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 6 electric, water and wastewater plant and equipment. Net present value savings (calculated according to industry standards) for a fixed-rate refunding should be at least three percent (3%) of the refunded Bonds. Refunding Debt shall not extend the maturity beyond the original debt being refunded without compelling justification. A higher minimum threshold for savings may be considered in the case of advance refunding. COSTS AND FEES All costs and fees related to the issuance of debt will be paid out of debt proceeds. METHOD OF DEBT OFFERING The City shall evaluate the best method of sale for each proposed bond issue. 1. Competitive sale. In a competitive sale, bids for the purchase of the bonds or a loan, in the case of a private placement, are received at a specified place and time and are awarded to the underwriter/lender whose conforming bid represents the lowest true interest cost to the City. 2. Negotiated sale. When a negotiated sale is deemed advantageous in consultation with the City’s Municipal Advisor, Finance Director and Treasurer shall negotiate the loan covenants, terms and conditions and underwriters discount, with assistance from the City’s Municipal Advisor. This will assist in ensuring that the City receives a fair true interest cost for the loan. Generally in a negotiated sale, the underwriter will be selected based on a formal RFP process. The City, with the assistance of its Municipal Advisor, shall evaluate the RFP based upon the experience of the firm and people assigned as well as the fees. Criteria for selection will be determined on a case by case basis. No debt issue will be sold on a negotiated basis without an independent Municipal Advisor. 3. Private placement/direct loans. In certain instances, the City may determine to utilize private placements or offerings to specially defined or otherwise limited investor types, but will only do so if it is more cost effective when considering cost of issuance, impact of funding a debt service reserve fund, continuing disclosure and trustee fees. Any and all private placement offerings which do not include a private placement memorandum (executed by the City) in compliance with Securities and Exchange Commission Rule 15c2-12 prepared by counsel delivery, a 10b5 Opinion, shall require the purchaser(s) to each deliver a "Sophisticated Investor Letter” prepared in a form acceptable to the City’s bond counsel where the buyer(s) represent they have completed their own due diligence regarding the investment, have not relied on information provided by the City except as explicitly stipulated therein, and are able and qualified to purchase without an official statement or disclosure document prepared in compliance with federal and/or state securities laws.