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 14 CERTIFICATE OF PARTICIPATION A financial instrument representing a proportionate interest in payments such as Lease payments by one party (such as a City acting as a Lessee) to another party (often a trustee). COMPETITIVE SALE A sale of securities in which the securities are awarded to the bidder who offers to purchase the issue at the best price or lowest true interest cost. CONTINUING DISCLOSURE The requirement by the Securities and Exchange Commission for most issuers of municipal debt to provide current financial information to the informational repositories for access by the general marketplace. CREDIT ENHANCEMENT A guarantee by a third party in a debt financing that strengthens the credit quality of a debt issue. CURRENT REFUNDING A Refunding in which the refunded Bonds are called or mature within 90 days of the issuance of the Refunding Bonds. (See also Advance Refunding). DEBT SERVICE The amount necessary to pay principal and interest requirements on outstanding Bonds for a given year or series of years. DEFAULT The failure to pay principal or interest in a timely manner. An actual Default should be distinguished from technical Default. The latter refers to a failure by an issuer to abide by certain covenants but does not necessarily result in a failure to pay principal or interest when due. DEFEASANCE Providing for payment of principal, interest, and premium, if any, in full on debt in accordance with the terms and requirements of the instrument pursuant to which the debt was issued. A legal Defeasance usually involves establishing an irrevocable escrow funded with only cash and US. government obligations. DISCOUNT The difference between a bond's par or face value and the price for which it is sold when the latter is less than par. MUNICIPAL ADVISOR An independent consultant who is registered with the SEC and MSRB and advises an issuer on matters pertinent to a debt issue, such as structure, sizing, timing, marketing, pricing, terms, and bond ratings. The municipal advisor acts as a fiduciary for the City with a duty of care and loyalty. GENERAL OBLIGATION DEBT Debt that is secured by a pledge of the ad valorem taxing power of the issuer. Also known as a full