMPLIANCE Tax-exempt bonds issued by the City retain their tax-exempt status throughout the life of the issue if all applicable federal tax laws are satisfied while the bonds are outstanding. Various requirements apply under the Internal Revenue Code and Income Tax Regulations including information filing and other requirements related to issuance, the proper and timely use of bond-financed property, and arbitrage yield restriction and rebate requirements. The Finance Director is responsible for ensuring that the rules are met at the time the bonds are issued and throughout the term of the bonds. This requires coordination and accountability on the part of other City departments with respect to the expenditure of bond proceeds and the continued proper use and operation of the facilities financed. It also requires proper maintenance of records sufficient to establish compliance with all applicable federal tax requirements until three years after the final maturity of the bonds. Specific written procedures are on file in the Finance Department for the ongoing administration and maintenance of the City’s bond issues. INTERNAL CONTROL PROCEDURES When issuing debt, in addition to complying with the terms of this Debt Policy, the City shall comply with any other applicable policies regarding initial bond disclosure, continuing disclosure, post-issuance compliance, and investment of bond proceeds. The City will periodically review the requirements of and will remain in compliance with the following: