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 8 REDEVELOPMENT AGENCY DEBT The former Redevelopment Agency (RDA) may have authorized the issuance of bonds that are secured by tax increment revenue of the RDA. Beginning February 1, 2012, the City’s Successor Agency may seek to restructure the former RDA debt to achieve savings for the City and affected taxing agencies. Criteria considered when issuing such debt are as follows: 1. A fiscal analysis of the tax increment projections for the project area, generally prepared by an independent redevelopment consultant, which demonstrates sufficient revenue to meet debt service requirements and the ability to support an investment grade credit rating. 2. Market conditions present favorable interest rates and demand for such financing. INTERFUND LOANS From time to time, interfund borrowings may be necessary from one fund to another fund that is experiencing a temporary cash shortage. Under generally accepted accounting principles (GAAP), funds that are not included in the nonspendable, restricted or committed fund balance may make temporary loans to other funds. Interfund loans are categorized into two types: 1. Cash advances at the end of the fiscal year to remove negative cash balance for special revenue funds. Many special revenue funds that account for grant funded projects experience negative cash balance at the end of the fiscal year due to the timing on grant funding. The negative cash situation will be resolved when grant reimbursement is received. 2. Interfund loans that provide for advance spending for a capital project or debt repayment. Such loans must be approved by the City Council. Interest will be paid by the borrowing fund to the lending fund, during the time the loan is outstanding. The rate is determined by the Finance Director on a case by case basis but should not less than the Local Agency Investment Fund rate. These interfund loans will have an approved repayment schedule; however, earlier repayment of the debt may occur based on available monies in the borrowing fund and approval of the City Manager or the Finance Director. Interfund loans shall not hinder the accomplishment of any function or project for which the lending fund was established. LAND-SECURED BONDS Land-secured bonds may be issued under the provisions of the Mello Roos Community Facilities Districts Act of 1982 (Commencing with Section 53311 of the Government Code), the Improvement Act of 1911, the Municipal Improvement Act of 1913 for special assessment districts and the Improvement Bond Act of 1915 Act for the issuance of bonds. These bonds become an obligation of the special district and are not an obligation of the City or any of its component units. See the City Council adopted the Statement of Goals and Policies Regarding the Use of the Mello- Roos Community Facilities Act of 1982 on November 15, 2016 (Resolution R-115-16).