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 7 TYPES OF DEBT FINANCING GENERAL OBLIGATION BONDS The City may issue general obligation bonds for essential projects where there is no other funding source available to meet project costs. The following criteria will be used to evaluate the financing: 1. The likelihood of obtaining voter approval of the debt has been researched and determined to be optimistic. 2. The project is essential to meet or relieve capacity needs and no other resources are available to finance it. 3. The project has been presented to City Council either through the CIP or through regular council reports. The useful life of the project or asset to be financed is at least equal to the term of the Bonds to be issued. When issuing debt, the City shall strive to use special assessment, revenue, or other self-supporting bonds in lieu of general obligation bonds. MUNICIPAL NOTES The City Council may authorize the issuance of municipal notes in special situations where there is benefit to the City. REVENUE BONDS The City Council may authorize the issuance of Revenue Bonds as a means of financing capital facilities. The following criteria will be used to evaluate the financing: 1. Revenues available for Debt Service are deemed to be sufficient and reliable so that the bonds can be marketed with investment grade credit ratings. Where appropriate, revenues for the term of the bonds shall be projected or confirmed by an independent revenue consultant selected in the sole discretion of the City. 2. The project securing the financing is of the type that will support an investment grade credit rating. 3. Market conditions present favorable interest rates and acceptance for the City financing. 4. The project has been presented to City Council either through the CIP or through regular council reports. 5. The project is essential to meet or relieve capacity needs and current resources are insufficient or unavailable. 6. The useful life of the project or asset to be financed is at least equal to the term of the Bonds to be issued. These types of obligations are often structured as Lease Revenue Bonds or Certificates of Participation (COP’s). If so structured, debt service shall not exceed the fair rental value of the leased asset for the term of the lease.