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HomeMy WebLinkAbout06. Review of proposed Debt Policy 60 Central Contra CotsSam ary Dis ric June 6, 2017 TO: ADMINISTRATION COMMITTEE VIA: ROGER BAILEY, GENERAL MANAGE 441 FROM: PHIL LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION SUBJECT: ADOPTION OF A DEBT POLICY The District does not currently have a debt policy. With a capital spending program that is projected to increase significantly from the current level, and a financial plan that contemplates the use of debt in the coming decade, the adoption of a debt policy that addresses the permissible uses, types, and parameters of debt is advised. During 2016, the Board directed the General Manager to develop a debt policy, and the adoption of a debt policy was included as a Fiscal Year 2016-17 goal in the current two- year Strategic Plan. Additionally, California Senate Bill No. 1029, approved by the Governor September 12, 2016, requires that any issuer of state or local government debt shall submit a report on the issuance of any debt to the California Debt and Investment Advisory Commission, shall provide certain ongoing reporting related to such debt, and shall have adopted a debt policy concerning any debt issuance. The debt policy is to include the following: 1. The purposes for which the debt proceeds may be used. 2. The types of debt that may be issued. 3. The relationship of the debt to, and integration with, the issuer's capital improvement program or budget, if applicable. 4. Policy goals related to the issuer's planning goals and objectives. 5. 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. Central San staff drafted the attached debt policy using the following process: 1. Obtained several debt policies from other agencies and localities that financial advisor PFM had assisted in developing which met the requirements of S131 029; 2. Reviewed, and integrated provisions of the various policies to arrive at a comprehensive draft; 3. Addressed specific matters of interest and concern to Central San; 4. Obtained feedback from Central San staff; Adoption of a Debt Policy June 6, 2017 Page 2 of 2 5. Split the draft into a policy level document containing higher-level policy related guidance (see Attachment 1) and a more detailed procedures-level document (see Attachment 2) that provides more guidance on specific issues; and 6. Obtained feedback on the draft from PFM and another financial advisor, Sperry Capital. The adoption of a debt policy does not have an immediate financial impact, but the content of the policy governs any subsequent debt issuances. The issuance of debt would have financial impacts related to the need to pay principal and interest and the funding ratio for capital improvement program. A debt policy would provide guidance on matters such as the type of debt that can be issued, the allowable term, allowable purposes for use of debt proceeds, and other administrative matters related to the debt. Alternatives related to a debt policy include: 1. Level of detail contained in the document, from high-level policy to specific detailed provisions. Various agencies have debt policies that cover this range. 2. The overall risk stance taken with respect to the use and types of debt, from conservative to more aggressive. 3. The extent to which the document proscribes ongoing Board reporting, transparency, and internal controls related to debt. With respect to these considerations, the current proposed debt policy: 1. Provides a moderate level of specificity, with additional detail contained in a General Manager maintained administrative procedure. 2. Is conservative in that it: a. Contemplates targeting the highest possible credit ratings consistent with Central San's debt management objectives; and b. Specifies that the amount of debt to be issued in a specified ten-year period will be limited, and that rate revenues will need to fund at least the amount of collection system replacement program spending. 3. Specifies Board approval of each debt transaction, provides transparency regarding the contemplated use of debt in the financial plan, ongoing reporting regarding debt, and the maintenance of internal controls regarding debt administration. Attached Supporting Documents: 1. Draft Debt Policy(Policy Level) 2. Draft Debt Policy with Administrative Procedures embedded (showing more detail of General Manager maintained procedures) ATTACHMENT 1 central Contra costa Number: BP 029 Sanitary District Related Admin. Procedure AP 029 Authority: Board of Directors Effective: 2017 Revised: www.centralsan.org Reviewed: Initiating Dept./Div.: Administration/Finance BOARD POLICY DEBT MANAGEMENT AND CONTINUING DISCLOSURE PURPOSE The Government Finance Officers Association (GFOA) recommends' as a best management practice that State and local governments adopt comprehensive written debt management policies to improve the quality of decisions, articulate policy goals, provide guidelines for the structure of debt issuance, and demonstrate a commitment to long-term capital financial planning. Additionally, California SB1029 requires public agency issuers of debt to adopt comprehensive written debt management policies pursuant to the GFOA recommendation, and to provide reports on any issuance prior to and after the debt sale, and on an ongoing basis to the California Debt and Investment Advisory Commission (CDIAC).2 The purpose of this Debt Management and Disclosure Policy ("Debt Policy") is to organize and formalize debt issuance and management related policies and procedures for the Central Contra Costa Sanitary District ("District" or "Central San"). This Debt Policy is applicable to both the District and the Central Contra Costa Sanitary District Facilities Financing Authority. This Debt Policy is intended to comply with Government Code Section 8855(1). General Manager maintained procedures amplify and provide additional guidance to staff related to the Debt Policy. The debt policies and procedures of the District are subject to and limited by applicable provisions of Federal and State law. POLICY The primary objectives of the District's debt and financing related activities are to: • Maintain cost-effective access to the capital markets through prudent fiscal management policies and practices; In their publication "Best Practice Debt Management Policy" 2 https://Ieg info.leg is latu re.ca.gov/faces/bi 11 N avClient.xhtm I?bill-.id=201 520160S B 1029 Number: BP 023 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 2 of 8 ■ Specify parameters related to the prudent use of debt in the context of Central San's rates and financial planning; • Ensure debt proceeds are expenditure for permissible uses as defined in this Policy, and in accordance with bond covenants and other applicable requirements; Minimize debt service commitments through effective planning and cash management; and • Ensure.the District is compliant with all applicable Federal and State securities laws; and ■ Achieve the highest practical credit ratings. SCOPE AND DELEGATION OF AUTHORITY This Debt Policy will govern the issuance and management of all debt funded through the capital markets, including the selection and management of related financial and advisory services and products, and the investment of bond proceeds. Overall policy direction of this Debt Policy will be provided by the District Board of Directors. Responsibility for implementation of the Debt Policy, and day-to-day responsibility for structuring, implementing, and managing the District's debt and finance program, will lie with the General Manager or their designee (Director of Finance and Administration). The Board's adoption of the District's Annual Budget and Capital Improvement Program (CIP), or review of the financial plan, does not, in and of itself, constitute authorization for debt issuance for any capital projects. This Debt Policy requires that the Board specifically authorize each debt financing. While adherence to this Debt Policy is required in applicable circumstances, the Board recognizes that changes in the capital markets, utility programs and other unforeseen circumstances may from time to time produce situations that are not covered by the Debt Policy and will require modifications or exceptions to achieve policy goals. In these cases, management flexibility is appropriate, provided specific authorization from the Board is obtained. ROLES AND RESPONSIBILITIES • General Manager and/or Deputy General Manager—Provides oversight of debt program and recommendations on debt to the Board. • Director of Finance and Administration—Has primary responsibility for debt issuance recommendations, financing transaction execution, oversight of bond proceeds expenditures, and ongoing debt management. • Board of Directors—The Board sets debt policy and approves individual transactions. Number: SP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 3of8 ETHICS AND CONFLICTS OF INTEREST Staff and Board members of the District involved in the debt management program will not engage in any personal business activities that could conflict with proper and lawful execution of securing capital financing. INTEGRATION WITH OTHER FINANCIAL POLICIES AND DOCUMENTS. The District is committed to long-term capital and financial planning, maintaining appropriate reserve levels and employing prudent practices in governance, management and budget administration. Policies related to these topics are adopted separately, but affect this Debt Policy in the context of the overall long term financial plan. STANDARDS FOR USE OF DEBT FINANCING In financial planning, the District will evaluate the use of various alternatives including current year funding of capital projects through rates, various forms of debt financing, use of reserves, and inter-fund borrowing. The District will utilize the most advantageous financing alternative balancing the goals of long-term cost minimization, risk exposure, and compliance with generally accepted ratemaking principles. The District's debt management program will consider debt issuance where public policy, equity, general ratemaking principles, economic efficiency and compliance with long- term financial planning parameters favor financing over cash funding. A. Use and Timing of Debt The District 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 District's public purposes and are consistent with the rate and financial planning parameters specified in the District's long-term financial plans. The Board shall be presented with a long-term financial plan in each instance Sewer Service Charge rates are to be adjusted. 1. The long-term financial plans will specify an expected debt issuance amount over a decade or more long-term planning horizon 2. All projects in the CI P are eligible to use debt financing, so long as the minimum rate revenues are generated as described in A.2 of this section. B. Credit Quality All District debt management activities for new debt issuances will be conducted in a manner conducive to receiving the highest credit ratings possible consistent with the District's debt management objectives. C. Ongoing Debt Administration and Internal Controls The District will maintain all debt-related records according to the District's Retention Policy. The District will maintain internal controls to ensure compliance Number: BP 023 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 4 of 8 with the Debt Policy (including use of bond proceeds for purposes specified in the applicable Bond official Statements and in compliance with this debt policy), all debt covenants and any applicable requirements of Federal and State law, including but not limited to: initial bond disclosure, continuing disclosure, tax- exemption, post-issuance compliance, investment of bond proceeds (including for example, any continuing disclosure obligations under SEC Rule 15c2-12, and tax covenants, and related federal tax compliance requirements such as arbitrage restrictions and rebate requirements), and annual transparency reporting to CDIAC. D. Rebate Policy and System The District will develop a system of reporting interest earnings that relates to and complies with Internal Revenue Code requirements relating to rebate, yield limits and arbitrage. The District will accurately account for all interest earnings in debt-related funds to ensure that the District is compliant with all debt covenants, and with state and federal laws. The District will invest funds in accordance with the investment parameters set forth in each respective bond indenture, and as permitted by the District Investment Policy. FINANCING CRITERIA When District staff determine the use of debt is appropriate, staff shall provide a report to the Board that describes the intended use of the financing proceeds (funding for new projects or to refund existing bonds), and recommends a specific debt type to include duration, type, interest rate characteristics, call features, credit enhancement or financial derivatives to be used in the transaction. For refunding transactions, a comprehensive report on the debt to be redeemed, the replacement debt and the benefits of the transaction shall be provided. TERMS AND CONDITIONS OF DEBT The District will establish all terms and conditions relating to the issuance of debt, and will control, manage, and invest all debt proceeds. The District will specify to the Board proposed debt terms, coupon structure, debt service structure, redemption features, any use of capitalized interest, and lien structure. TYPES OF DEBT The following types of debt are allowable under this Debt Policy, subject to applicable law, and the District's statutory authority to issue debt: ■ General obligation bonds ■ Commercial paper • Bond or grant anticipation notes • Lease revenue bonds, certificates of participation and lease-purchase transactions Number: BP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 5 of 8 ■ Other revenue bonds ■ 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 ■ Refunding Obligations • State Revolving Fund Loans • Lines of Credit ■ Letters of Credit • The District Board of Directors 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. CREDIT ENHANCEMENTS The District may consider the use of credit enhancement on a case-by-case basis, evaluating the economic benefit versus cost for each case. only when a clearly demonstrable savings or other measurable advantages can be shown will enhancement be considered. REFINANCING OUTSTANDING DEBT The District will periodically evaluate outstanding bond issues for refunding opportunities, and will bring to the attention of the Board those opportunities that are in the District's interest. Reports to the Board on potential refunding shall describe anticipated savings and the structure of refunding and refunded debt. METHODS OF ISSUANCE District bonds may be sold on a competitive or negotiated basis (including private placement). A recommendation regarding the proposed use of either method shall be prepared by staff and provided to the Board prior to or concurrent with the proposed issuance. MARKET RELATIONSHIPS A. Rating Agencies and Investors The General Manager and designees (Deputy General Manager and Director of Finance and Administration) will be responsible for maintaining the District's relationships with rating agencies, which will typically include two or more of the nationally recognized statistical rating agencies. Number: BP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 8 of 8 B. Board of Directors Communication r The General Manager will make available any ratings report or other relevant feedback provided from rating agencies and/or investors regarding the District's financial strengths and weaknesses and recommendations for addressing any weaknesses. C. Continuing Disclosure The District will remain in compliance with SEC Rule 15c2-12 addressing continuing disclosure obligations. The District will also comply with state reporting requirements specified in SB 1029, which require initial and ongoing debt reporting requirements for California public agencies. D. Rebate Reporting The use and investment of bond proceeds shall be monitored to ensure compliance with arbitrage restrictions. E. Other Jurisdictions From time to time, the District may issue bonds to fund projects that provide a benefit to other public entities, (e.g. concord). The District will conduct such analyses as deemed necessary to assure adequate cost recovery for such funding, and to mitigate risks to the District. The District may participate in a joint powers authority with one or more other eligible entities pursuant to Sec 6500 of the California Government Code if deemed advantageous and appropriate, and subject to Board approval. CONSULTANTS A. Selection of Financing Team Members The General Manager or designee will make recommendations for all financing team members, with the District Board of Directors providing final approval. Financing team members may include a financial advisor, bond counsel, disclosure counsel (which may be the same firm as bond counsel) and underwriter. Selection of those financing team members shall be in accordance with Professional Service and Consultant provisions of the District's procurement policies. In the event of a competitive bond sale, the District's debt will be offered to the underwriter providing the most cost advantageous proposal to the District. B. Financial Advisor The District may utilize a financial advisor to assist in its debt issuance and debt administration processes as is deemed prudent and necessary by management and in compliance with MSRB regulations. C. Bond Counsel District debt will include a written opinion by legal counsel affirming that the District is authorized to issue the proposed debt, that the District has met all Number: BP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 7 of 8 constitutional and statutory requirements necessary for issuance, and a determination of the proposed debt's federal income tax status. The approving opinion and other documents relating to the issuance of debt will be prepared by counsel with extensive experience in public finance and tax issues. D. Disclosure Counsel The District may utilize a separate firm to serve as disclosure counsel as it deems necessary. If cost effective, bond counsel may also serve as disclosure counsel. E. Underwriter The District will have the right to select a senior manager for a proposed negotiated sale, as well as co-managers and selling group members, as appropriate. F. Conflict of Interest Disclosure by Financing Team Members All financing team members will be required to provide full and complete disclosure, relative to agreements with other financing team members and outside.parties. The extent of disclosure may vary depending on the nature of the transaction. However, in general terms, no agreements will be permitted which could compromise the firm's ability to provide independent advice that is solely in the District's interests (to the extent the firm's role involves a duty to do so) or which could reasonably be perceived as a conflict of interest. INITIAL AND CONTINUING DISCLOSURE COMPLIANCE A. Disclosure Coordinator and overall Requirements for Initial and Continuing Disclosure The Director of Finance and Administration (or as designated, the Finance Manager) for the District shall be the disclosure coordinator of the District ("Disclosure Coordinator"). The Disclosure Coordinator shall: ■ Ensure that any official Statement meets appropriate standards and is approved by the Board of Directors as required. ■ Ensure that initial and continuing disclosure obligations undertaken by the District related to each debt issuance are met, including State of California requirements, and Municipal Securities Rulemaking Board requirements that the District commits to undertake in the continuing Disclosure Certificate or Agreement over the life of the bonds to investors 0 Initial Disclosure requirements include preparation of the Bond Official statement and reports on the issuance to the California Debt and Investment Advisory Commission (CDIAC). 0 ongoing disclosure requirements include annual reports with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access ("EMMA") system and the CDIAC. Number: BP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 8 of 8 EXCEPTIONS In the event there are any deviations or exceptions from the Debt Policy when a certain bond issue is structured, those exceptions will be discussed in the staff reports when the bond issue is docketed for the Board of Director's consideration. POLICY CONSIDERATION This policy shall be reviewed on a biennial basis. Any changes must be approved by the Board after review by the Administration Committee, as well as the individual(s) charged with maintaining internal controls. [Original Retained by the Secretary of the District] ATTACHMENT 2 central Contra costa Number: AP 029 Sanitary District Related Board Policy: BP 029 Authority: Effective: 2017 bib Revised: www.centrallsan-org Reviewed: Initiating Dept/Div: Administration/Finance Date Signed: Phil Leiber, Director of Finance&Administration Roger S. Bailey, General Manager ADMINISTRATIVE PROCEDURE DEBT MANAGEMENT AND CONTINUING DISCLOSURE (Contains Board Policy with Procedures shown in blue text) I. INTRODUCTION AND PURPOSE The Government Finance Officers Association (GFOA) recommends' as a best management practice that state and local governments adopt comprehensive written debt management policies to improve the quality of decisions, articulate policy goals, provide guidelines for the structure of debt issuance, and demonstrate a commitment to long-term capital financial planning. Additionally, California SB1029 requires public agency issuers of debt to adopt comprehensive written debt management policies pursuant to the GFOA recommendation, and to provide reports on any issuance prior to and after the debt sale, and on an ongoing basis to the California Debt and Investment Advisory Commission.2 The purpose of this Debt Management and Disclosure Policy ("Debt Policy") is to organize and formalize debt issuance and management related policies and procedures for the Central Contra Costa Sanitary District ("District" or "Central San"). This Debt Policy is applicable to both the District and the Central Contra Costa Sanitary District Facilities Financing Authority. This Debt Policy is intended to comply with Government Code Section 8855(1). General Manager maintained procedures amplify and provide additional guidance to staff related to the Debt Policy. The debt policies and procedures of the District are subject to and limited by applicable provisions of state and federal law. L In their publication "Best Practice Debt Management Policy" 2 https:Hleginfo.legislature.ca.gov/faces/bilINavClient.xhtml?bill—id=201520160SB1029 Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 2 of 19 Ill. DEBT POLICY OBJECTIVE The primary objectives of the District's debt and financing related activities are to • Maintain cost-effective access to the capital markets through prudent fiscal management policies and practices; • Specify parameters related to the prudent use of debt in the context of Central San's rates and financial planning; • Ensure debt proceeds are expenditure for permissible uses as defined in this Policy, and in accordance with bond covenants and other applicable requirements; • Minimize debt service commitments through effective planning and cash management; and • Ensure the District is compliant with all applicable federal and state securities laws; and • Achieve the highest practical credit ratings. 111111. SCOPE AND DELEGATION OF AUTHORITY This Debt Policy will govern the issuance and management of all debt funded through the capital markets, including the selection and management of related financial and advisory services and products, and the investment of bond proceeds. Overall policy direction of this Debt Policy will be provided by the District Board of Directors. Responsibility for implementation of the Debt Policy, and day-to-day responsibility for structuring, implementing, and managing the District's debt and finance program, will lie with the General Manager or their designee (the Director of Finance and Administration). The Board's adoption of the District's Annual Budget and Capital Improvement Program (CI P), or review of the financial plan, does not, in and of itself, constitute authorization for debt issuance for any capital projects. This Debt Policy requires that the Board specifically authorize each debt financing. While adherence to this Debt Policy is required in applicable circumstances, the Board recognizes that changes in the capital markets, utility programs and other unforeseen circumstances may from time to time produce situations that are not covered by the Debt Policy and will require modifications or exceptions to achieve policy goals. In these cases, management flexibility is appropriate, provided specific authorization from the Board is obtained. IV. ROLES AND RESPONSIBILITIES • General Manager and/or Deputy General Manager—Provides oversight of debt program and recommendations on debt to the Board. • Director of Finance and Administration—Has primary responsibility for debt issuance recommendations, financing transaction execution, oversight of bond proceeds expenditures, and ongoing debt management. Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 3 of 19 0 Provide for the issuance of Central San debt at the lowest possible cost and risk 0 Determine the available debt capacity of Central San; 0 Provide for the issuance of Central San debt at appropriate intervals and in reasonable amounts as required to fund approved capital expenditures in accordance with the Board reviewed financial plan; 0 Track and report on debt proceed usage to ensure that bond proceeds are spent on1directed to the intended use; 0 Recommend to the Board the method and manner of sale of Central San debt; 0 Monitor opportunities to refund debt and recommend such refunding as appropriate to reduce costs or to achieve other policy objectives; 0 Comply with all Internal Revenue Service (IRS), Municipal Securities Rulemaking Board (IMSRB), and Securities and Exchange Commission (SEC) rules and regulations governing the issuance of debt; 0 Maintain a current database with all outstanding Central San debt; 0 Provide for the timely payment of principal and interest on all Central San /P debt; 0 Comply with all terms and conditions., and disclosure required by the legal documents governing the debt issued; 0 In conjunction with other Central San management, maintain a financial plan to evaluate the impact of capital program spending, operations and maintenance costs, and debt service on rates and overall financial condition. • Board of Directors—The Board sets debt policy and approves individual transactions. 0 Approve and review debt policy not less than biannually, 0 Review Central San's long-term financial plan in the context of rate setting discussions; o Approve each debt issuance; Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 4 of 19 V. ETHICS AND CONFLICTS OF INTEREST Staff and Board members of the District involved in the debt management program will not engage in any personal business activities that could conflict with proper and lawful execution of securing capital financing. V1. INTEGRATION WITH OTHER FINANCIAL POLICIES AND DOCUMENTS The District is committed to long-term capital and financial planning, maintaining appropriate reserve levels and employing prudent practices in governance, management and budget administration. Policies related to these topics are adopted separately, but affect this Debt Policy in the context of the overall long term financial plan. 0 The District's multi-year Capital Improvement Program (C1P) sets priorities for projects to be completed and funded over a 1 0-year horizon. The Capital Improvement Budget provides the detailed cost for the first year of the 10-year plan. 0 The District's financial plan specifies how the costs of those projects, operating and other costs are to be recovered from customers and other funding sources. 0 The Reserve Policies set financial planning parameters related to reserve levels for the operating expenses, sewer construction fund, and emergency reserve, 0 This Debt Policy provides policy direction and limitations for proposed financings undertaken to implement the CIP in the context of the financial plan. Debt issuance for capital projects should be incorporated into the financial plan to be reviewed with the Board in the context of setting customer rates and charges. VII. STANDARDS FOR USE OF DEBT FINANCING In financial planning, the District will evaluate the use of various alternatives including current year funding of capital projects through rates, various forms of debt financing, use of reserves, and inter-fund borrowing. The District will utilize the most advantageous financing alternative balancing the goals of long-term cost minimization, risk exposure, and compliance with generally accepted ratemaking principles. The District's debt management program will consider debt issuance where public policy, equity, general ratemaking principles, economic efficiency and compliance with long- term financial planning parameters favor financing over cash funding. A. Use and Timing of Debt The District 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 District's public purposes and are consistent with the rate and financial planning parameters specified in the Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 5 of 19 District's long-term financial plans. The Board shall be presented with a long-term financial plan in each instance Sewer Service Charge rates are to be adjusted. 1. The long-term financial plans will specify an expected debt issuance amount over a decade or more long-term planning horizon. 2. District shall ensure that rate revenues fund, at a minimum, the running ten- year average of the collection system replacement program of the CIP. 3. All projects in the CIP are eligible to use debt financing, so long as the minimum rate revenues are generated as described in A.2 of this section. o Debt versus rate funding considerations on a planning basis include: M Debt may be appropriately targeted to fund long-term,jecus. non- routine, large scale pro N Current revenues would be targeted to fund those projects where replacement and reconstruction costs are regular and predictable, including routine, ongoing programs, and for work for which expenditures on a programmatic basis are relatively level year by year. 0 The expected debt issuance amount in the financial plan shall provide for a maximum of 60% debt funding of the 10 year Capital Improvement Plan. N In this context, debt may also be appropriately utilized where increases in annual capital spending would result in a rate increase that general ratemaking principles,, contractual or customer limitations would indicate should be mitigated. o The debt repayment period should relate to the expected useful life of the facilities or equipment being financed, and should coincide with the stream of benefits provided by the projects being financed. When the District finances capital projects by incurring debt, the debt repayment period should be structured so that the weighted average maturity of the debt does not exceed 120% of the expected average useful life of the project being financed. Inherent in its long-term debt policies, the District recognizes that future ratepayers will benefit from the capital investment and that it is appropriate that they pay a share of the asset cost. o Long-term debt financing will not be used to fund operating costs beyond a de-minimis amount acceptable according to tax-exempt debt regulations specified by the Internal Revenue Code and District needs. B. Credit Quality All District debt management activities for new debt issuances will be conducted in a manner conducive to receiving the highest credit ratings possible consistent with the District's debt management objectives. The District will strive to maintain and improve the current credit ratings Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 6 of 19 assigned to the District's outstanding debt by the major credit rating agencies with due consideration for the financial parameters considered by the rating agencies consistent with this rating including: • Debt Service Coverage Levels • Debt Ratio 19 Debt per Capita C. On-going Debt Administration and Internal Controls The District will maintain all debt-related records according to the District's Retention Policy. The District will maintain internal controls to ensure compliance with the Debt Policy (including use of bond proceeds for purposes specified in the applicable Bond Official Statements and in compliance with this debt policy), all debt covenants and any applicable requirements of state and federal law, including but not limited to: initial bond disclosure, continuing disclosure, tax- exemption, post-issuance compliance, investment of bond proceeds (including for example, any continuing disclosure obligations under SEC Rule 15c2-12, and tax covenants, and related federal tax compliance requirements such as arbitrage restrictions and rebate requirements), and annual transparency reporting to CDIAC.. o The repository of Debt related records will include all offIcial statements, bid documents, ordinances, indentures, trustee reports, etc. for all District debt. The District will collect all available documentation for outstanding debt and will maintain a standard procedure for archiving transcripts for any new debt. o Whenever reasonably possible, proceeds of debt will be held by a third-party trustee and the District will submit written requisitions for such proceeds. The District will submit a requisition only after obtaining the signature of the Director of Finance and Administration. In those cases where it is not reasonably possible for the proceeds of debt to be held by a third-party trustee., the Director of Finance and Administration shall retain records of all expenditures of proceeds through the final payment date for the debt. o Accounting shall coordinate with Capital Projects and Planning and Development Services to. ■ Maintain records of the funding sources for capital spending, whether rate funded, bond funded or any other source of funding in order to track compliance with the "Use and Timing of Debt"provisions of the Debt Policy, bond arbitrage rebate requirements, debt covenants, or other use of proceeds commitments made in Bond Official Statements. o The District shall provide to the Board an accounting of the use of bond proceeds when the funds have been fully spent. The District shall evaluate and perform ongoing compliance reporting as Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 7 of 19 committed to for continuing disclosures through EMMA, and with CDIA C as specified in Section XVI of this document. D. Rebate Policy and System The District will develop a system of reporting interest earnings that relates to and complies with Internal Revenue Code requirements relating to rebate, yield limits and arbitrage. The District will accurately account for all interest earnings in debt-related funds to ensure that the District is in compliance with all debt covenants, and with state and federal laws. The District will invest funds in accordance with the investment parameters set forth in each respective bond indenture, and as permitted by the District Investment Policy. VIII. FINANCING CRITERIA When District staff determine the use of debt is appropriate, staff shall provide a report to the Board that describes the intended use of the financing proceeds (funding for new projects or to refund existing bonds), and recommends a specific debt type to include duration, type, interest rate characteristics, call features, credit enhancement or financial derivatives to be used in the transaction. For refunding transactions a comprehensive report on the debt to be redeemed, the replacement debt and the benefits of the transaction shall be provided. The following criteria will be utilized to evaluate the type of debt to be issued. A. Long-term debt financing will be used to finance eligible capital projects including the acquisition, construction or major rehabilitation of capital facilities, when funding requirements cannot be met with current revenues or cash reserves or the use of such funds would be contrary to ratemaking principles. The proceeds derived from long-term borrowing will not be considered appropriate for any recurring purpose such as current operating and maintenance expenditures. B. Short-term Debt.- Short-term borrowing may be utilized for the temporary funding of operational cash flow deficits or anticipated revenues, where anticipated revenues are defined as an assured revenue source with the anticipated amount based on conservative estimates. The District will determine and utilize the least costly method for short-term borrowing. The District may issue short-term debt when there is a defined repayment source and amortization of principal. C. Variable Rate Debt. To maintain a predictable debt service burden, the District will give preference to debt that carries a fixed interest rate. Variable rate debt may be deemed appropriate to diversify the District's debt portfolio, reduce interest costs, provide interim funding for capital projects and improve the match of assets to liabilities. o Variable Rate Debt Capacity. The District will maintain a conservative Level of outstanding unhedged variable rate debt not to exceed a maximum of a 20-30% variable rate exposure, in addition to maintaining adequate safeguards against risk and managing the variable revenue stream both as described below: Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 8 of 19 o Adequate Safeguards Against Risk: Financing structure and budgetary safeguards are in place to prevent adverse impacts from interest rate shifts; such structures could include, but are not limited to, interest rate swaps, interest rate caps and the matching of assets and liabilities. o Variable Revenue Stream: The revenue stream for repayment is variable, and is anticipated to move in the same direction as market-generated variable interest rates, or the dedication of revenues allows capacity'for variability. o As a Component to Synthetic Fixed Rate Debt.- Variable rate bonds may be used in conjunction with a financial strategy that results in synthetic fixed rate debt. D. Financial Derivative Products. Financial Derivative Products will be considered appropriate in the issuance or management of debt only in instances where it has been demonstrated that the derivative product is expected to either provide a hedge that reduces the risk Of fluctuations in expense or revenue, or alternatively where the derivative product is expected to reduce total pro project cost. E. Refunding Financing. Refunding bonds are issued to retire all or a portion of an outstanding bond issue. Refunding issuances can be used to achieve present- value savings on debt service or to restructure the payment schedule, type of debt instrument used, or covenants of existing debt. The District must analyze the refunding issue on a present-value basis to identify economic effects before approval. IX. TERMS AND CONDITIONS OF DEBT The District will establish all terms and conditions relating to the issuance of debt, and will control, manage, and invest all debt proceeds. The District will specify to the Board proposed debt terms, coupon structure, debt service structure, redemption features, any use of capitalized interest, and lien structure. The following restrictions will be followed unless otherwise authorized by the District Board. A. Terra All capital improvements financed through the issuance of debt will be financed for a period so that the average weighted e maturity of the debt will not 19 9 exceed 120% of the expected average useful life of the assets being financed. B. Coupon Structure Debt may include par, discount and premium. Discount and premium bonds must be demonstrated to be advantageous relative to par bond structures. For variable rate debt, the variable rate may be based on one of a-number of commonly used interest rate indices and the Index will be determined at the time of pricing. Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 9 of 19 C. Debt Service Structure Debt service will be structured primarily on a level debt service (combined annual principal and interest) basis. Certain individual bond issues, such as refunding bonds, may have debt service that is not level. However, on an aggregate basis, debt service should be structured primarily on a level basis. Exceptions may be warranted in the context of the overall financial plan, and shall be discussed with and approved by the Board of Directors. D. Redemption Features In order to preserve flexibility and refinancing opportunities, District debt will generally be issued with call provisions no longer than 10 years from the anniversary date of the delivery of the debt. The District may consider calls that are shorter than traditional andlor non-call debt when warranted by market conditions and opportunities. For each transaction, the District will evaluate the efficiency of call provision alternatives. E. Capitalized Interest Given the timing of the District's revenue stream, the use of capitalized interest for a limited period of time may be used on occasion if justified. Additionally, certain types of financings may require the use of capitalized interest from the issuance date until the District has constructive uselbenefit of the financed project. Interest will not be funded (capitalized) beyond three (3) years or a shorter period if further restricted by statute. F. Lien Levels Senior and junior liens for each revenue source will be utilized in a manner that will maximize the most critical constraint, typically either cost or capacity, thus allowing for the most beneficial use of the revenue source securing the bond. X. TYPES OF DEBT The following types of debt are allowable under this Debt Policy, subject to applicable law, and the District's statutory authority to issue debt: 0 General obligation bonds 0 Commercial Paper 0 Bond or grant anticipation notes 0 Lease revenue bonds, certificates of participation and lease-purchase transactions 0 Other revenue bonds 0 Tax and revenue anticipation notes 0 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 0 Refunding Obligations Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 10 of 19 • State Revolving Fund Loans 0 Lines of Credit 0 Letters of Credit 0 The District Board of Directors 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. X1. CREDIT ENHANCEMENTS The District may consider the use of credit enhancement on a case-by-case basis, evaluating the economic benefit versus cost for each case. Only when a clearly demonstrable savings or other measurable advantages can be shown will enhancement be considered. The District may purchase bond insurance when such purchase is deemed prudent and advantageous. The predominant determination will be based on such insurance being less costly than the present value of the difference in the interest on insured bonds versus uninsured bonds. With the Districts current "AAA"rating (as of 2017), bond insurance would not be necessary or cost effective. When required, a reserve fund will be funded from the proceeds of each series of bonds, subject to federal tax regulations and in accordance with the requirements of credit enhancement providers andlor rating agencies. The District may purchase reserve equivalents (i.e., the use of a reserve fund surety) when such purchase is deemed prudent and advantageous. Such equivalents will be evaluated in comparison to cash funding of reserves on a net present value basis. The District may enter into a letter-of-credit agreement when such an agreement is deemed prudent and advantageous. Letters of credit will generally be provided only by those financial institutions with long-term ratings in one of the two highest rating categories, and short-term ratings. XII. REFINANCING OUTSTANDING DEBT The District will periodically evaluate outstanding bond issues for refunding opportunities, and will bring to the attention of the Board those opportunities that are in the District's interest. Reports to the Board on potential refundings shall describe anticipated savings and the structure of refunding and refunded debt. The District will consider the following issues when evaluating possible refunding opportunities: A. Debt Service Savings The District has established a minimum savings threshold of three percent (3) of the refunded bond principal amount unless there are other compelling reasons Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 11 of 19 for defeasance. The present value savings will be net of all costs related to the refinancing. B. Restructuring The District will refund debt as opportunities are identified. Refundings may include restructuring for purposes of achieving cost savings, mitigating irregular debt service payments, releasing reserve funds, removing unduly restrictive bond covenants, termination of swaps or other'factors deemed necessary by the Board of Directors,- C. Term of Refunding Issues The District will generally refund within the term of the originally issued debt. However, the District may consider maturity extension when necessary to achieve a desired outcome, provided that such extension is legally permissible. The District may also consider shortening the term of the originally issued debt to achieve greater savings. The remaining useful life of the financed asset and the concept of intergenerational equity be will given due consideration in formulating these decisions. D. Escrow Structuring The District will utilize the least costly securities available in structuring refunding escrows. A certificate from a third-party agent, who is not a broker-dealer, is required stating that the securities were procured through an arms-length, competitive bid process (in the case of open market securities), that such securities were more cost effective than State and Local Government Obligations (SL S) (or in the event SLGS are not available, the prudent and available alternative), and that the price paid for the securities was reasonable within federal guidelines. Under no circumstances will an underwriter, agent or financial advisor sell escrow securities to the District from its own account. E. Arbitranin The District will take all necessary steps to optimize escrows and to avoid negative arbitrage in its refundings. Any resulting positive arbitrage will be rebated as necessary according to federal guidelines. X111- METHODS OF ISSUANCE District bonds may be sold on a competitive or negotiated basis (including private placement). A recommendation regarding the proposed use of either method shall be prepared by staff and provided to the Board prior to or concurrent with the proposed issuance. The District will consider the following factors when determining the prudency of a competitive versus negotiated sale. A. Competitive Sale In a competitive sale, the District's bonds will be awarded to the bidder providing the lowest true interest cost as long as the bid adheres to the requirements set forth in the official notice of sale. Conditions under which a competitive sale would be preferred are as follows: Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 12 of 19 Bond prices are stable and or demand is strong Market timing and interest rate sensitivity are not critical to the pricing • There are no complex explanations required during marketing regarding the District's projects, media coverage, political structure, political support, funding or credit quality The bond type and structure are conventional • Bond insurance is included or pre-qualified (available) Manageable transaction size The bonds carry strong credit ratings Issuer is well known to investors B. Negotiated Sale The District recognizes that some securities are best sold through negotiation under the following conditions: Bond prices are volatile Demand is weak or supply of competing bonds is high Market timing► is important, such as for refundings The Bonds will carry lower credit ratings or are not rated Issuer is not well known to investors • The bond type and/or structural features are unusual, such as for a forward delivery bond sale, issuance of variable rate bonds, or where there is the use of derivative products Bond insurance is not available Early structuring and market participation by underwriters are desired The par amount for the transaction is significantly larger than normal Demand for the bonds by retail investors is expected to be high C. Private Placement The District may elect to privately place its debt under certain conditions. Such placement will only be considered where a cost savings can be achieved by the District relative to other methods of debt issuance, or to enable the financing to be completed within a shorter timeframe. Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 13 of 19 XIV. MARKET RELATIONSHIPS A. Rating Aoencies and Investors The General Manager and designees (Deputy General Manager and Director of Finance and Administration) will be responsible for maintaining the District's relationships with rating agencies, which will typically include two or more of the nationally recognized statistical rating agencies. In addition to general communication, District designees may: (1) meet with credit analysts at least once each fiscal year, or(2)prior to each competitive or negotiated sale, offer conference calls with agency analysts in connection with the planned sale. B. Board of Directors Communication The General Manager will make available any ratings report or other relevant feedback provided from rating agencies and/or investors regarding the District's financial strengths and weaknesses and recommendations for addressing any weaknesses. C. Continuing Disclosure The District will remain in compliance with SEC Rule 15c2-12 addressing continuing disclosure obligations. The District will also comply with state reporting requirements specified in SB 1029, which require initial and ongoing debt reporting requirements for California public agencies. D. Rebate Reporting The use and investment of bond proceeds shall be monitored to ensure compliance with arbitrage restrictions. Existing regulations require that issuers calculate rebate liabilities related to any bond issues, with rebate paid every five years and as otherwise required by applicable provisions of the Internal Revenue Code and regulations. The Director of Finance and Administration will ensure that proceeds and investments are tracked in a manner that facilitates accurate, complete calculation, and timely rebate payments, if necessary. E. Other Jurisdictions, From time to time, the District may issue bonds to fund projects that provide a benefit to other public entities (e.g. Concord). The District will conduct such analyses as deemed necessary to assure adequate cost recovery for such funding, and to mitigate risks to the District. The District may participate in a joint powers authority with one or more other eligible entities pursuant to Sec 6500 of the California Government Code if deemed advantageous and appropriate, and subject to Board approval. XV. CONSULTANTS A. Selection of Financing Team Members The General Manager or designee will make recommendations for all financing team members, with the District Board of Directors providing final approval. Financing team members may include a financial advisor, bond counsel, disclosure counsel (which may be the same firm as bond counsel) and underwriter. Selection of those financing team members shall be in accordance Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 14 of 19 with Professional Service and Consultant provisions of the District's procurement policies. In the event of a competitive bond sale, the District's debt will be offered to the underwriter providing the most cost advantageous proposal to the District. B. Financial Advisor The District may utilize a financial advisor to assist in its debt issuance and debt administration processes as is deemed prudent and necessary by management and in compliance with IVISRB regulations. Financial advisory services provided to the District may include, but will not be limited to the following: • Evaluation of risks and opportunities associated with debt issuance • Monitoring market opportunities • Evaluation of proposals submitted to the District by investment banking firms • Structuring, pricing, and timing of sales • Preparation and evaluation of requests for proposals for other financial services such as trustee and paying agent services, printing, credit facilities, remarketing, agent services, etc. • Advice, assistance and preparation for presentations with rating agencies and investors • Assisting in review of all legal documents related to the District's bond issues • Reviewing and updating the long-term financial plan • Being available at reasonable times for consultation to render advice regarding the financial aspects of the Districts debt program as may be requested by the Board', the General Manager, or the Director of Finance and Administration. • Other activities in connection with debt issuance including preparing the financing schedule, monitoring the progress of financing team participants, facilitating and coordinating the completion of tasks and responsibilities in accordance with schedule and revising the schedule as necessary, The District also expects that its financial advisor will provide the District with objective advice and analysis, maintain the confidentiality of District financial plans, and be free from any conflicts of interest, as required by the as specified In the Municipal Advisor("MA') rules promulgated by the Municipal Securities Rulemaking Board (IMSPB), Dodd—Frank Wall Street Reform and Consumer Protection Act, and the SEC. C. Bond Counsel District debt will include a written opinion by legal counsel affirming that the District is authorized to issue the proposed debt, that the District has met all constitutional and statutory requirements necessary for issuance, and a Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 15 of 19 determination of the proposed debt's federal income tax status. The approving opinion and other documents relating to the issuance of debt will be prepared by counsel with extensive experience in public finance and tax issues. 1-he services of bond counsel may include, but are not limited to., * Rendering a legal opinion with respect to authorization and valid issuance of debt obligations including whether the interest paid on the debt is tax exempt under federal and State of California law; * Preparing all necessary legal documents in connection with authorization, sale, issuance and delivery of bonds and other obligations; * Assisting in the preparation of the preliminary and final official statements and offering memoranda,- Participating In discussions with potential investors, insurers and credit rating agencies, if requested; and • Providing continuing advice, as requested, on the proper use and administration of bond proceeds under applicable laws and the bond documents. D. Disclosure Counsel The District may utilize a separate firm to serve as disclosure counsel as it deems necessary. If cost effective, bond counsel may also serve as disclosure counsel. E. Underwriter The District will have the right to select a senior manager for a proposed negotiated sale, as well as co-managers and selling group members, as appropriate. F. Conflict of Interest Disclosure by_ Financing Team Members All financing team members will be required toprovide full and complete disclosure, relative to agreements with other financing team members and outside parties. The extent of disclosure may vary depending on the nature of the transaction. However, in general terms, no agreements will be permitted which could compromise the firm's ability to provide independent advice that is solely in the District's interests (to the extent the firm's role involves a duty to do so) or which could reasonably be perceived as a conflict of interest. XVI. INITIAL AND CONTINUING DISCLOSURE COMPLIANCE A. Disclosure Coordinator and Overall Reguirements for Initial and ContinuiEg Disclosure The Director of Finance and Administration (or as designated, the Finance Manager) for the District shall be the disclosure coordinator of the District ("Disclosure Coordinator"). The Disclosure Coordinator shall: Ensure that any Official Statement meets appropriate standards and is approved by the Board of Directors as required. ■ Ensure that initial and continuing disclosure obligations undertaken by the District related to each debt issuance are met, including State of California Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 16 of 19 requirements, and Municipal Securities Rulemaking Board requirements that the District commits to undertake in the Continuing Disclosure Certificate or Agreement over the life of the bonds to investors 0 Initial Disclosure requirements include preparation of the Bond Official statement and reports on the issuance to the California Debt and Investment Advisory Commission (CDIAC). 0 Ongoing disclosure requirements include annual reports with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access ("EMMA") system and the CDIAC. B. Review and Approval of Official Statements The Disclosure Coordinator of the District shall review any Official Statement prepared in connection with any debt issuance by the District in order to ensure there are no misstatements or omissions of material information in any sections that contain descriptions of information prepared by the District. In connection with review of the Official Statement, the Disclosure Coordinator may consult with third parties, including outside professionals assisting the District, and relevant members of District staff, to the extent that the Disclosure Coordinator concludes they should be consulted so that the Official Statement will include all "material"information (as defined for purposes of federal securities law). ► As part of the review process, the Disclosure Coordinator shall submit all Official Statements to the District Board of Directors for approval. The approval of an Official Statement by the District Board of Directors shall be docketed as a new business matter and shall not be approved as a consent item. The District Board of Directors shall undertake such review as deemed necessary, following consultation with the Disclosure Coordinator, to fulfill the District Board of Director's responsibilities under applicable federal and state securities laws. In this regard. the Disclosure Coordinator shall consult with the District's disclosure counsel to the extent the Disclosure Coordinator considers appropriate. Under the continuing disclosure undertakings that the District has entered into in connection with its debt offerings, the District is required each year to file annual reports with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access ("EMMA„) system In accordance with such undertakings. Such annual reports are required to include certain updated financial and operating information, and the District's audited financial statements. The District is also required under its continuing disclosure undertakincls to file notices of certain events with EMMA. Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 17 of 19 The Disclosure Coordinator is responsible for establishing a system (which may involve the retention or one or more consultants) by which: 0 the District will make the annual filings required by its continuing disclosure undertakings on a complete and timely basis, and 0 the District will file notices of enumerated events on a timely basis. C. California Debt and Investment Advisory Commission (CDIA ) Initial and Ongoing Disclosure. SB 1029 requires California public agencies that issue debt to provide certain initial and ongoing disclosures to CDIAC., including: 1. Report not later than 30 days prior to the sale of any debt issue to include: • Certification by the issuer that it has adopted local debt policies concerning the use of debt and that the contemplated debt issuance is consistent with those local debt policies, to include: a) The purposes for which the debt proceeds may be used. b) 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. d) Policy goals related to the issuer"s planning goals and objectives. 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. 2. Report not later than 21 days after the sale of the debt, a final report on the sale to include: a) Final official statement or other disclosure document. b) Indenture. c) Installment sales agreement. d) Loan agreement. e) Promissory note. f) Bond purchase contract. g) Resolution authorizing the issue. h) Bond specimen. 3. An Annual report not later than seven months from the end of the reporting period of July 1 to June 30. The annual report shall consist of the following information: (A) Debt authorized during the reporting period, which shall include the following: (i) Debt authorized at the beginning of the reporting period. (ii) Debt authorized and issued during the reporting period. Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 18 of 19 (ii) Debt authorized but not issued at the end of the reporting period. (iii)Debt authority that has lapsed during the reporting period. (B) Debt outstanding during the reporting period, which shall include the following.- (i) Principal balance at the beginning of the reporting period. (ii) Principal paid during the reporting period. (iii)Principal outstanding at the end of the reporting period, (C) The use of proceeds of issued debt during the reporting period, which shall include the following: (i) Debt proceeds available at the beginning of the reporting period. (ii) Proceeds spent during the reporting period and the purposes for which it was spent. (iii)Debt proceeds.remaining at the end of the reporting period. Compliance with this subdivision shall be required for each issue of debt with outstanding debt, debt that has been authorized but not issued, or both, during the reporting period. D. Public Statements Regarding Financial Information Whenever the District makes statements or releases information relating to its finances to the public that are reasonably expected to reach investors and the trading markets, the District is obligated to ensure that such statements and information are complete, true, and accurate in all material respects. E. Training The Disclosure Coordinator shall ensure that the members of the District staff involved in the initial or continuing disclosure process and the District Board of Directors and staff are properly trained to understand and perform their responsibilities. The Disclosure Coordinator shall arrange for disclosure training sessions conducted by the District's disclosure counsel. Such training sessions shall include education on these Disclosure Policies, the District's disclosure obligations under applicable federal and state securities laws and the disclosure responsibilities and potential liabilities of members of the District's staff and members of the District Board of Directors. Such training sessions may be conducted using a recorded presentation. F District's Website The District may maintain an investor information section on the District's website. Disclosure Documents that are ma tenial to the District's securities, and no other information, shall be posted to the investor information section of the District's website following review and approval by the Director of Finance and Administration. Any investor information on the District's website shall include currently appropriate disclaimer statements of the nature indicated below: Number: AP 029 DEBT MANAGEMENT AND CONTINUING DISCLOSURE Page 19 of 19 "The only information on this Web site that is posted with the intention of reaching the investing public, including bondholders, rating analysts, investment advisors, or any other members of the investment communitY, is located on the investor information web pages. Other than the specific information presented in the investor information web pages, no other information on the District's website is intended to be the basis of or should be relied upon in making an investment decision. Because each security issued by the District or its related entities may involve different sources of payment and security, you should refer for additional information to the official statement and continuing disclosure filings for the particular security. The information posted in the investor information web pages speaks only as of its date.yy XVII. EXCEPTIONS In the event there are any deviations or exceptions from the Debt Policy when a certain bond issue is structured, those exceptions will be discussed in the staff reports when the bond issue is docketed for the Board of Director's consideration. XVIII. POLICY CONSIDERATION This policy shall be reviewed on a biennial basis. Any changes must be approved by the Board after review by the Administration Committee, as well as the individual(s) charged with maintaining internal controls. [Original Retained by the Secretary of the District]