REPORT TO COUNCIL
SUBJECT
Title
Debt Management Policy Review and Approval
Report
BACKGROUND
The Government Finance Officers Association (GFOA) recommends that state and local governments adopt comprehensive written debt management policies. In addition, effective January 1, 2017, California Government Code section 8855(i) requires any issuer of public debt to provide to the California Debt and Investment Advisory Commission (CDIAC) a report of any proposed issuance. The report to the CDIAC must include certification that the issuer has adopted local debt policies concerning the use of debt and that the proposed debt issuance is consistent with those policies.
DISCUSSION
The City does not currently have an adopted Debt Management Policy that provides written guidelines on debt issuance, management of a debt portfolio, and adherence to various laws and regulations. A debt management policy will improve the quality of decisions and adherence to the policy signals to rating agencies and capital markets that a government is well managed and therefore is likely to meet its debt obligations in a timely manner.
The proposed Debt Management Policy provides the necessary written guidance and is in compliance with all provisions of the City Charter and the California Government Code section 8855 (i) relevant to the issuance of public debt by local agencies. Additionally, the policy provides guidance regarding the types of debt the City may issue (fixed or variable rate, tax-exempt or taxable), the methods for issuing debt obligations (competitive sale, negotiated sale, or private placement), the selection of financial service providers (financial advisors, bond counsel, trustees, etc.), and the structural features of debt issuances (final maturity, call options, etc.) The policy also describes various revenue sources that may be used to secure debt, such as property taxes, enterprise revenue, lease revenue, and special assessments. To help ensure that debt i...
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