HomeMy WebLinkAboutResolutions - No. 2017-205RESOLUTION NO. 2017-205
A RESOLUTION OF THE LODI CITY COUNCIL
APPROVING A DEBT MANAGEMENT POLICY
WHEREAS, Senate Bill 1029 ("SB 1029"), which was signed by Governor Brown
on September 12, 2016, requires California public agencies that issue debt to adopt debt
management policies that meet certain criteria; and
WHEREAS, in response to SB 1029 and in order to adhere to sound financial
management practices, the City of Lodi finds it desirable to adopt and maintain a debt
management policy; and
WHEREAS, there has been presented to the Council a proposed form of debt
management policy, attached hereto as Exhibit A and incorporated herein by this
reference (the "Policy").
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lodi as
follows:
Section 1. Approval of Policy. The City Council hereby approves and adopts the
Policy as the Debt Management Policy for the City of Lodi.
Section 2. Effective Date. This Resolution shall take effect immediately upon its
passage and adoption.
Dated: November 1, 2017
I hereby certify that Resolution No 2017-205 was passed and adopted by the City
Council of the City of Lodi in a regular joint meeting held November 1, 2017, by the
following vote:
AYES: COUNCIL MEMBERS — Chandler, Nakanishi, and Mayor Kuehne
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — Johnson and Mounce
ABSTAIN: COUNCIL MEMBERS — None
2017-205
NNIFE FERRAIOLO
ity Clerk
EXHIBIT A
CITY OF LODI
AND
LODI PUBLIC FINANCING AUTHORITY
DEBT MANAGEMENT POLICY
This Debt Management Policy (this "Debt Policy") of the City of Lodi (the "City") and the Lodi
Public Financing Authority (the "Authority", and together with the City, each an "Issuer") was
approved by the City's City Council on November 1, 2017, pursuant to Resolution No. 2017-205
and the Authority's Board of Directors on November 1, 2017, pursuant to Resolution
No. LPFA2017-01. The Debt Policy may be amended by the City Council or the Board of
Directors, as applicable, as it deems appropriate from time to time in the prudent management
of the debt of the Issuer. Any approval of debt by the City Council or Board of Directors that is
not consistent with this Debt Policy shall constitute a waiver of this Debt Policy.
1. Findings
This Debt Policy is intended to comply with Government Code Section 8855(i), effective on
January 1, 2017, and shall govern all debt undertaken by the Issuer.
The Issuer hereby recognizes that a fiscally prudent debt policy is required in order to:
• Maintain the Issuer's sound financial position;
• Ensure the Issuer has the flexibility to respond to changes in future service priorities,
revenue levels, and operating expenses;
• Protect the Issuer's credit -worthiness;
• Ensure that all debt is structured in order to protect both current and future
taxpayers, ratepayers and constituents of the Issuer; and
• Ensure that the Issuer's debt is consistent with the Issuer's planning goals and
objectives and capital improvement program or budget, as applicable.
2. Policies
A. Purposes For Which Debt May Be Issued
(i)
Long -Term Debt. Long-term debt may be issued to finance the construction,
acquisition, and rehabilitation of capital improvements and facilities, equipment,
and land to be owned and operated by the Issuer.
(a) Long-term debt financings are appropriate when the following conditions
exist:
• When the project to be financed is necessary to provide basic
services.
When the project to be financed will provide benefit to constituents
over multiple years.
When total debt does not constitute an unreasonable burden to the
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Issuer and its taxpayers and ratepayers.
• When the debt is used to refinance outstanding debt in order to
produce debt service savings or to realize the benefits of a debt
restructuring.
• When adequate pay as you go resources are not available to fund
the project.
(b) Long-term debt financings will not generally be considered appropriate for
current operating expenses and routine maintenance expenses.
(c) The Issuer may use long-term debt financings subject to the following
conditions:
The project to be financed must be approved by the City Council or
Board of Directors, as applicable;
The weighted average maturity of the debt (or the portion of the debt
allocated to the project) will not exceed the average useful life of the
project to be financed by more than 20%;
The Issuer estimates that sufficient revenues will be available to
service the debt through its maturity; and
The Issuer determines that the issuance of the debt will comply with
the applicable state and federal law.
(ii) Short-term debt. Short-term debt may be issued to provide financing for the
Issuer's operational cash flows in order to maintain a steady and even cash flow
balance. Short-term debt may also be used to finance short-lived capital
projects; for example, the Issuer may undertake lease -purchase financing for
equipment.
(iii) Financings on Behalf of Other Entities. The Issuer may also find it beneficial to
issue debt on behalf of other governmental agencies or private third parties in
order to further the public purposes of Issuer. In such cases, the Issuer shall take
reasonable steps to confirm the financial feasibility of the project to be financed
and the financial solvency of any borrower and that the issuance of such debt is
consistent with the policies set forth herein.
B. Types of Debt
For purposes of this Debt Policy, "debt" shall be interpreted broadly to mean bonds, notes,
certificates of participation, financing leases, or other financing obligations, but the use of such
term in this Debt Policy shall be solely for convenience and shall not be interpreted to
characterize any such obligation as an indebtedness or debt within the meaning of any statutory
or constitutional debt limitation where the substance and terms of the obligation comport with
exceptions thereto.
The following types of debt are allowable under this Debt Policy:
• general obligation bonds;
• bond or grant anticipation notes;
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• lease revenue bonds, certificates of participation and lease -purchase
transactions;
• other revenue bonds and certificates of participation;
• tax and revenue anticipation notes;
• land -secured financings, such as special tax revenue bonds issued under the
Mello -Roos Community Facilities Act of 1982, as amended, and limited
obligation bonds issued under applicable assessment statutes;
• tax increment financing to the extent permitted under state law;
• conduit financings, such as financings for affordable rental housing and
qualified 501c3 organizations; or
• private placement loans directly with a bank or other financial institution.
The Issuer may from time to time find that other forms of debt would be beneficial to further its
public purposes and may approve such debt by majority vote of the City Council or Board of
Directors, as applicable, without an amendment of this Debt Policy.
Debt shall be issued as fixed rate debt unless the Issuer makes a specific determination as to
why a variable rate issue would be beneficial to the Issuer in a specific circumstance.
C. Relationship of Debt to Capital Improvement Program and Budget
The Issuer is committed to long-term capital planning. The Issuer intends to issue debt for the
purposes stated in this Debt Policy and to implement policy decisions incorporated in the
Issuer's capital budget and the capital improvement plan.
The Issuer shall strive to fund the upkeep and maintenance of its infrastructure and facilities due
to normal wear and tear through the expenditure of available operating revenues. The Issuer
shall seek to avoid the use of debt to fund infrastructure and facilities improvements that are the
result of normal wear and tear.
The Issuer shall integrate its debt issuances with the goals of its capital improvement program
by timing the issuance of debt to ensure that projects are available when needed in furtherance
of the Issuer's public purposes.
The Issuer shall seek to avoid the use of debt to fund infrastructure and facilities improvements
in circumstances when the sole purpose of such debt financing is to reduce annual budgetary
expenditures.
The Issuer shall seek to issue debt in a timely manner to avoid having to make unplanned
expenditures for capital improvements or equipment from its general fund.
D. Policy Goals Related to Planning Goals and Objectives
The Issuer is committed to Tong -term financial planning, maintaining appropriate reserves levels,
and employing prudent practices in governance, management and budget administration. The
Issuer intends to issue debt for the purposes stated in this Debt Policy and to implement policy
decisions incorporated in the Issuer's annual operations budget.
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It is a policy goal of the Issuer to protect taxpayers, ratepayers and constituents by utilizing
conservative financing methods and techniques so as to obtain the highest practical credit
ratings (if applicable) and the lowest practical borrowing costs.
The Issuer will comply with applicable state and federal law as it pertains to the maximum term
of debt and the procedures for levying and imposing any related taxes, assessments, rates, and
charges.
When refinancing debt, it shall be the policy goal of the Issuer to realize, whenever possible,
and subject to any overriding non-financial policy considerations, (i) minimum net present value
debt service savings equal to or greater than 3.0% of the refunded principal amount, and (ii)
present value debt service savings equal to or greater than 100% of any escrow fund negative
arbitrage.
E. Internal Control Procedures
When issuing debt, in addition to complying with the terms of this Debt Policy, the Issuer shall
comply with any other applicable policies regarding initial bond disclosure, continuing
disclosure, post -issuance compliance, and investment of bond proceeds.
The Issuer will periodically review the requirements of and will remain in compliance with the
following:
any continuing disclosure undertakings under SEC Rule 15c2-12;
any federal tax compliance requirements, including without limitation arbitrage and
rebate compliance, related to any prior bond issues; and
the Issuer's investment policies as they relate to the investment of bond proceeds.
It is the policy of the Issuer to ensure that proceeds of debt are spent only on lawful and
intended uses. Whenever reasonably possible, proceeds of debt will be held by a third -party
trustee and the Issuer will submit written requisitions for such proceeds. The Issuer will submit
a requisition only after obtaining the signature of the Treasurer. In those cases where it is not
reasonably possible for the proceeds of debt to be held by a third -party trustee, the Treasurer
shall retain records of all expenditures of proceeds through the final payment date for the debt.
APPROVED AS TO FORM:
JANICE D. MAGDICH
City Attorney
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