HomeMy WebLinkAboutReso 107-2017 (17-887)City of South San Francisco P.O. Box 711 (City Hall,
400 Grand Avenue)
South San Francisco, CA
City Council
Resolution: RES 107 -2017
File Number: 17 -887 Enactment Number: RES 107 -2017
RESOLUTION APPROVING THE DEBT MANAGEMENT POLICY
OF THE CITY OF SOUTH SAN FRANCISCO
WHEREAS, the City of South San Francisco (City) continues to promote and align with best
recommended accounting practices; and
WHEREAS, the state legislature recently adopted SB 1029 amending Government Code section 8855, to
require local government agencies to submit reports to the California Debt and Investment Advisory
Commission (CDIAC) no later than 30 days prior to the sale of any debt issuance, which would include
certification that the local agency has adopted a local debt policy; and
WHEREAS, the City requires debt issuance in the near term to finance the proposed Community Civic
Campus, as well as any future Community Facilities Districts or other land secured financing tools; and
WHEREAS, City staff recommends that the City Council adopt the Debt Management Policy, attached
to this resolution as Exhibit A.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of South San Francisco does
here by approve the Debt Management Policy for the City of South San Francisco, attached hereto as
Exhibit A.
BE IT FURTHER RESOLVED, that the City Council authorizes the City Manager, or his designee to
make minor revisions, amendments, or modifications to the Debt Policy, consistent with the intent of
California Government Code section 8855 and this Resolution which do not materially alter or increase
the City's obligations thereunder, subject to approval as to form by the City Attorney.
BE IT FURTHER RESOLVED, that the City Council authorizes the City Manager to take any other
related action necessary to further the intent of this Resolution.
At a meeting of the Special City Council on 9/6/2017, a motion was made by Richard Garbarino,
seconded by Mark Addiego, that this Resolution be approved. The motion passed.
Yes: 5 Matsumoto, Normandy, Addiego, Gupta, and Garbarino
Attest
City of South San Francisco
Page 1
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DEBT MANAGEMENT POLICY
This Debt Management Policy (the “Debt Policy”) of the City of South San Francisco (the
“Issuer”) was approved by the Issuer’s City Council on ________, 2017. The Debt Policy may be
amended by the City Council as it deems appropriate from time to time in the prudent management of
the debt of the Issuer. This Debt Policy applies to the Issuer and all subordinate entities of the Issuer for
which the City Council serves as the governing board.
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.
•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.
•W hen total debt does not constitute an unreasonable burden to the Issuer and its
taxpayers and ratepayers.
•W hen the debt is used to refinance outstanding debt in order to produce debt
service savings or to realize the benefits of a debt restructuring.
EXHIBIT A
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(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.
• 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.
• 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
The following types of debt are allowable under this Debt Policy:
• general obligation bonds
• bond or grant anticipation notes
• 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
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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 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 long-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 Policy and to
implement policy decisions incorporated in the Issuer’s annual operations budget.
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.
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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.
Proceeds of debt will be held either (a) by a third-party trustee, which will disburse such
proceeds to the Issuer upon the submission of one or more written requisitions, or (b) by the
Issuer, to be held and accounted for in a separate fund or account, the expenditure of which will
be carefully documented by the Issuer.