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SA-2017-003SUCCESSOR AGENCY RESOLUTION NO. SA -2017-003 RESOLUTION OF THE GOVERNING BOARD OF THE SUCCESSOR AGENCY TO THE ANAHEIM REDEVELOPMENT AGENCY APPROVING A DEBT ISSUANCE AND MANAGEMENT POLICY IN ACCORDANCE WITH SENATE BILL 1029 WHEREAS, The State legislature has recently enacted Senate Bill 1029, amending, in part, Government Code Section 8855, which requires any issuer of municipal debt to certify at least 30 days prior to the sale of any debt issue, that it has adopted local debt policies addressing the topics set forth in Government Code Section 8855(1); and WHEREAS, The Successor Agency to the Anaheim Redevelopment Agency (the "Successor Agency") desires to approve and adopt the Debt Issuance and Management Policy (the "Policy") of the Successor Agency in accordance with Government Code Section 8855, which Policy shall apply to debt issued by the Successor Agency; NOW THEREFORE, THE GOVERNING BOARD OF THE SUCCESSOR AGENCY TO THE ANAHEIM REDEVELOPMENT AGENCY DOES HEREBY RESOLVE AS FOLLOWS: Section 1. Each of the above recitals is true and correct. Section 2. 71'he Policy, in substantially the form attached hereto as Exhibit A, is hereby approved and adopted. Section 3. This Resolution shall be effective upon its adoption. PASSED AND ADOPTED by the Successor Agency to the Anaheim Redevelopment Agency this1 9 th day of December 2017 , by the following vote: AYES: Chairman Tait and Authority Members: Vanderbilt, Murray, Barnes, Moreno, Kring, and Faessel NOES: None ABSENT: None ABSTAIN: None - Chair ATT - ED: Acting Secretar} EXHIBIT A DEBT ISSUANCE AND MANAGEMENT POLICY SUCCESSOR AGENCY TO THE ANAHEIM REDEVELOPMENT AGENCY Debt Issuance and Management Policy 1. Introduction This Debt Policy provides guidelines for debt issuance, management and post -issuance related policies and procedures for the Successor Agency to the Anaheim Redevelopment Agency (the "Successor Agency"). This Debt Policy may be amended by the Executive Director of the Successor Agency as it deems appropriate from time -to - time in the prudent management of the debt and financing needs of the Successor Agency. 2. Purpose The purpose of this Debt Policy is to establish guidelines and parameters for the effective governance, management and administration of debt and other financing obligations issued by the Successor Agency. This Debt Policy is intended to improve and direct decision making, assist with the structure of debt issuance, identify policy goals, and demonstrate a commitment to long-term financial planning. Adherence to a debt policy helps to ensure the Successor Agency's debt is issued and managed prudently in order to maintain a sound financial position and credit worthiness. When used in this Debt Policy, "debt" refers to all indebtedness and financing obligations of the Successor Agency. 3. Debt Policy Objective This Debt Policy is intended to comply with the requirements of Senate Bill 1029 (SB 1029), codified as part of California Government Code Section 8855(1), effective on January 1, 2017 and shall govern all debt undertaken by the Successor Agency. The primary objectives of the Successor Agency's debt and financing related activities are to: A. Maintain the Successor Agency's sound financial position; B. Ensure the Successor Agency has the flexibility to respond to possible changes in future obligations, revenues, and operating expenses; C. Ensure that all debt is structured in order to protect both current and future taxpayers, ratepayers and constituents of the Successor Agency; D. Minimize debt service commitments through efficient planning and cash management. E. Protect the Successor Agency's credit worthiness and achieve the highest practical credit ratings, when applicable; and F. Ensure the Successor Agency is in compliance with all relevant State and Federal securities laws and other applicable laws and regulations. SUCCESSOR AGENCY TO THE ANAHEIM REDEVELOPMENT AGENCY 4. Acceptable Uses of Debt Proceeds Pursuant to the Redevelopment Dissolution Law, the Successor Agency is limited in its issuance of debt by Health and Safety Code Section 34177.5. The Successor Agency will ensure any debt issued by it complies with the provisions of this section. 5. Standards for Use of Debt Financing The Successor Agency recognizes that there are numerous types of financing structures and funding sources available, each with specific benefits, costs, and risks. The Successor Agency will consider debt issuance only in those cases where public policy, equity and economic efficiency favor debt financing over cash funding. Prior to the issuance of debt or other financing obligations, the Successor Agency will carefully consider the overall long-term affordability of the proposed debt issuance by conducting an objective analysis of the Successor Agency's ability to support additional debt service payments. The Successor Agency will consider its long-term revenue and expenditure trends, the impact on operational flexibility and the overall debt burden on the taxpayers/ratepayers. The evaluation process shall include a review of generally accepted measures of affordability and will strive to achieve and/or maintain debt levels consistent with its current operating and capital needs. 6. Types of Debt In order to maximize the financial options available to benefit the public, it is the Successor Agency's policy to allow the consideration of issuing all generally accepted types of debt, including, but not exclusive to the following: A. Tax Allocation Bonds: Tax Allocation Bonds are special obligations that are secured by the allocation of tax increment revenues that are generated by increased property taxes in the designated (now former) redevelopment project area. California Health and Safety Code, Division 24, Parts 1.8 and 1.85 limit the authority to issuance of tax allocation bonds only as to refunding of bonds properly and timely issued prior to January 1, 2011; such laws are referred to as the "Dissolution Law" and govern successor agencies to now dissolved redevelopment agencies. B. Short -Term Debt: L Short-term borrowing, such as commercial paper, Tax and Revenue Anticipation Notes (TRANS), and lines of credit, will be considered as an interim source of funding in anticipation of long-term borrowing and may be issued to generate funding for cash flow needs. The final maturity of the debt issued to finance the project shall be consistent with the useful life of the project. Short-term debt may also be used to finance short-lived capital projects such as lease -purchase financing for equipment. SUCCESSOR AGENCY TO THE ANAHEIM REDEVELOPMENT AGENCY C. Refunding Bonds.- i. onds:i. The Successor Agency shall refinance debt pursuant to the authorization that is provided under California law, including but not limited to Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, as market opportunities arise. Refundings may be undertaken in order: (1) To take advantage of lower interest rates and achieve debt service costs savings; (2) To eliminate restrictive or burdensome bond covenants; or (3) To restructure debt to lengthen the duration of repayment, relieve debt service spikes, reduce volatility in interest rates or free up reserve funds. ii. Generally, the Successor Agency shall strive to achieve a minimum of 3% net present value savings. The net present value assessment shall factor in all costs, including issuance, escrow, and foregone interest earnings of any contributed funds on hand. Refundings which produce a net present value savings of less than 3% will be considered on a case-by-case basis. Upon the advice of the Executive Director and with the assistance of a financial advisor and bond counsel, the Successor Agency will consider undertaking refundings for other than economic purposes based upon a finding that such a restructuring is in the Successor Agency's overall best financial interest. The Successor Agency 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. However, the other form or forms of debt must comply with this Debt Management Policy. Debt shall be issued as fixed rate debt unless the Successor Agency makes a specific determination as to why a variable rate issue would be beneficial to the Successor Agency in that circumstance and that such variable rate debt complies with the law. 7. Relationship to Capital Improvement Program and Operating Budget The Successor Agency is limited its authority to issue debt by Health and Safety Code Section 34177.5, which generally restricts Successor Agency debt for purposes of refunding existing debt for savings. 8. Policy Goals Related to Planning Goals and Objectives A. This Debt Policy has been adopted to assist with the Successor Agency's goal of financial sustainability and financial prudence. In following this Debt Policy, the Successor Agency shall pursue the following policy goals: i. The Successor Agency is committed to financial planning, maintaining appropriate reserves levels and employing prudent practices in governance, SUCCESSOR AGENCY TO THE ANAHEIM REDEVELOPMENT AGENCY management and budget administration. The Successor Agency intends to issue debt for the purposes stated in this Debt Policy and to implement policy decisions incorporated in the Successor Agency's annual Operating Budget; It is a policy goal of the Successor Agency 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; iii. The Successor Agency 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; and iv. When refinancing debt, it shall be the policy goal of the Successor Agency to achieve, whenever possible and subject to any overriding non-financial policy, minimum aggregate net present value debt service savings of at least 3% of the refunded principal amount. SUCCESSOR AGENCY TO THE ANAHEIM REDEVELOPMENT AGENCY 9. Internal Control Procedures When issuing debt, in addition to complying with the terms of this Debt Policy, the Successor Agency shall comply with any other applicable policies regarding initial bond disclosure, continuing disclosure, post -issuance compliance, and investment of bond proceeds. The Successor Agency will periodically review the requirements of and will remain in compliance with the following: i. Federal securities law, including any continuing disclosure undertakings under SEC Rule 15c2-12; ii. Any federal tax compliance requirements including without limitation arbitrage and rebate compliance, related to any prior bond issues; iii. The Successor Agency's investment policies as they relate to the investment of bond proceeds; and iv. Government Code section 8855(k) and the annual reporting requirements therein. The Successor Agency shall be vigilant in using bond proceeds in accordance with the stated purpose at the time that such debt was issued. The Executive Director or designee will monitor the expenditure of bond proceeds to ensure they are used only for the purpose and authority for which the bonds were issued. Whenever reasonably possible, proceeds of debt will be held by a third -party trustee and the Successor Agency will submit written requisitions for such proceeds. The Successor Agency will submit a requisition only after obtaining the signature of the Executive Director, 10. Amendment and Waivers of Debt Policy This Debt Policy will be reviewed and updated periodically as needed. Any amendments to this Debt Policy are subject to Executive Director approval. While adherence to this Debt Policy is required in all applicable circumstances, on rare occasions there might be circumstances when strict adherence to a provision of this Debt Policy is not possible or not in the best interest of the Successor Agency. If the Successor Agency staff has determined that a waiver of one or more provisions of this Debt Policy should be considered, it will prepare an analysis describing the rationale for the waiver and the impact of the waiver on the proposed debt issuance and on taxpayers, if applicable. The failure of a debt financing to comply with one or more provisions of this Debt Policy shall in no way affect the validity of any debt issued by the Successor Agency in accordance with applicable laws. 11. SB 1029 Compliance SUCCESSOR AGENCY TO THE ANAHEIM REDEVELOPMENT AGENCY SB 1029, signed by Governor Brown on September 12, 2016, and enacted as Chapter 307, Statutes of 2016, requires issuers to adopt debt policies addressing each of the five items below: A. The purposes for which the debt proceeds may be used. i. Section 4 (Acceptable Uses of Debt Proceeds) addresses the purposes for which debt proceeds may be used. B. The types of debt that may be issued. i. Section 6 (Types of Debt) provides information regarding the types of debt that may be issued. C. The relationship of the debt to, and integration with, the issuer's capital improvement program or budget, if applicable. i. Section 7 (Relationship to Capital Improvement Program and Operating Budget) provides information regarding the relationship between the Successor Agency's debt and Capital Improvement Program and annual Operating Budget. D. Policy goals related to the issuer's planning goals and objectives. i. Section 3 (Debt Policy Objective) and Section 8 (Policy Goals Related to Planning Goals and Objectives) address some of the Successor Agency's policy goals and how this Debt Policy has implemented them. E. The internal control procedures that the issuer has implemented, or will implement, to ensure that the proceeds of the proposed debt issuance will be directed to the intended use. i. Section 9 (Internal Control Procedures) provides information regarding the Successor Agency 's internal control procedures designed to ensure that the proceeds of its debt issues are spent as intended. This Debt Policy, as written, complies with and meets the requirements of SB 1029. Debt Management Policy 3 •• • 6 2017 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss. CITY OF ANAHEIM ) I, THERESA BASS, Acting Secretary of the Successor Agency to the City of Anaheim Redevelopment Agency, herby certify that the foregoing resolution SA -2017-003 was duly adopted by the Successor Agency to the Anaheim Redevelopment Agency, at its regular meeting held on the 19' day of December, 2017 and that it was so adopted by the following vote: AYES: Chairman Tait and Agency Members: Vanderbilt, Murray, Barnes, Moreno, Kring, and Faessel NOES: None ABSTAIN: None ABSENT: None IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of December, 2017. NG SECRETARY TO THE SUCCESSOR AGENCY (SEAL)