HomeMy WebLinkAboutRESOLUTIONS - 03222022 - 2022/77
Contra Costa County, California
Debt Management Policy
County Administration
1025 Escobar Street, 4th Floor
Martinez, California 94553
Resolution No. 2022/77
DEBT MANAGEMENT POLICY
TABLE OF CONTENTS
I. Purpose 1
II. Debt Affordability Advisory Committee 1
III. Comprehensive Capital Planning 2
IV. Planning and Structure of County Indebtedness 3
V. Method of Sale 4
VI. Refinancing of Outstanding Debt 5
VII. Credit Ratings 5
VIII. Management Practices 6
Government Finance Officers Association: Checklist of Debt Policy Considerations Appendix 1
Post-Issuance Tax Compliance Procedures for Tax Exempt and Tax-Advantaged Bonds Appendix 2
Continuing Disclosure Procedures Appendix 3
Community Facilities Districts Appendix 4
Multifamily Mortgage Revenue Bond Program Policies and Procedures Appendix 5
Successor Agency to the former Contra Costa County Redevelopment Agency Appendix 6 Policies and Procedures
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Contra Costa County, California
Debt Management Policy
I. PURPOSE: The County recognizes the foundation of any well-managed debt program
is a comprehensive debt policy. A debt policy sets forth the parameters for issuing debt
and managing outstanding debt and provides guidance to decision makers regarding the
timing and purposes for which debt may be issued, types and amounts of permissible debt,
method of sale that may be used and structural features that may be incorporated. The
debt policy should recognize a binding commitment to full and timely repayment of all debt
as an intrinsic requirement for entry into the capital markets. Adherence to a debt policy
helps to ensure that a government maintains a sound debt position and that credit quality
is protected. Advantages of a debt policy are as follows:
• enhances the quality of decisions by imposing order and discipline, and promoting
consistency and continuity in decision making,
• provides rationality in the decision-making process,
• identifies objectives for staff to implement,
• demonstrates a commitment to long-term financial planning objectives, and
• is regarded positively by the rating agencies in reviewing credit quality.
II. DEBT AFFORDABILITY ADVISORY COMMITTEE
A. Purpose. By adoption of this Debt Policy, the Debt Affordability Advisory Committee (DAAC)
is established. Its purpose is to annually review and evaluate existing and proposed new County
debt and other findings and/or issues considered appropriate.
It is the task of the DAAC to assess the County’s ability to generate and repay debt. The DAAC will
issue an annual report to the County Administrator defining debt capacity of the County. This review
will be an important element of the budget process and will include recommendations made by the
DAAC regarding how much new debt can be authorized by the County without overburdening itself with
debt service payments.
B. Members. The DAAC shall be composed of the Auditor-Controller, Treasurer-Tax
Collector, Director/Conservation and Development Department, and County Finance Director.
C. Creditworthiness and Debt Affordability Measures. The DAAC shall examine specific
statistical measures to monitor the County’s credit metrics and determine debt capacity and relative
debt position based on Moody’s and Standard & Poor’s published rating criteria for U.S. local
governments and their respective methodologies and calculations of specific credit metrics and debt
ratios. Within the Moody’s and Standard & Poor’s published rating criteria, each agency utilizes a
scorecard approach and identifies key factors (based on credit metrics and ratios) and applies a
corresponding “scoring” approach as a starting point for analysis.
The DAAC will evaluate the County’s results in the below areas based on the Moody’s rating
methodology and scoring framework. For each sub-factor, Moody’s provides a range of scoring values
which are representative of a rating of “Aaa” at best to “B & Below” at worst. The County will monitor its
metric and ratio results against the “Aaa” category.
1. Full value per capita;
2. Fund balance as a percentage of revenues;
3. Cash balance as a percentage of revenues;
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4. Debt to full value; and
5. Debt to revenue.
The DAAC will also evaluate the County’s results in the below areas based on Standard & Poor’s rating
methodology and scoring framework. For each credit metric, Standard & Poor’s assigns a score of 1
“Very Strong” to 5 “Very Weak.” The County will monitor its metric and ratio results against the “1” or
“Very Strong” category.
1. Total market value per capita;
2. Total governmental available cash as a percentage of total governmental debt service;
3. Available fund balance as a percentage of expenditures;
4. Net direct debt as a percentage of total governmental funds revenue; and
5. Total governmental funds debt service as a percentage of governmental funds
expenditures.
In tandem with the evaluation and calculation of the credit metrics and debt ratios identified above, the
DAAC will evaluate the County’s results against a group of cohort counties, namely, other counties in
California of similar population, budget, tax base, and proximity. The DAAC utilizes each respective
cohort county’s most recently available ACFR to measure the County’s comparative performance on the
various credit and debt measures calculated by Moody’s and S&P.
Additionally, the DAAC will evaluate the County’s calculated credit metrics and debt ratios based on
each fiscal year financial results against the County’s own outcomes over the prior three fiscal years.
This analysis allows for the tracking of County trends within key measures and to identify any notable
aberrations from past performance either in the form of improvements or declines in creditworthiness.
III. COMPREHENSIVE CAPITAL PLANNING
A. Planning. The County Administrator’s Office shall prepare a multi-year capital program for
consideration and adoption by the Board of Supervisors as part of the County’s budget process.
Annually, the capital budget shall identify revenue sources and expenditures for the coming current
year and the next succeeding three fiscal years. The plan shall be updated annually.
B. Funding of the Capital Improvement Program. Whenever possible, the County will first
attempt to fund capital projects with grants or state/federal funding, as part of its broader capital
improvement plan. When such funds are insufficient, the County will use dedicated revenues to fund
projects. If these are not available, the County will use excess surplus from the reserve and debt
financing, general revenues. The County shall be guided by three principles in selecting a funding
source for capital improvements: equity, effectiveness and efficiency.
1. Equity: Whenever appropriate, the beneficiaries of a project or service will pay for it. For
example, if a project is a general function of government that benefits the entire community, such as an
Office of Emergency Services, the project will be paid for with general purpose revenues or financed
with debt. If, however, the project benefits specific users, such as a building permit facility, the
revenues will be derived through user fees or charges, and assessments.
2. Effectiveness: In selecting a source or sources for financing projects, the County will
select one or more that effectively funds the total cost of the project. For example, funding a capital
project, or the debt service on a project, with a user fee that does not provide sufficient funds to pay
for the project is not an effective means of funding the project.
3. Efficiency: If grants or current revenues are not available to fund a project, the County will
generally select a financing technique that provides for the lowest total cost consistent with acceptable
risk factors and principals of equity and effectiveness. These methods currently consist of County
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issued debt, special funding programs funded by state or federal agencies, or special pool financing.
Examples include funding pools like the Association of Bay Area Governments Participation
Certificates.
C. Maintenance, Replacement and Renewal/FLIP. The County intends to set aside sufficient
current revenues to finance ongoing maintenance needs and to provide periodic replacement and
renewal consistent with its philosophy of keeping its capital facilities and infrastructure systems in
good repair and to maximize a capital asset’s useful life.
D. Debt Authorization. No County debt issued for the purpose of funding capital projects
may be authorized by the Board of Supervisors unless an appropriation has been included in the
capital budget (Some forms of debt such as Private Activity Bonds for housing, Mello-Roos for
infrastructure, and redevelopment bonds for infrastructure/facilities may not be appropriate for
inclusion in the County capital improvement program. The policies for such forms of debt are
included as Appendixes 4, 5, and 6).
IV. PLANNING AND STRUCTURE OF COUNTY INDEBTEDNESS
A. Overview. The County shall plan long- and short-term debt issuance to finance its capital
program based on its cash flow needs, sources of revenue, capital construction periods, available
financing instruments and market conditions. The County Finance Director shall oversee and
coordinate the timing, issuance process and marketing of the County’s borrowing and capital funding
activities required in support of the capital improvement plan. The County shall finance its capital
needs on a regular basis dictated by its capital spending pattern. Over the long-term this policy should
result in a consistently low average interest rate. When market conditions in any one year result in
higher than average interest rates, the County shall seek refinancing opportunities in subsequent years
to bring such interest rates closer to the average. The DAAC shall use the Government Financial
Officers Association checklist set forth in Appendix 1 hereto in planning and structuring any debt
issuances.
B. Financing Team. The County employs outside financial specialists to assist it in developing a
debt issuance strategy, preparing bond documents and marketing bonds to investors. The key team
members in the County’s financing transactions include its financial advisor and outside bond and
disclosure counsel, the underwriter and County representatives (the County Auditor-Controller,
Treasurer-Tax Collector, and the County Finance Director, among others). Other outside firms, such
as those providing paying agent/registrar, trustee, credit enhancement, verification, escrow, auditing,
or printing services, are retained as required. The County will issue Requests for Qualifications (RFQs)
for financial advisor, bond & tax counsel, disclosure counsel and underwriters every three years, with
the option to renew for a maximum of two additional years. The financing team shall meet at least
semi-annually to review the overall financing strategy of the County and make recommendations to the
County Administrator.
C. Term of Debt Repayment. Borrowings by the County shall mature over a term that does not
exceed the economic life of the improvements that they finance and usually no longer than 20 years,
unless special structuring elements require a specific maximum term to maturity, as is the case with
pension obligation bonds. The County shall finance improvements with a probable useful life less than
five years using pay-go funding for such needs. Bonds sold for the purchase of equipment with a
probable useful life exceeding five years are repaid over a term that does not exceed such useful life.
D. Legal Borrowing Limitations/Bonds and other indebtedness. California Government
Code Section 29909 limits General Obligation Bond indebtedness to five percent of the total
assessed valuation of all taxable real and personal property within the County, excluding Public
Financing Authority lease revenue bonds, Private Activity Bond, Mello-Roos special tax, and
Assessment District Debt for which no legal limitations are currently in effect.
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E. Debt Features.
1. Original issue discount or premium. The County’s bonds may be sold at a
discount or premium, in order to achieve effective marketing, achieve interest cost savings or
meet other financing objectives. The maximum permitted discount is stated in the Notice of Sale
accompanying the County’s preliminary official statement on the Bond Purchase Agreement, as
applicable.
2. Debt service structure/Level Debt Service. The County shall primarily finance its
long-lived municipal improvements over a 20-year term or less, on a level debt service basis. This
policy minimizes long-run impact on a funding department’s budget. The County will seek to
continue this practice, unless general fund revenues are projected to be insufficient to provide
adequately for this debt service structure.
3. Call provisions. The County shall seek to minimize the protection from optional
redemption given to bondholders, consistent with its desire to obtain the lowest possible interest rates
on its bonds. The County’s tax-exempt bonds are generally subject to optional redemption. The
County seeks early calls at low or no premiums because such features will allow it to refinance debt
more easily for debt service savings when interest rates drop. The County and its financial advisor
shall evaluate optional redemption provisions for each issue to assure that the County does not pay
unacceptably higher interest rates to obtain such advantageous calls. The County shall not sell
derivative call options.
4. Interest rates. The County shall first consider the use of fixed-rate debt to finance it
capital needs, except for short-term needs (such as short-lived assets) that will be repaid or
refinanced in the near term; and may consider variable rate debt under favorable conditions.
F. Other Obligations Classified as Debt/Other Post-Employment Benefits (OPEB)/Vested
Vacation Benefits. OPEBs and vacation benefits are earned by County employees based on time in
service. The County records these vacation benefits as earned in accordance with generally accepted
accounting principles as established by the Governmental Accounting Board (GASB). The liability for
the benefit is recorded on the Fund level financial statements. The expense is recorded during the
conversion to the Government Wide financial statements in accordance with GASB standards. For
Enterprise funds the expense and liability are accrued in the respective funds. In this initial policy, the
amount of OPEB and vacation benefits will not be in measures used to evaluate the County’s debt
affordability. However, the County’s net OPEB obligation is posted to the County’s balance sheet.
V. METHOD OF SALE. The County will select a method of sale that is the most appropriate in light
of financial, market, transaction-specific and County-related conditions, and explain the rationale for its
decision.
A. Competitive Sales. Debt obligations are generally issued through a competitive sale. The
County and its financial advisor will set the terms of the sale to encourage as many bidders as
possible. By maximizing bidding, the County seeks to obtain the lowest possible interest rates on its
bonds. Some of the conditions that generally favor a competitive sale include:
1. the market is familiar with the County;
2. the County is a stable and regular borrower in the public market;
3. there is an active secondary market with a broad investor base for the County’s bonds;
4. the issue has a non-enhanced credit rating of A or above or can obtain credit enhancement
prior to the competitive sale;
5. the debt structure is backed by the County’s full faith and credit or a strong, known or historically
performing revenue stream;
6. the issue is neither too large to be easily absorbed by the market nor too small to attract
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investors without a concerted sale effort;
7. the issue does not include complex or innovative features or require explanation as to the
bonds’ security;
8. the issue can be sold and closed on a schedule that does not need to be accelerated or
shortened for market or policy reasons; and
9. interest rates are stable, market demand is strong, and the market is able to absorb a
reasonable amount of buying or selling at reasonable price changes.
B. Negotiated Sales. When certain conditions favorable for a competitive sale do not exist and
when a negotiated sale will provide significant benefits to the County that would not be achieved
through a competitive sale, the County may elect to sell its debt obligations through a private
placement or negotiated sale, upon approval by the County Board of Supervisors. Such
determination shall be made on an issue-by-issue basis, for a series of issues, or for part or all of a
specific financing program. The following practices are recommended to be observed in the event of
a negotiated sale:
1. ensure fairness by using a competitive underwriter selection process through a request for
proposals distributed to the established underwriter pool so that multiple proposals are
considered;
2. remain actively involved in each step of the negotiation and sale processes to uphold the public
trust;
3. ensure that either an employee of the County and an outside professional other than the
issue underwriter, who is familiar with and abreast of the condition of the municipal market,
is available to assist in structuring the issue, pricing, and monitoring sales activities;
4. require that the financial advisor used for a particular bond issue not act as underwriter of
the same bond issue;
5. require that financial professionals disclose the name or names of any person or firm,
including attorneys, lobbyists and public relations professionals compensated in
connection with a specific bond issue;
6. request all financial professionals submitting joint proposals or intending to enter into joint
accounts or any fee-splitting arrangements in connection with a bond issue to fully
disclose to the County any plan or arrangements to share tasks, responsibilities and fees
earned, and disclose the financial professionals with whom the sharing is proposed, the
method used to calculate the fees to be earned, and any changes thereto; and
7. review the “Agreement among Underwriters” and ensure that it is filed with the County
and that it governs all transactions during the underwriting period.
VI. REFINANCING OF OUTSTANDING DEBT. The County may undertake refinancing of
outstanding debt under the following circumstances:
A. Debt Service Savings. The County may refinance outstanding long-term debt when such
refinancing allows the County to realize significant debt service savings (2% minimum by maturity and
a minimum 4% savings overall) without lengthening the term of refinanced debt and without increasing
debt service in any subsequent fiscal year. The County may also consider debt refinancing when a
primary objective would be the elimination of restrictive covenants that limit County operations.
B. Defeasance. The County may refinance outstanding debt, either by advance refunding to the
first call or by defeasance to maturity, when the public policy benefits of replacing such debt outweigh
the costs associated with new issuance as well as any increase in annual debt service.
VII. CREDIT RATINGS
A. Rating Agency Relationships. The County Finance Director, or designee, is responsible
for maintaining relationships with the rating agencies that assign ratings to the County’s various debt
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obligations. This effort includes providing periodic updates on the County’s general financial
condition along with coordinating meetings and presentations in conjunction with a new debt
issuance.
B. Quality of Ratings. The County shall request ratings prior to the sale of securities from at
least two major rating agencies for public issuances of municipal bonds. Currently, there are three
major rating agencies providing ratings to municipal issuers, including Moody’s Investors Service
(“Moody’s), Standard & Poor’s Global Ratings (S&P) and Fitch Ratings. The County is currently
rated by Moody’s and S&P. The County shall provide a written and/or oral presentation to the rating
agencies to help each credit analyst make an informed evaluation of the County’s financial condition
and to present details of the proposed issuance. The County shall make every reasonable effort to
maintain its implied general obligation bond credit ratings. The County may, on a case-by-case
basis, decide to obtain one or no ratings prior to a bond issuance if, after consulting with its financial
advisor, bond counsel and disclosure counsel, it is determined that this is in the best interest of the
County.
VIII. MANAGEMENT PRACTICES. The County has instituted sound management practices and will
continue to follow practices that will reflect positively on it in the rating process. Among these are the
County development of and adherence to long-term financial and capital improvement plans,
management of expense growth in line with revenues and maintenance of an adequate level of
operating reserves.
A. Formal Fiscal Policies. The County shall continue to establish, refine, and follow formal fiscal
policies such as: Investment Policy, General Fund Reserve Policy, Budget Policy, and this Debt
Management Policy.
B. Rebate Reporting and Continuing Covenant Compliance. The County Finance Director, or
designee, is responsible for maintaining a system of record keeping and reporting to meet the
arbitrage rebate compliance requirements of the federal tax code and/or contracting for such service.
This effort includes tracking investment earnings on debt proceeds, calculating rebate payments in
compliance with tax law, and remitting any rebatable earnings to the federal government in a timely
manner in order to preserve the tax- exempt status of the County’s outstanding debt issues.
Additionally, general financial reporting and certification requirements embodied in bond covenants are
monitored to ensure that all covenants are complied with.
C. Reporting Practices. The County will comply with the standards and best practices of the
Government Finance Officers Association for financial reporting and budget presentation and the
disclosure requirements of federal regulatory agencies including the Securities and Exchange
Commission and Internal Revenue Service; state agencies charged with the regulation of municipal
securities, including the State Treasurer’s Office; and self-regulatory organizations such as the
Municipal Standards Rulemaking Board.
D. Post-Issuance Tax Compliance Procedures for Tax-Exempt and Tax-Advantaged
Bonds. To assure it manages its debt obligations in accordance with all federal tax requirements,
the County will comply with the Post-Issuance Tax Compliance Procedures for Tax-Exempt and Tax-
Advantaged Bonds, as set forth in Appendix 2 to this Policy.
E. Continuing Disclosure Procedures. To assure it manages its debt obligations in
accordance with the terms of Continuing Disclosure Agreements included in individual bond
issuances and federal and state regulations, the County has adopted policies and procedures set
forth in Appendix 3 hereto.
APPENDIX 1
GOVERNMENT FINANCE OFFICERS ASSOCIATION
Checklist of Debt Policy Considerations
1. How long is the capital planning period?
2. Have all non-debt sources of funds been considered?
3. How are borrowing plans reviewed internally?
4. What level of debt is manageable in order to maintain or improve the government’s credit quality?
5. How much “pay-as-you-go” financing should be included in the capital plan?
6. How much short-term borrowing will be undertaken, including both operating and capital borrowings?
7. How much debt will be issued in the form of variable-rate securities?
8. How does the redemption schedule for each proposed issue affect the overall debt service requirements of
the government?
9. What types of affordability guidelines will be established to help monitor and preserve credit quality?
10. What provisions have been made to periodically review the capital plan and borrowing practices?
11. What is the overlapping debt burden on the taxpayer?
12. How will the formal debt policies be integrated into the capital planning and funding process?
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Appendix 2
County of Contra Costa
Post-Issuance Tax Compl iance Procedures
for
Tax-Exempt and Direct Pay Bonds
ARTICLE I - PURPOSE ………………………………………….......................................................................... 2
ARTICLE II - GENERAL PRINCIPLES ................................................................................................................ 2
ARTICLE III - POST-ISSUANCE COMPLIANCE REQUIREMENTS …………………………...………….... 2
Section 1. Timely Reporting of Final Sale ...................................................................................................... 2
Section 2. California Debt and Investment Advisory Commission (CDIAC) ................................................ 2
Section 3. Internal Revenue Services (IRS) .................................................................................................... 2
ARTICLE IV - EXTERNAL ADVISORY AND DOCUMENTATION .................................................................. 3
Section 1. General ........................................................................................................................................... 3
Section 2. Oversight ........................................................................................................................................ 3
Section 3. External Advisors ........................................................................................................................... 3
ARTICLE V - ROLE OF COUNTY AS BOND ISSUER ........................................................................................ 3
Section 1. Custody of Bond Proceeds.............................................................................................................. 3
Section 2. Arbitrage Rebate and Yield ............................................................................................................ 3
Section 3. Use of Bond Proceeds ...…………………………………………………………………………. 4
ARTICLE VI - RECORD RENTENTION POLICY ................................................................................................. 4
Section 1. General Policy ................................................................................................................................ 4
Section 2. Electronic Records Retention ......................................................................................................... 5
Section 3. Department Retention Policies Superseded ................................................................................... 5
ARTICLE I
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h
PURPOSE
The purpose of these Post-Issuance Tax Compliance Procedures is to establish policies and procedures in
connection with tax-exempt bonds and other tax-advantaged bonds (such as direct pay “Build America bonds”) (together,
the "Bonds") issued by the County of Contra Costa and the County of Contra Costa Public Financing Authority
(together, the "County") so as to ensure that the County complies with all applicable post-issuance requirements of
federal income tax law needed to preserve the tax-exempt or tax-advantaged status of the Bonds and with certain
State law filing requirements.
ARTICLE II
GENERAL PRINCIPLES
Ultimate responsibility regarding post-issuance compliance for all matters relating to County financings and
refundings, other than Tax and Revenue Anticipation Notes ("TRANs"), rests with the County Administrator (the
"Administrator"). The County Treasurer and County Auditor-Controller are responsible for compliance with
respect to TRANs.
ARTICLE III
POST-ISSUANCE COMPLIANCE FILING REQUIREMENTS
Section 1. Timely Reporting of Final Sale. The Administrator and other appropriate County personnel
shall file timely any report required by state and federal regulatory agencies notifying those agencies of the final sale
of bonds, or receipt of bank loan/private placement proceeds, as required by law.
Section 2. California Debt and Investment Advisory Commission (CDIAC) Filings
(A) Report of Proposed Debt Issuance. This report details information about the issuer and the bond
issuance. This report requires the issuer to certify that it has adopted debt policies concerning the use of debt and that
the proposed debt issuance is consistent with those policies. The report is required to be filed no later than 30 days
prior to the sale of any debt issue, pursuant to Government Code § 8855.
(B) Report of Final Sale. This report details information about the issuer and the bond issuance. The
report requires attachment of the Official Statement related to the transaction or other bond documents in the case of a
bank loan/private placement. The report is required to be filed within 21 days of closing, pursuant to Government
Code § 8855.
(C) Special Requirement for Refunding Bonds sold via Negotiated Sale or Private Placement. In addition
to the Report of Final Sale identified in Section 2(B) above, if refunding bonds are sold through a negotiated sale or
private placement, CDIAC requires submission of a written statement explaining the reasons for not selling those
bonds at a public sale or on a competitive basis, as applicable, within 14 days of closing, pursuant to Government
Code § 53583(c)(2)(B).
Section 3. Internal Revenue Service (IRS) Filings
(A) IRS Form 8038-G "Information Return for Tax-Exempt Governmental Obligations”. This filing
details information about the issuer and tax-exempt governmental obligations over $100,000. The report is required
to be filed no later than the 15th day of the second calendar month after the close of the calendar quarter in which
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the bond was issued, pursuant to Internal Revenue Code § 149(e).
ARTICLE IV
EXTERNAL ADVISORY AND DOCUMENTATION
Section 1. General. The Administrator and other appropriate County personnel shall consult with bond
counsel and other legal counsel and advisors, as needed, throughout the Bond issuance process to identify
requirements and to establish procedures necessary or appropriate so that the Bonds will continue to qualify for the
appropriate tax status. Those requirements and procedures shall be documented in a County resolution(s), Tax
Certificate(s) and/or other documents finalized at or before issuance of the Bonds.
Those requirements and procedures shall include future compliance with applicable arbitrage rebate
requirements, private use limitations and all other applicable post-issuance requirements of federal tax law
throughout (and in some cases beyond) the term of the Bonds.
Section 2. Oversight. The Administrator and other appropriate County personnel also shall consult with
bond counsel and other legal counsel and advisors, as needed, following issuance of the Bonds to ensure that all
applicable post- issuance requirements in fact are met. This shall include, without limitation, consultation in
connection with future contracts with respect to the use of Bond-financed assets and future contracts with respect to
the use of output or throughput of Bond-financed assets.
Section 3. External Advisors. Whenever necessary or appropriate, the County shall engage expert
advisors (each a "Rebate Service Provider") to assist in the calculati on of arbitrage rebate payable in respect of the
investment of Bond proceeds.
ARTICLE V
ROLE OF COUNTY AS BOND ISSUER
Section 1. Custody of Bond Proceeds. Unless otherwise provided by County resolutions, unexpended
Bond proceeds shall:
(A) be held by the County, and the investment of Bond proceeds shall be managed by the Administrator.
The Administrator shall maintain records and shall prepare regular, periodic statements to the County regarding
the investments and transactions involving Bond proceeds; or
(B) if a County resolution provides for Bond proceeds to be administered by a trustee, the trustee shall
provide regular, periodic (monthly) statements regarding the investments and transactions involving Bond
proceeds.
Section 2. Arbitrage Rebate and Yield. Unless a Tax Certificate documents that bond counsel has
advised that arbitrage rebate will not be applicable to a specific issue of Bonds, the County shall:
(A) the County shall engage the services of a Rebate Service Provider, and the County or Trustee of the
Bonds shall deliver periodic statements concerning the investment of Bond proceeds to the Rebate Service Provider
on a prompt basis;
(B) upon request, the Administrator and other appropriate County personnel shall provide to the Rebate
Service Provider additional documents and information reasonably requested by the Rebate Service Provider to allow
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for complete arbitrage rebate and yield restriction analysis;
(C) the Administrator, and other appropriate County personnel, shall monitor efforts of the Rebate
Service Provider and assure payment of required rebate amounts, if any, no later than 60 days after each ”rebate
computation” date of the Bonds (consistent with relevant law and the Tax Certificate for each Bond issue), and no
later than 60 days after the last Bond of each issue is redeemed; and
(D) during the construction period of each capital project financed in whole or in part by Bonds, the
Administrator and other appropriate County personnel shall monitor the investment and expenditure of Bond
proceeds and shall consult with the Rebate Service Provider to determine compliance with any applicable
exceptions from the arbitrage rebate requirements during each 6-month spending period up to 6 months, 18 months
or 24 months, as applicable, following the issue date of the Bonds.
Section 3. Use of Bond Proceeds. The Administrator, and other appropriate County personnel, shall:
(A) monitor the use (for this purpose, use means any arrangement including operating contracts, leases
and licenses) of Bond proceeds, the use of Bond-financed assets (e.g., facilities, furnishings or equipment) and the
use of output or throughput of Bond-financed assets throughout the term of the Bonds (and in some cases beyond the
term of the Bonds) to ensure compliance with covenants and restrictions set forth in applicable County resolutions
and Tax Certificates;
(B) maintain records identifying the assets or portion of assets that are financed or refinanced with
proceeds of each issue of Bonds;
(C) consult with Bond Counsel and other professional expert advisers in the review of any contracts,
leases, licenses or arrangements involving use of Bond-financed facilities to ensure compliance with all covenants
and restrictions set forth in applicable County resolutions and Tax Certificates;
(D) maintain records for any contracts, leases, licenses or arrangements involving the use of Bond-
financed facilities as might be necessary or appropriate to document compliance with all covenants and restrictions
set forth in applicable County resolutions and Tax Certificates;
(E) meet at least annually with personnel responsible for Bond-financed assets to identify and discuss any
existing or planned use of Bond-financed, assets or output or throughput of Bond-financed assets, to ensure that
those uses are consistent with all covenants and restrictions set forth in applicable County resolutions and Tax
Certificates.
ARTICLE VI
RECORD RETENTION POLICY
Section 1. General Policy. Unless otherwise specified in applicable County resolutions or Tax
Certificates, the County shall maintain the following documents for the term of each issue of Bonds (including
refunding Bonds, if any) plus five years, or longer if contemplated by a Tax Certificate for a specific issuance:
(A) a copy of the Bond closing transcript(s) and other relevant documentation delivered to the County at
or in connection with closing of the issue of Bonds;
(B) a copy of all material documents relating to capital expenditures financed or refinanced by Bond
proceeds, including (without limitation) construction contracts, purchase orders, invoices, trustee requisitions and
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payment records, as well as documents relating to costs reimbursed with Bond proceeds and records identifying the
assets or portion of assets that are financed or refinanced with Bond proceeds;
(C) a copy of all contracts and arrangements involving private use of Bond-financed assets or for the
private use of output or throughput of Bond-financed assets; and
(D) copies of all records of investments, investment agreements, arbitrage reports and underlying
documents, including trustee statements.
Section 2. Electronic Records Retention. The records outlined above may be retained through an
electronic database that meets the requirements of section 4.01 of IRS Revenue Procedure 97-22, incorporated
herein by reference, including any updates or successor regulations. County Departments responsible for
maintaining records outlined above that choose to retain those records electronically shall coordinate with the Chief
Information Officer to ensure that the information technology system used to store those documents satisfies the
requirements outlined in by section 4.01 of IRS Revenue Procedure 97-22.
Section 3. Department Retention Policies Superseded. This countywide record retention policy related
to the County’s debt management program supersedes any departmental document retention policies that may relate
to the records indicated above.
APPENDIX 3
COUNTY OF CONTRA COSTA
CONTINUING DISCLOSURE PROCEDURES
ARTICLE I - DEFINITIONS ………….………………………......................................................... 2
ARTICLE II - GENERAL PRINCIPLES ............................................................................................. 4
ARTICLE III - DISCLOSURE REPRESENTATIVES AND COORDINATORS …….………...... 4
Section 1. Appointment of Disclosure Representative .......................................................................... 4
Section 2. Duties of the Disclosure Representative …........................................................................... 4
Section 3. Appointment of Disclosure Coordinator …........................................................................... 4
Section 4. Duties of the Disclosure Coordinator …................................................................................ 4
ARTICLE IV - LISTED EVENTS REQUIREMENTS ...................................................................... 5
Section 1. General. ................................................................................................................................ 5
Section 2. Listed Events for Bonds Issued Prior to December 1, 2010. ................................................ 5
Section 3. Listed Events for Bonds Issued on December 1, 2010 through February 26, 2019.............. 6
Section 4. Listed Events for Bonds Issued on and after February 27, 2019 …...……………………....7
ARTICLE V - ANNUAL REPORT REQUIREMENTS ...................................................................... 9
Section 1. General………....................................................................................................................... 9
Section 2. Financial Statements …………………………………………….......................................... 9
ARTICLE VI - FILING AND NOTICE REQUIREMENTS .............................................................. 9
Section 1. Annual Reports and Event Notices. ....................................................................................... 9
Section 2. California Debt and Investment Advisory Commission......................................................... 9
Section 3. Required Notices. .................................................................................................................. 9
ARTICLE VII - VOLUNTARY DISCLOSURES ................................................................................... 10
ARTICLE VIII - DOCUMENT RETENTION POLICY ..................................................................... 10
Exhibit A: County and Authority Outstanding Debt .......................................................................... A-1
Exhibit B: Required Information for Annual Reports for County and Authority............................... B-1
2
ARTICLE I
DEFINITIONS
The following capitalized terms shall have the following meanings in these Procedures:
“Agency” shall mean the Successor Agency to the former Redevelopment Agency of Contra
Costa County.
“Annual Report” shall mean any annual report to be filed by the County or the Authority in
connection with its obligations under any Continuing Disclosure Certificate executed in accordance with
Rule 15c2-12 under the Securities Exchange Act of 1934.
“Auditor-Controller” shall mean the Auditor-Controller of the County of Contra Costa.
“Authority” shall mean the Contra Costa County Public Financing Authority, a joint exercise of
powers authority of which the County of Contra Costa and the Contra Costa County Flood Control and
Water Conservation District are members.
“Board of Supervisors” shall mean the Board of Supervisors of the County of Contra Costa.
“Bonds” shall mean any bonds, certificates of participation, notes or any other evidence of
indebtedness issued by or on behalf of the County or the Authority which is subject to Rule 15c2-12.
“Bond Insurer” shall mean an issuer of a financial guaranty insurance or municipal bond
insurance policy guaranteeing the scheduled payment of principal of and interest on an outstanding issue
of Bonds when due.
“CDIAC” shall mean the California Debt and Investment Advisory Commission.
“Continuing Disclosure Certificate” shall mean each continuing disclosure certificate,
undertaking or agreement executed and delivered by the County or the Authority in connection with an
issue of Bonds.
“County” shall mean the County of Contra Costa, a political subdivision of the State of California.
“County Counsel” shall mean an attorney within the Office of the County Counsel of the County
of Contra Costa, California.
“County Finance Director” shall mean the County Finance Director of the County of Contra
Costa in the County Administrator’s Office.
“Credit Facility Provider” shall mean a bank providing a direct-pay letter of credit or other
security or liquidity instrument in connection with an issue of Bonds which secures the payment of the
principal or purchase price, if any, of and interest on an outstanding issue of Bonds when due.
“Debt Affordability Advisory Committee” shall mean a committee composed of the Auditor-
Controller, Treasurer-Tax Collector, Director of Conservation and Development and the County Finance
Director that advise the County Administrator on debt management issues.
3
“Director of Conservation and Development” shall mean the Director of the Department of
Conservation and Development of the County of Contra Costa.
“Disclosure Coordinator” shall mean the person or persons designated by a Disclosure
Representative to assist in taking such action necessary or desirable to comply with the terms of the
Continuing Disclosure Certificates, as provided in Article III hereof.
“Disclosure Counsel” shall mean a firm of nationally recognized standing in matters pertaining
to the disclosure obligations under Rule 15c2-12 of the Securities and Exchange Commission of the
United States of America, duly admitted to the practice of law before the highest court of any state of the
United States of America.
“Disclosure Representatives” shall mean the County Administrator, Director of Conservation
and Development and County Finance Director who are collectively responsible for compliance with the
terms of the Continuing Disclosure Certificates, as provided in Article III.
“EMMA” shall mean the MSRB’s Electronic Municipal Market Access system or any other
successor thereto as designated by the SEC or the MSRB.
“Event Notice” shall mean any notice of the occurrence of a Listed Event.
“Listed Event” shall mean any event described in Article IV hereof.
“MSRB” shall mean Municipal Securities Rulemaking Board.
“Official Statement” shall mean any Preliminary Official Statement, final Official Statement or
any other disclosure document that the County or the Authority prepared in connection with the issuance
and sale of any Bonds.
“Paying Agent” shall mean any bank, trust company, banking association or financial institution
appointed to perform the functions of a paying agent for an issue of Bonds.
“Procedures” shall mean these Continuing Disclosure Procedures.
“Rating Agency” shall mean each of Moody’s Investor’s Service and Standard & Poor’s Rating
Services or any other nationally recognized statistical rating organization registered with the SEC.
“Rule 15c2-12” shall mean Rule 15c2-12(b)(5) adopted by the SEC under the Securities
Exchange Act of 1934, as the same may be amended from time to time.
“SEC” shall mean the United States Securities and Exchange Commission.
“Treasurer-Tax Collector” shall mean the Treasurer - Tax Collector of the County of Contra
Costa.
“Trustee” shall mean the bank, trust company, national banking association or other financial
institution appointed as a trustee for an issue of Bonds.
4
ARTICLE II
GENERAL PRINCIPLES
The County is committed to complete and accurate market disclosure in accordance with the disclosure
requirements under the federal securities laws, including rules and regulations promulgated by the SEC and
the MSRB. In order to achieve this objective and, in accordance therewith, these Procedures are approved
by the Board of Supervisors, as recommended by the Debt Affordability Advisory Committee (DAAC), and
may be amended and supplemented from time to time as necessary or desirable, as SEC and MSRB rules are
amended, as Bonds mature, or are redeemed, and as Bonds that are subject to Rule 15c2-12 are issued.
ARTICLE III
DISCLOSURE REPRESENTATIVES AND COORDINATORS
Section 1. Appointment of Disclosure Representatives. The County Administrator,
Director of Conservation and Development, and County Finance Director are appointed as Disclosure
Representatives to fulfill the duties set forth in Section 2 of this Article III.
Section 2. Duties of the Disclosure Representatives.
(A) The Disclosure Representatives shall:
(i) monitor and maintain compliance by the County with its respective Continuing
Disclosure Certificates and these Procedures;
(ii) serve as the main contact for each Disclosure Coordinator to communicate issues and
information that may be included in an Event Notice or an Annual Report;
(iii) maintain the lists attached as Exhibits A and B;
(iv) receive and file notification from Disclosure Coordinators that necessary Event Notices,
Annual Reports, and other information has been timely filed with the EMMA systemand
(v) take such other action as may be necessary or useful to achieve the objectives of these
Procedures and to comply with all applicable federal securities laws.
Section 3. Appointment of Disclosure Coordinator.
The Disclosure Representatives shall appoint one or more Disclosure Coordinators from time to
time to fulfill the duties set forth in Section 4 of this Article III. The Disclosure Coordinators may work
with employees in various County or Authority offices and departments in order to effectively comply
with the objectives of these Procedures.
Section 4. Duties of the Disclosure Coordinator.
5
(A) The Disclosure Coordinator shall:
(i) draft, review and file all proposed Event Notices, Annual Reports, and other information
with the EMMA system, in consultation with County Counsel and Disclosure Counsel, as
needed, and notify the Disclosure Representative of completed filings.
(ii) serve as a contact for County staff to communicate issues and information that may be
included in an Event Notice or an Annual Report;
(iii) maintain filing records of Event Notices of ListedEvents and Annual Reports filed on the
EMMA system;
(iv) keep informed regarding all of the County’s public disclosures, including disclosures to
Bond Insurers, Credit Facility Providers, Rating Agencies, Trustees, and CDIAC;
(v) document the County’s continuing disclosure filings by retaining the documents set forth
in Article VIII hereof; and
(vi) take such other action as may be necessary or useful to achieve the objectives of these
Procedures and to comply with all applicable federal securities laws.
(B) In addition to the duties set forth above in Section (A) above, the Disclosure Coordinator
shall review the Listed Events regularly to determine whether an event has occurred that may require a
filing of an Event Notice.
ARTICLE IV
LISTED EVENTS REQUIREMENTS
Section 1. General.
(A) The Continuing Disclosure Certificates entered into by the County or the Authority with
respect to Bonds are subject to the following listed events requirements:
(i) Continuing Disclosure Certificates entered into prior to December 1, 2010 require Event
Notices to be filed upon the occurrence of any event listed in Section 2 of Article IV
hereof, if material. Any such Event Notice shall be filed “in a timely manner”.
(ii) Continuing Disclosure Certificates entered into on or after December 1, 2010 through
February 26, 2019 require Event Notices to be filed upon the occurrence of any event listed
in Section 3 of Article IV hereof no later than 10 business days after the occurrence of such
Listed Event.
(iii) Continuing Disclosure Certificates entered into on or after February 27, 2019 require Event
Notices to be filed upon the occurrence of any event listed in Section 4 of Article IV hereof
no later than 10 business days after the occurrence of such Listed Event.
Section 2. Listed Events for Bonds Issued Prior to December 1, 2010.
(A) For Bonds issued prior to December 1, 2010, pursuant to the provisions of the
6
applicable Continuing Disclosure Certificate, the County or Authority shall give, or cause to be given,
notice of the occurrence of any of the following events with respect to the outstanding obligation, if
material, in a timely manner:
(i) principal and interest payment delinquencies;
(ii) non-payment related defaults;
(iii) unscheduled draws on debt service reserves reflecting financial difficulties;
(iv) unscheduled draws on any credit enhancements reflecting financial difficulties;
(v) substitution of any credit or liquidity providers, or their failure to perform;
(vi) adverse tax opinions or events affecting the tax-exempt status of the securities;
(vii) modifications to the rights of security holders;
(viii) bond calls;
(ix) defeasances;
(x) release, substitution, or sale of property securing repayment of the securities; and
(xi) rating changes.
Section 3. Listed Events for Bonds Issued on and after December 1, 2010 through
February 26, 2019.
(A) For Bonds issued on or after to December 1, 2010 through February 26, 2019, pursuant to
the provisions of the applicable Continuing Disclosure Certificate, the County or Authority shall give, or
cause to be given, notice of the occurrence of any of the following Listed Events within ten (10) business
days of the occurrence thereof:
(i) principal and interest payment delinquencies;
(ii) non-payment related defaults, if material;
(iii) unscheduled draws on debt service reserves reflecting financial difficulties;
(iv) unscheduled draws on credit enhancements reflecting financial difficulties;
(v) substitution of credit or liquidity providers, or their failure to perform;
(vi) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final
determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other
material notices or determinations with respect to the tax status of the security, or other
material events affecting the tax status of the security;
(vii) modifications to rights of security holders, if material;
7
(viii) bond calls, if material, and tender offers;
(ix) defeasances;
(x) release, substitution, or sale of property securing repayment of the securities, if material;
(xi) rating changes;
(xii) bankruptcy, insolvency, receivership or similar event of the obligated person (Note: For
the purposes of this event, the event is considered to occur when any of the following
occur: The appointment of a receiver, fiscal agent or similar officer for an obligated
person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under
state or federal law in which a court or governmental authority has assumed jurisdiction
over substantially all of the assets or business of the obligated person, or if such
jurisdiction has been assumed by leaving the existing governing body and officials or
officers in possession but subject to the supervision and orders of a court or governmental
authority, or the entry of an order confirming a plan of reorganization, arrangement or
liquidation by a court or governmental authority having supervision or jurisdiction over
substantially all of the assets or business of the obligated person);
(xiii) the consummation of a merger, consolidation, or acquisition involving an obligated person
or the sale of all or substantially all of the assets of the obligated person, other than in the
ordinary course of business, the entry into a definitive agreement to undertake such an
action or the termination of a definitive agreement relating to any such actions, other than
pursuant to its terms, if material;
(xiv) appointment of a successor or additional trustee or the change of name of a trustee, if
material.
Section 4. Listed Events for Bonds Issued on and after February 27, 2019.
(A) For Bonds issued on or after to February 27, 2019, pursuant to the provisions of the
applicable Continuing Disclosure Certificate, the County or Authority shall give, or cause to be given,
notice of the occurrence of any of the following Listed Events within ten (10) business days of the
occurrence thereof:
(i) principal and interest payment delinquencies;
(ii) non-payment related defaults, if material;
(iii) unscheduled draws on debt service reserves reflecting financial difficulties;
(iv) unscheduled draws on credit enhancements reflecting financial difficulties;
(v) substitution of credit or liquidity providers, or their failure to perform;
(vi) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final
determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other
material notices or determinations with respect to the tax status of the security, or other
material events affecting the tax status of the security;
8
(vii) modifications to rights of security holders, if material;
(viii) bond calls, if material, and tender offers;
(ix) defeasances;
(x) release, substitution, or sale of property securing repayment of the securities, if material;
(xi) rating changes;
(xii) bankruptcy, insolvency, receivership or similar event of the obligated person (Note: For
the purposes of this event, the event is considered to occur when any of the following
occur: The appointment of a receiver, fiscal agent or similar officer for an obligated
person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under
state or federal law in which a court or governmental authority has assumed jurisdiction
over substantially all of the assets or business of the obligated person, or if such
jurisdiction has been assumed by leaving the existing governing body and officials or
officers in possession but subject to the supervision and orders of a court or governmental
authority, or the entry of an order confirming a plan of reorganization, arrangement or
liquidation by a court or governmental authority having supervision or jurisdiction over
substantially all of the assets or business of the obligated person);
(xiii) the consummation of a merger, consolidation, or acquisition involving an obligated person
or the sale of all or substantially all of the assets of the obligated person, other than in the
ordinary course of business, the entry into a definitive agreement to undertake such an
action or the termination of a definitive agreement relating to any such actions, other than
pursuant to its terms, if material;
(xiv) appointment of a successor or additional trustee or the change of name of a trustee, if
material.
(xv) incurrence of a financial obligation of the issuer or obligated person, if material, or
agreement to covenants, events of default, remedies, priority rights, or other similar terms
of a financial obligation of the issuer or obligated person, any of which affect security
holders, if material.
(xvii) default, event of acceleration, termination event, modification of terms, or other similar
events under the terms of the financial obligation of the issuer or obligated person, any of
which reflect financial difficulties.
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ARTICLE V
ANNUAL REPORT REQUIREMENTS
Section 1. General
Pursuant to the various Continuing Disclosure Certificates, the County and the Authority is
required to provide its respective Annual Report with respect to an issue of Bonds by the date set forth in
Exhibit B attached hereto. The Disclosure Coordinator shall commence collection of information for each
Annual Report at such time as determined necessary or useful in order to timely complete and file the
Annual Report. The Disclosure Coordinator shall obtain any information necessary to be included in an
Annual Report that is not included in the County’s audited financial statements and is necessary to make
the statements contained in the Annual Report not misleading in any material respect. The Annual Report
shall include the financial information and other operating data set forth in the respective Continuing
Disclosure Certificate as summarized in Exhibit B attached hereto.
Section 2. Financial Statements
In accordance with the Continuing Disclosure Certificates, if audited financial statements are not
available by the date the Annual Report is required to be filed, unaudited financial statements are to be
included in such Annual Reports and audited financial statements shall be filed when such statements
become available. In addition, the Continuing Disclosure Certificates require the County to file a notice of
any failure to provide its Annual Report, on or before the date specified in a Continuing Disclosure
Certificate.
ARTICLE VI
FILING AND NOTICE REQUIREMENTS
Section 1. Annual Reports and Event Notices.
The Disclosure Representative shall file each Annual Report on such dates as provided in Exhibit
B attached hereto and shall file each Event Notice as required pursuant to Article III hereof and the related
Continuing Disclosure Certificate. The Disclosure Representative shall submit all filings of Annual
Reports and Listed Events through EMMA or any other repository so designated by the MSRB or the
SEC, unless the County is otherwise advised by a written opinion of Disclosure Counsel.
Section 2. California Debt and Investment Advisory Commission.
The Disclosure Representative shall file each periodic report required to be prepared and filed
with CDIAC as set forth in statute. This includes, but is not limited to, annual Self-Certifications for direct
pay bonds allocated to the County by the State and reports required pursuant to Senate Bill 1029 (Chapter
307, Statutes of 2016) and any subsequent or successor legislation.
Section 3. Required Notices.
The Disclosure Representative shall file any notice required to be given to any Bond Insurer,
Credit Facility Provider, Paying Agent, Rating Agency or Trustee as may be required from time to time.
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ARTICLE VII
VOLUNTARY DISCLOSURES
The Disclosure Representative may determine to file voluntary disclosure or information that is
not required under the Continuing Disclosure Certificates. The County shall have no obligation to update
any voluntary disclosure or information.
ARTICLE VIII
RECORD RETENTION POLICY
Section 1. General
In accordance with Article III hereof, the Disclosure Coordinator shall maintain the following
documents for the term of each issue of Bonds (including refunding Bonds, if any) plus seven years, or
longer if contemplated by a Tax Certificate for a specific issuance.
Section 2. Refunded Issuances
For refunded bonds, documentation relating to the original issuance and all material records
related to the refunding issue should be maintained until seven years, or more if required by a Tax
Certificate, after the final redemption of both bond issues.
Section 3. Documents to be Retained
(A) At a minimum, the following documentation shall be retained for the durations identified
in Sections 1 and 2 of this Article VIII:
(i) Continuing Disclosure Certificate:
(ii) Annual Reports, including any EMMA transmittal letters and filing receipts;
(iii) Event Notices, including any EMMA transmittal letters and filing receipts;
(iv) CDIAC transmittal letters and filing receipts, including those related to filing of
Annual Debt Transaction Reports (ADTRs), pursuant to Senate Bill 1029 (Chapter
207, Statutes of 2016);
(v) Rating Agency reports; and
(vi) Such other information as the Disclosure Representative determines necessary or useful in
accordance with the Continuing Disclosure Certificates.
Section 4. Department Retention Policies Superseded
This countywide record retention policy related to the County’s debt management program
supersedes any departmental document retention policies that may relate to the records indicated above.
EXHIBIT A: COUNTY AND AUTHORITY OUTSTANDING DEBT as of March 10, 2022
Name of Issue Issuing Entity Principal Amount Date of Issue
Final Maturity
Date
CUSIP for Final
Maturity
Trustee or
Paying
Agent
Annual
Report
Due Date
Disclosure
Representative
Disclosure
Coordinator
Lease Revenue Bonds/Obligations:
Lease Revenue Bonds, 2021 Series B (Refunding)
County of Contra Costa
Public Financing Authority $ 33,880,000 3/18/2021 6/1/2038 21226PPW2
Wells
Fargo 3/31
County Finance
Director
Chief Asst.
CAO
Lease Revenue Bonds, 2021 Series A (Capital Projects)
County of Contra Costa
Public Financing Authority $ 63,540,000 3/18/2021 6/1/2041 21226PPD4
Wells
Fargo 3/31
County Finance
Director
Chief Asst.
CAO
Lease Revenue Bonds, 2017 Series B (Capital Projects)
***Private Placement***
County of Contra Costa
Public Financing Authority $ 100,285,000 5/26/2017 6/1/2032 N/A
Wells
Fargo N/A
County Finance
Director
Chief Asst.
CAO
Lease Revenue Bonds, 2017 Series A (Refunding and
Capital Projects) ***Private Placement***
County of Contra Costa
Public Financing Authority $ 99,810,000 3/3/2017 6/1/2027 21226PNH7
Wells
Fargo N/A
County Finance
Director
Chief Asst.
CAO
Lease Revenue Bonds, 2015 Series A (Capital Projects) and
2015 Series B (Refunding)
County of Contra Costa
Public Financing Authority $ 71,150,000 8/25/2015
6/1/2035 (A)
6/1/2028 (B)
21226PLV8 (A)
21226PMJ4 (B)
Wells
Fargo 3/31
County Finance
Director
Chief Asst.
CAO
Pension Obligation Bonds:
California Taxable Pension Obligation Bonds, Series
2003A, $322,710,000 Contra Costa County 322,710,000$ 5/1/2003 8/1/2022 212257BV0
Wells
Fargo 3/31
County Finance
Director
Chief Asst.
CAO
Tax Allocation Bonds:
Tax Allocation Refunding Bonds, Series 2017A,
$49,530,000
Successor Agency to the
Contra Costa County
Redevelopment Agency 49,530,000$ 8/16/2017 8/1/2036 212263AM9 US Bank 3/31 DCD Director
Affordable
Housing
Program
Manager
Taxable Tax Allocation Refunding Bonds, Series 2017B,
$23,095,000
Successor Agency to the
Contra Costa County
Redevelopment Agency 23,095,000$ 8/16/2017 8/1/2025 212263AV9 US Bank 3/31
DCD Director
Affordable
Housing
Program
Manager
Special Assessment Districts:
2013 Special Tax Refunding Bonds (Norris Canyon),
$5,605,000
County of Contra Costa
Community Facilities
District No. 2001-1 5,605,000$ 1/24/2013 9/1/2031 212288CT9
BNY
Mellon 3/31 DCD Director
Affordable
Housing
Program
Manager
A-1
As of March 10, 2022
- B-1 -
EXHIBIT B:
REQUIRED INFORMATION FOR ANNUAL REPORTS OF COUNTY AND AUTHORITY
Issue Description
Due
Date
Filing Requirements
Lease Revenue Bonds:
County of Contra Costa Public
Financing Authority Lease Revenue
Bonds, $97,420,000 consisting of
$63,540,000 2021 Series A (Capital
Projects) and $33,880,000 2021 Series
B (Refunding)
Nine
months
after
FYE
6/30
(3/31)
(a) The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting
principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County’s
audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall
contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited
financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) A maturity schedule for the outstanding 2021 Bonds.
(c) Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following
captions:
1. Table B-1–“County of Contra Costa General Fund Budget Summary;”
2. Table B-3–“County of Contra Costa Summary of Secured Assessed Valuations and Ad Valorem Property Taxation;”
3. Table B-6–“County of Contra Costa General Fund Statement of Revenues, Expenditures and Changes in Fund Balances;”
4. Table B-9–“Contra Costa County Outstanding Lease Revenue Obligations and Pension Obligation Bonds”).
(d) In addition to any of the information expressly required to be provided under Sections 4(a) and 4(b), the County shall provide such other
information, if any, necessary to the required statements, in light of the circumstances under which they were made, not misleading.
(e) The presentation and format of the Annual Report may be modified from time to time as determined in the judgment of the County to conform to
changes in accounting or disclosure principles or practices and legal requirements followed by or applicable to the County to reflect changes in the
business, structure, or operations of the County; provided that any such modifications shall comply with the requirements of the Rule.
(f) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the
County or related public entities, which, have been made available to the public on the MSRB website. The County shall clearly identify each such
other document so included by reference.
County of Contra Costa Public
Financing Authority Lease Revenue
Bonds, $71,115,000 consisting of
$19,055,000 2015 Series A (Capital
Projects) and $52,060,000 2015 Series
B (Refunding)
Nine
months
after
FYE
6/30
(3/31)
(a) The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting principles as
promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County’s audited
financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain
unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial
statements shall be filed in the same manner as the Annual Report when they become available.
(b) Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following
captions:
1. The status of the construction and installation of the improvement constituting the 2015 Project, until such time as the 2015 Project is completed;
2. Report of changes in “DEBT SERVICE SCHEDULE;”
3. Table B-1–“County of Contra Costa General Fund Budget Summary;”
4. Table B-2–“County of Contra Costa Summary of Secured Assessed Valuations and Ad Valorem Property Taxation;”
As of March 10, 2022
- B-2 -
EXHIBIT B:
REQUIRED INFORMATION FOR ANNUAL REPORTS OF COUNTY AND AUTHORITY
Issue Description
Due
Date
Filing Requirements
5. Table B-5–“County of Contra Costa General Fund Statement of Revenues, Expenditures and Changes in Fund Balances;”
6. Table B-8–“Contra Costa County Employees’ Retirement Association Schedule of Funded Status;”
7. Table B-16–“Contra Costa County Other Post Employment Benefit Plan Summary of Contributions;” and
8. Table B-19–“Contra Costa County Outstanding Lease Revenue Obligations and Pension Obligation Bonds”).
(c) In addition to any of the information expressly required to be provided under Sections 4(a) and 4(b), the County shall provide such other
information, if any, necessary to the required statements, in light of the circumstances under which they were made, not misleading.
(d) The presentation and format of the Annual Report may be modified from time to time as determined in the judgment of the County to conform to
changes in accounting or disclosure principles or practices and legal requirements followed by or applicable to the County to reflect changes in the
business, structure, or operations of the County; provided that any such modifications shall comply with the requirements of the Rule.
(e) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the
County or related public entities, which, have been made available to the public on the MSRB website. The County shall clearly identify each such
other document so included by reference.
As of March 10, 2022
- B-3 -
EXHIBIT B:
REQUIRED INFORMATION FOR ANNUAL REPORTS OF COUNTY AND AUTHORITY
Issue Description
Due
Date
Filing Requirements
Pension Obligation Bonds:
County of Contra Costa, California
Taxable Pension Obligation Bonds,
Series 2003A, $322,710,000 Dated:
May 1, 2003
Nine
months
after
FYE
6/30
(3/31)
1. The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting principles as
promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County's audited
financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain
unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial
statements shall be filed in the same manner as the Annual Report when they become available
2. Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following
captions:
(a) “APPENDIX A – COUNTY ECONOMIC, DEMOGRAGHIC AND FINANCIAL INFORMATION – Recent County General Fund Budgets”
(update table entitled “COUNTY OF CONTRA COSTA GENERAL FUND BUDGET”);
(b) “APPENDIX A – COUNTY ECONOMIC, DEMOGRAGHIC AND FINANCIAL INFORMATION – Ad Valorem Property taxes” (updated
table entitled “COUNTY OF CONTRA COSTA SUMMARY OF ASSESSED VALUATIONS AND AD VALOREM PROPERTY
TAXATION”);
(c) “APPENDIX A – COUNTY ECONOMIC, DEMOGRAGHIC AND FINANCIAL INFORMATION – Accounting Policies, Reports and
Audits” (update table entitled “COUNTY OF CONTRA COSTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES”);
(d) “APPENDIX A – COUNTY ECONOMIC, DEMOGRAGHIC AND FINANCIAL INFORMATION – Long Term Obligations – General
Obligation Debt” and “- Lease Obligations” (update table entitled “COUNTY OF CONTRA COSTA OUTSTANDING MARKETABLE LEASE
AND PENSION BOND OBLIGATIONS”)
Tax Allocation Bonds:
Tax Allocation Refunding Bonds,
Series 2017A (Tax-Exempt),
$49,530,000, Series 2017B (Taxable),
$23,095,000
Nine
months
after
FYE
6/30
(3/31)
(a) The audited financial statements of the Successor Agency for the prior fiscal year, prepared in accordance with generally accepted accounting
principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the audited
financial statements of the Successor Agency are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the
Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement,
and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement as follows:
(i) Aggregate assessed values, incremental values, and projected Tax Revenues for the Project Areas;
(ii) Assessed values for the Ten Largest Property Taxpayers in the Project Areas substantially in the form of Table 8 of the Official Statement;
(iii) Information about each resolved and/or open appeal of assessed values in the Project Areas that exceeds 5% of the aggregate assessed value of
the Project Areas substantially in the form of Table 9 of the Official Statement;
As of March 10, 2022
- B-4 -
EXHIBIT B:
REQUIRED INFORMATION FOR ANNUAL REPORTS OF COUNTY AND AUTHORITY
Issue Description
Due
Date
Filing Requirements
(iv) The outstanding principal amount, debt service schedule, and debt service coverage ratios for the Series 2017 Bonds, and any outstanding
Parity Debt secured by Tax Revenues; and
(v) The balance in the Reserve Account, if a municipal debt service reserve insurance policy is not deposited into the Reserve Account.
(c) In addition to any of the information expressly required to be provided under Sections 4(a) and 4(b), the Successor Agency shall provide such
other information, if any, necessary to make the required information, in light of the circumstances under which they were made, not misleading.
(d) The presentation and format of the Annual Report may be modified from time to time as determined in the sole judgment of the Successor
Agency to conform to changes in accounting or disclosure principles or practices and legal requirements followed by or applicable to the Successor
Agency to reflect changes in the business, structure, or operations of the Successor Agency; provided that any such modifications shall comply with
the requirements of the Rule.
(e) Any or all of the items listed in this Section 4 may be included by specific reference to other documents, including official statements of debt
issues of the Successor Agency or related public entities, which have been made available to the public on the MSRB website. The Successor
Agency shall clearly identify each such other document so included by reference.
Special Assessment Districts:
2013 Special Tax Refunding Bonds,
$5,605,000
Nine
months
after
FYE
6/30
(3/31)
(a) The audited financial statements of the County for the prior fiscal year prepared in accordance with generally accepted accounting principles in
effect from time to time by the Governmental Accounting Standards Board to apply to governmental entities. If the audited financial statements are
not available by the time the Annual Disclosure Report is required to be filed pursuant to
Section 3(a), the Annual Disclosure Report shall contain unaudited financial statements in a format similar to the financial statements contained in
the Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Disclosure Report when they become
available.
(b) The following information with respect to the 2013 Bonds and the District:
1. The principal amount of the 2013 Bonds outstanding.
2. The balances of all funds and accounts established by the Fiscal Agent Agreement as of the end of the next preceding fiscal year.
3. Total assessed value of all parcels subject to the Special Tax.
4. Actual Special Tax levy for the most recent fiscal year, Special Tax and property tax delinquency rate for parcels in the District for the most
recent year.
5. Concerning delinquent parcels:
(i) number of parcels delinquent in payment of Special Tax,
(ii) amount of total delinquency and as a percentage of total Special Tax levy, and
(iii) status of the County’s foreclosure proceedings upon delinquent properties.
6. Identity of any delinquent tax payer obligated for more than 10% of the annual Special Tax levy and:
As of March 10, 2022
- B-5 -
EXHIBIT B:
REQUIRED INFORMATION FOR ANNUAL REPORTS OF COUNTY AND AUTHORITY
Issue Description
Due
Date
Filing Requirements
(i) assessed value of applicable properties, and
(ii) summary of results of foreclosure sales, if available.
7. Significant amendments to land use entitlements for property in the District known to the Director of the Department of Conservation and
Development.
8. Status of any significant legislative, administrative, and judicial challenges to the construction of the development in the District known to the
Director of the Department of Conservation and Development, without independent inquiry, for any year in which construction activity has
occurred in the District.
CONTRA COSTA COUNTY
FINANCING POLICIES FOR
COMMUNITY FACILITIES DISTRICTS
APPENDIX 4
TABLE OF CONTENTS
TABLE OF CONTENTS .......................................................................................................................................
SECTION I: GENERAL POLICY STATEMENT .................................................................................................... 1
A. Community Facilities District Financings .......................................................................................... 1
B. Eligible Facilities ................................................................................................................................ 2
C. Eligible Services ................................................................................................................................. 2
SECTION II: INITIATION OF THE FINANCING ................................................................................................. 2
A. Application ........................................................................................................................................ 2
B. Processing and Formation Fees ........................................................................................................ 3
C. Petition for Formation and Waiver of Time Requirements of the Election ...................................... 4
D. Selection of the Financing Team ....................................................................................................... 4
SECTION III: DEBT AFFORDABILITY ADVISORY COMMITTEE ......................................................................... 5
SECTION IV: ECONOMIC VIABILITY OF THE FINANCING................................................................................ 6
A. Absorption Study .............................................................................................................................. 6
B. Appraisal ........................................................................................................................................... 7
C. Financial Information Required of Applicant .................................................................................... 8
D. Potential Third Party Guarantee of Special Tax Payments During Project Development ................ 9
E. Land Use Approvals ........................................................................................................................... 9
F. Equity Participation by Applicant and Major Participants .............................................................. 10
SECTION V: REVENUE SUPPORTING THE FINANCING ................................................................................. 10
SECTION VI: STRUCTURING THE FINANCING .............................................................................................. 11
A. Limited Obligations of the County .................................................................................................. 12
B. Structuring of Debt Service ............................................................................................................. 12
C. Reserve Funds ................................................................................................................................. 12
D. Capitalized Interest ......................................................................................................................... 12
E. Foreclosure Covenant ..................................................................................................................... 12
F. Underwriter and Original Issue Discount ........................................................................................ 13
SECTION VII: AGREEMENTS WITH AFFECTED PUBLIC ENTITIES .................................................................. 13
A. County Initiated CFD Financings ..................................................................................................... 13
B. CFD Financings Not Initiated by the County ................................................................................... 14
APPENDIX 4
SECTION VIII: CREDIT ENHANCEMENTS ...................................................................................................... 15
SECTION IX: OFFERING STATEMENTS AND DISCLOSURE ............................................................................ 15
SECTION X: ADMINISTRATION .................................................................................................................... 16
A. Debt Administration ........................................................................................................................ 16
B. Notice to Future Property Owners ................................................................................................. 16
C. Annual Reporting ............................................................................................................................ 17
SECTION XI: REFUNDINGS ........................................................................................................................... 17
SECTION XII: AMENDMENTS AND EXCEPTIONS .......................................................................................... 18
APPENDIX 4
SECTION I: GENERAL POLICY STATEMENT
Contra Costa County (the "County") has created these goals and policies concerning the use of the Mello-
Roos Community Facilities Act of 1982 (Government Code sections 53311 and following), as amended
(the “Act”) in providing adequate public services and public infrastructure improvements (the "Policies").
The Policies will apply to all Community Facilities Districts (“CFDs”) and related debt financing. In those
cases in which fixed lien special assessment or other types of land based financing is substituted for CFD
financing, the County will apply the appropriate provisions of these Policies. These Policies are intended
to serve as guidelines to assist all concerned parties in determining the County's approach to CFD financing,
provide specific guidance for approval of public financing for provision of public services and public
infrastructure improvements and establish the standards and guidelines for the review of proposed
development financings. It is the County's intent to support projects which address a public need and provide
a public benefit. These Policies are also designed to comply with Section 53312.7(a) of the Government
Code.
A. Community Facilities District Financings
1. The County encourages the development of residential, commercial and industrial property
consistent with the adopted General Plan. The Board of Supervisors will consider the use of CFDs
to assist these types of projects.
2. The County will consider the funding of services permitted under the Act if such funding does not
create an unreasonable economic burden on the land and special taxpayers.
3. The County encourages the formation of CFDs as acquisition districts. In acquisition districts, a
developer is reimbursed for projects only when discrete, useable public facilities are deemed by the
County to be completed. In construction districts, to the extent permitted under the Act, developers
are provided progress payments during the construction of facilities. Acquisition districts provide
stronger credit features, and better assure that the public facilities are completed.
4. While recognizing that public facilities proposed to be financed by a CFD are to benefit those
properties within the boundaries of the proposed CFD, the Board of Supervisors finds that public
benefit can only be "significant" when the benefit is also received by the community at large or are
regional in nature but have a benefit to the properties within the proposed CFD.
5. The use of CFDs will be permitted to finance public facilities as described in Paragraph B below,
whose useful life will be at least five (5) years and equal to or greater than the term of the bonds.
Facilities which are, upon completion, owned, operated or maintained by public agencies will be
considered public facilities. Limited exceptions may be made for facilities to be owned, operated
or maintained by private utilities, or for facilities which could be owned by public agencies, or
utilities.
6. The County is concerned that the proposed project that is to be financed is not premature for the
area in which it is to be located. The proposed project must meet the land use approvals listed in
subsection E of Section IV below.
7. Extending public financing to a proposed project for identified public improvements cannot be
APPENDIX 4
done without considering the aggregate public service needs for the project. Upon receipt of an
application for public financing, the County will notify the other public entities having
responsibility to serve the proposed project and request comment on the application. Periodic
meetings, on a regional basis, with all affected public entities will be encouraged by the County to
address the issues relative to overlapping debt
8. The Debt Affordability Advisory Committee (described in Section III below) may waive all or
some of the provisions of these policies if unique and special circumstances apply to specific
CFD financings.
B. Eligible Facilities
Facilities eligible to be financed by a CFD, upon completion of the construction or acquisition thereof, are
intended to be owned by the County, another public agency or a public utility and must have a useful life
of five (5) years or more. The list of public facilities eligible to be financed by a CFD may include, but is
not limited to the following: streets, highways, and bridges; water, sewer, and drainage facilities; parks;
libraries; police and fire stations; traffic signals and street lighting; recreation facilities; governmental
facilities; flood control facilities; environmental mitigation measures; and public rights-of-way
landscaping.
Facilities to be financed must be legally eligible under the Act and federal tax law, if applicable, to the
satisfaction of bond counsel. The Board of Supervisors will have the final determination as to the eligibility
of any facility for financing under these Policies.
C. Eligible Services
Services eligible to be funded through a CFD include: police protection services, fire protection and
suppression services, ambulance and paramedic services, maintenance and lighting of parks, parkways,
streets, roads and open space, flood and storm protection services, and services with respect to the removal
or remedial action for the cleanup of any hazardous substance released or threatened to be released in to the
environment. The Board of Supervisors will have the final determination as to the prioritization of funding
such services. A CFD may not finance public services already provided by a public agency.
SECTION II: INITIATION OF THE FINANCING
A. Application
The proponent of a project must obtain and submit the required application to the initiating County
department. The initiating County department with respect to CFD financings is the Department of
Conservation and Development (the “Department”).
Any application for the establishment of a CFD district will contain such information and be submitted in
such form as the Department may require. At a minimum each application must contain:
APPENDIX 4
1. Proof of authorization to submit the application on behalf of the owner of the property proposed
for new development for which the application is submitted if the applicant is not the owner of such
property;
2. Evidence satisfactory to the Department that the applicant represents or has the consent of the
owners of not less than 67% by area, of the property proposed to be subject to the levy of the special
tax; and
3. For any CFD financing to benefit new development, a business plan for the development of the
property within the proposed CFD and such additional information as the Department may deem
necessary to adequately review the financial feasibility of the CFD. For any CFD financing to
benefit new development, the applicant must demonstrate to the satisfaction of the Department the
ability of the owner of the property to be developed to pay the special tax installments for the CFD
and any other assessments, special taxes and ad valorem on such property until full build out and
sale or lease up of the property.
An application must be completed and the necessary information provided, as determined by the
Department, before any action will be taken to process the application and initiate financing for a project.
B. Processing and Formation Fees
Applications are to be accompanied by a processing or formation fee. All costs to t he County associated
with the proceedings statutorily required to establish a CFD are to be advanced by the applicant and paid
prior to the actual sale of any bonds. The applicant will be reimbursed solely from the proceeds of the bonds
sold for all monies advanced to the extent allowed by the Act.
An initial deposit in an amount of not less than $35,000 for a CFD is to be attached to the completed
application submitted. The Department, in its discretion, may determine a larger deposit amount is
appropriate. The deposit will be placed in a separate trust account held by the County. The deposit may
be placed in an interest bearing account so long as it is directed to do so by the Board of Supervisors
and is allowable under state law. All costs of the County and/or its consultants retained during the
formation process are to be paid from this account.
If, in the judgment of the Department, the costs incurred or projected will cause the balance in this
account to fall below $5,000, a written demand will be made to the applicant to advance monies
sufficient to bring the account to a balance that is projected to meet remaining costs required to
establish the CFD. Failure to advance the requested monies within ten (10) days of a written demand by
the County will result in all processing of the application to cease and no further actions to be taken toward
establishing the financing district until the monies have been received.
Monies held in the trust account are to be applied to pay the County and its staff in reviewing and processing
the application as well as the costs of the special tax consultant, bond counsel, appraiser, absorption
consultant, all publication expenses, and any other costs determined by the County to be necessary to
establish the CFD.
Accompanying the application will be an agreement governing the processing or formation fee, its deposit
in a trust account, the use of the monies, the return to the applicant of any unused portion of the fee or other
APPENDIX 4
monies advanced, and the possible reimbursement of monies advanced from bond proceeds.
C. Petition for Formation and Waiver of Time Requirements of the Election
The Mello-Roos Community Facilities Act of 1982, as amended, (the "Act") states that one way to request
the formation of a proposed community facilities district is through a Petition signed by landowners holding
title to ten percent (10%) of the land by area expected to be included within the proposed community
facilities district. The Petition must be submitted to the County before formal action can be commenced to
form the CFD. The form of the petition will be supplied by bond counsel once a completed application has
been received and initial processing has been accomplished.
The Act also provides that the formation can be shortened if one hundred percent (100%) of the property
owners within the proposed boundaries of the CFD execute a waiver regarding the timing of and certain
procedures associated with arequired special election. The applicant should indicate on the application
whether this waiver can be secured.
D. Selection of the Financing Team
The County will select the bond counsel, municipal advisor, underwriter or placement agent, and fiscal
agent/trustee. It will require the retention of underwriter's counsel or disclosure counsel. Providers of letters
of credit, liquidity supports and other types of credit enhancements are also subject to the approval of the
County. Bond counsel and underwriter counsel must be different firms.
In addition to the consultants that compose the financing team, as noted above, the County will select a
special tax consultant to determine a fair and reasonable method to allocate the special tax required to meet
debt service on the bonds and other related expenses of the proposed CFD.
Unless satisfactory and current information regarding land values for property within the proposed
CFD and subject to the special tax is available, the County will require that a real estate appraiser of
its choice be retained and an appraisal made. Additionally, an economist or real estate appraiser or
other qualified independent third party may also be retained for the purpose outlined in Section IV.A.
In addition, the County reserves the right to retain additional professional consultants that it deems
appropriate.
APPENDIX 4
SECTION III: DEBT AFFORDABILITY ADVISORY COMMITTEE
The Board of Supervisors established the Debt Affordability Advisory Committee (the “Committee”) to
review issues relevant to capital markets transactions and to make recommendations to the Board of
Supervisors when appropriate. The Committee will be comprised of the County Auditor-Controller, the
County Treasurer-Tax Collector, Director of the Department of Conservation and Development, and the
Senior Deputy County Administrator/Finance Director. The Committee is charged with the task of
reviewing and commenting upon all CFD financing as well as other types of financing proposed to be issued
by the County or its related districts or agencies. The Committee is to review each proposed debt issue and
provide comment on whether the proposed debt issue is consistent with these Policies. It is to comment on
the economic viability and credit worthiness of the proposed debt issue. In performing its function the
Committee may, in its sole discretion, review a matter more than once and retain additional consultants t o
assist in its review. The cost of such consultants is to be borne by the proponent of the debt issue. In addition,
the Committee has an ongoing responsibility to monitor the status of debt issued by the County or related
districts or agencies.
A written summary of the Debt Affordability Advisory Committee's review of the proposed financing is to
be prepared and submitted to the Board of Supervisors after it considers the financing. The written summary
will state the issues considered by the Committee, whether the financing and the issues considered were
consistent with or at variance with these Policies, and its recommendation with regard to each issue and the
financing. If the vote of the Committee is not unanimous, the written summary is to so indicate and
summarize the position taken by the minority members of the Committee.
The following are those matters which at minimum the Debt Affordability Advisory Committee is to review
and comment upon with regard to the CFD financings.
1. Prior to the Board of Supervisors considering the resolution of intention to establish a CFD, the
Department is to determine that all land use approvals required for the project under Section IV.E.
have been fulfilled and that the proposed rate and method of apportionment of the special tax is
consistent with Section V.A. of these Policies. Any variation from these Policies is to be noted and
a recommendation made to the Board of Supervisors with regard thereto.
2. Prior to the Board of Supervisors considering the resol ution authorizing the sale and issuance of
bonds, the Debt Affordability Advisory Committee is to determine that:
a) A current appraisal and any related absorption study have been prepared consistent with
Section IV.A. and IV.B of these Policies and that satisfactory land value to lien ratios exist.
b) Each property owner responsible for twenty percent (20%) or more of the debt service on the
bonded indebtedness to be incurred has supplied the financial security required by Section
IV.C. and IV.D. of these Policies.
c) The rate and method of apportionment of the special tax is in compliance with Section V.A. of
these Policies.
d) The structure of the proposed financing is consistent with the applicable subsections of Section
VI of these Policies.
APPENDIX 4
e) Each property owner responsible for 20% or more of the debt service in connection with any
series of bonds must be current with respect to payment of all general property taxes, and any
assessments or special taxes levied.
As stated above, any variation from these Policies is to be noted and a recommendation made to the Board
of Supervisors with regard thereto. In addition, the Debt Affordability Advisory Committee is to make any
comment it deems relevant in determining the economic viability or credit worthiness of the proposed debt
issue. The Committee is to make a recommendation to the Board of Supervisors as to whether or not to
proceed with the sale and issuance of the bonds.
If the proposed financing contemplates that bonds are to be issued in series, then each series is to be
reviewed and commented upon by the Debt Affordability Advisory Committee before that series of bonds
is considered by the Board of Supervisors for issuance.
Any proposal for refunding or defeasing a particular CFD financing is to be reviewed for consistency with
Section XI of these Policies and commented on by the Debt Affordability Advisory Committee prior to it
being submitted to the Board of Supervisors for consideration.
Once issuance of bonds has been approved by the Board of Supervisors and the bonds have been sold, the
County department or related district or agency having responsibility for the administration of the bond
issue is to annually file with the State and the Auditor Controller of the County a report regarding the status
of the bond financing. The occurrence of a technical default, or the likelihood thereof, is to be reported
immediately to the Auditor Controller of the County by the administering County department or related
district or agency.
SECTION IV: ECONOMIC VIABILITY OF THE FINANCING
In evaluating the application and the proposed debt issue, the County may require any or all of the following
to determine the economic viability of the proposed project and the timing of the sale of any bonds or series
thereof. The following requirements would apply to a CFD to finance services only to the extent determined
by the Department.
A. Absorption Study
Unless waived by the Debt Affordability Advisory Committee, an absorption study of anyproposed project
for substantially undeveloped property will be required for CFD financings. The absorption study will be
used: (1) as a basis to verify proposed base pricing of the finished products (lots or completed buildings or
dwelling units) subject to the levy of the special tax; (2) to determine the projected market absorption of
such finished products and (3) as a basis for verification that the assumptions supporting the special tax
formula are appropriate and sufficient revenues can be collected to support the bonded indebtedness to be
incurred.
The absorption study will also be used to evaluate the timing consideration identified by the applicant and
the financing team. The absorption study will be provided to the appraiser and the appraisal required below
APPENDIX 4
in Section IV.B. is to reflect consideration of the absorption study.
B. Appraisal
1. Definition of Appraisal
An appraisal is a written self-contained report independently and impartially prepared by
a qualified appraiser setting forth an opinion of defined value of an adequately described property to be
included in a CFD as of a specific date, supported by the presentation and analysis of relevant market
information. A qualified appraiser is a state certified real estate appraiser, as defined in Business and
Professions Code Section 11340.
2. Standards of Appraisal
A detailed complete appraisal will be prepared to support any CFD financing where the property to be
included in the CFD is not substantially built out. A detailed complete appraisal will reflect nationally
recognized appraisal standards including, to the extent appropriate, the Uniform Standards of
Professional Appraisal Practice (USPAP) of the Appraisal Foundation, the Code of Professional Ethics
and the Standards of Professional Appraisal Practice of the Appraisal Institute. An appraisal should
also generally conform to the Appraisal Standards for Land - Secured Financings provided by the
California Debt and Investment Advisory Commission ("CDIAC"). Appraisals undertaken to establish
value-to-lien ratios in CFD’s should value the fee simple estate, subject to any existing special
assessment and special tax liens. The estimate of Market Value should be refined to reflect the Retail
Value of fully improved and occupied properties and the Bulk Sale Value of all vacant properties,
including both unimproved properties and improved or partially improved but unoccupied properties.
An appraisal must contain sufficient documentation including valuation data and the appraiser’s
analysis of the data to support his or her opinion of value. At a minimum, the appraisal will contain
the following items:
a) The purpose and/or function of the appraisal, an identification of the property being
appraised, the intended use, the identity of the current and intended uses, and a statement of the
assumptions and limiting conditions affecting the appraisal.
b) An adequate description of the physical characteristics of the property being
appraised, location, General Plan/zoning, present use, and an analysis of highest and best use.
c) Relevant and reliable approaches to value consistent with commonly accepted professional
appraisal practices. If a discounted cash flow analysis is used, it should be supported with at
least one other valuation method, such as a market approach using sales that are at the same
stage of land development, when possible. If more than one approach is utilized, there will be
an analysis and reconciliation of approaches to value that are sufficient to support the
appraiser’s opinion of value.
d) A description of comparable sales, including a description of all relevant physical, legal and
economic factors such as parties to the transaction, source and method of financing, and
verification by a party involved in the transaction.
e) A statement of the value of real property.
APPENDIX 4
f) The effective date of valuation, date of appraisal, signature and certification of the appraiser.
3. Community Facilities District Appraisal Premises. The valuation of proposed special tax districts
will be based on all of the following three premises:
a) Raw Land Value. (Premise #1). The total land within the project will be valued “as is”:
(i) Without proposed infrastructure being financed or any future private improvements;
(ii) With existing parcel configuration and existing land use entitlements; and
(iii) Considering planned densities allowed by the General Plan, specific plan, zoning or other
project approvals then in effect
This is a typical type of land valuation.
b) Project Build-out value. (Premise #2). The total land within the project is valued under
projected conditions:
(i) With completion of proposed infrastructure being financed;
(ii) At the planned densities allowed by the General Plan, specific plan, zoning or other
approvals then in effect: and
(iii) Land development is at the stage of being marketed to merchant builders or tentative tract
maps ready to be filed.
This is a projected value based on project plans predicated on market conditions continuing as
projected.
c) Bulk Land Value. (Premise #3). The total land within the project is valued under projected
conditions:
(i) With completion of proposed infrastructure being financed;
(ii) With existing parcel configuration; and
(iii) Considering planned densities allowed by the General Plan, specific plan, zoning or other
project approvals then in effect.
This premise should consider a discounted or “quick sale” valuation considering time, costs and
the possibility of a pre unit value based on the total size of the project.
4. Timeliness of Information. To ensure that the opinion of value is current at the time of any bond
sale, the valuation date of the appraisal or an update to the appraisal should be within three months
of the bond sale.
C. Financial Information Required of Applicant
At time of application, the applicant for a CFD debt issue and all property owners owning land within the
boundaries of the proposed financing district that will be responsible for twenty percent (20%) or more of
the debt service on the bonded indebtedness to be incurred will provide financial statements (preferably
audited) for the current and prior two fiscal years. The applicant will also provide all other financial
information related to the proposed project that may be requested by the County.
APPENDIX 4
Subsequent to the sale and issuance of the bonds, federal and state statutes and/or regulations regarding the
financing may require the preparation of periodic reports. The applicant and all major participants in the
project will be required to provide that information needed to complete such statutorily required reports. In
addition, the County department or related district or agency responsible for the administration of the bonds
may require information of the applicant or the major participants in the project to satisfy reporting demands
of rating agencies or institutional buyers.
D. Potential Third Party Guarantee of Special Tax Payments During Project
Development
The greatest exposure to default on CFD bonds is the period between the issuance of bonds and project
build out. The risk of default is increased when only a single or a few property owners are responsible for
the special assessment or special tax payments that support the repayment of the bonds. While the County’s
credit is not pledged to support the bonds, a default on CFD bonds can negatively impact the investment
community’s perception of the County.
To minimize the risk of default, the County may require a third party guarantee for the annual special tax
payments within a district while the project is being developed and until there is significant absorption of
the new development. The need for, nature and duration of any third party guarantees will be evaluated by
the County and its financing team on a case by case basis If required, the commitment letter for the third
party guarantee must be provided within five days of the Resolution of Issuance and the third party
guarantee must be provided prior to printing the preliminary official statement for the financing.
Third party guarantees may include letters of credit (“LOCs”), surety bonds, or some other mechanism
which assures payment of special taxes while the project is being developed. When LOCs are provided,
they must be in form and substance acceptable to the County from a bank acceptable to the County.
E. Land Use Approvals
For CFD financings the County will require, at a minimum that the proposed project must
1. be consistent with the County's General Plan;
2. be reviewed by the Director of the Department or designee, and have satisfied or be able to
satisfy, all of the relevant land use requirements specified by the Director; and,
3. have had the service levels for the required public facilities established or the exact public
facilities required for the project identified.
A proposed project that requires: (i) a General Plan amendment, (ii) a change of zone that increases the
density or intensity of land use, (iii) a specific plan, or (iv) a specific plan amendment that increases the
density or intensity of land use will be referred to the Department’s Community Development Division
for evaluation as to whether the project is premature.
APPENDIX 4
An appropriate environmental review of the proposed project is to have been completed as part of land use
entitlement proceedings that will have addressed all of the public facilities that are to be constructed through
the proposed financing.
F. Equity Participation by Applicant and Major Participants
In evaluating the proposed debt issue, the Debt Affordability Advisory Committee will consider the equity
participation of the applicant and the major participants in the proposed project. At the time the application
for the proposed financing is received, an analysis will be made as to the equity interest that the applicant
has in the proposed project. It will also be required of the applicant that in addition to the financing, the
applicant will fund in-tract public infrastructure and may be expected to contribute to other public
improvements related to the proposed project.
SECTION V: REVENUE SUPPORTING THE FINANCING
CFD bonds are termed "limited obligations" whose primary repayment is secured by a special tax levied on
property in the CFD. The following are criteria that will be applied in evaluating the revenue stream that
will be supporting a proposed CFD bond financing.
A. The rate and method of apportionment of the special tax must be both reasonable and equitable in
apportioning the costs of the public facilities and services to be financed to each of the parcels within
the boundaries of the proposed CFD.
B. The rate and method of apportionment must be structured to produce special taxes sufficient to pay
scheduled debt service on all bonds (and provide coverage equal to 10% of debt service - see Section
V.F. below), pay annual services or maintenance expenses (if applicable), establish or replenish any
reserve fund for a bond issue, and pay reasonable and necessary administrative expenses of the CFD .
In addition, the rate and method of apportionment may be structured to produce amounts to pay directly
the costs of public facilities authorized to be financed by the CFD, the accumulation of funds reasonably
required for future debt service, amounts equal to projected deficiencies in special tax payments, any
remarketing, credit enhancement or liquidity fees and any other costs or payments permitted by law.
C. The rate and method of apportionment of the special tax is to provide for the administrative exp enses
of the proposed CFD, including, but not limited to, those expenses necessary for the annual enrollment
and collection of the special tax and bond administration.
D. All property not otherwise exempted by the Act from taxation will be subject to the special tax. The
rate and method of apportionment may provide for exemptions to be extended to parcels that are
publicly-owned, held by property owners associations, used for a public purpose such as permanent
open space or wetlands, or affected by public utility easements making impractical their use for other
than the purposes specified in the easement
E. The annual special tax levy on each residential parcel developed to its final land use will not escalate,
APPENDIX 4
except that a variation for services and administrative expenses will be allowed. The County will allow
an annual escalation factor, not to exceed two percent (2%) per year, on parcels to be developed for
commercial or industrial uses.
F. The maximum annual special tax, together with ad valorem property taxes, County Service Area
charges, special assessments or taxes for an overlapping financing district, or any other charges, taxes
or fees payable from and secured by the property, including potential charges, taxes, or fees relating to
authorized but unissued debt of public entities other than the County, in relation to the expected assessed
value of each parcel upon completion of the private improvements to the parcel is of great importance
to the County in evaluating the proposed financing.
The objective of the County is to limit the total tax burden, including the ad valorem property taxes
levied by the County, special taxes levied by any existing district for the payment of bonded
indebtedness or ongoing services, assessments levied for any assessment district or maintenance district
for the payment of bonded indebtedness or services and the assigned special tax for the proposed CFD,
on any parcel to a maximum of two percent (2%) of the expected assessed value of the parcel upon
completion of the private improvements. In evaluating whether this objective can be met, the County
will consider the aggregate public service needs for the proposed project. It will consider what public
improvements the applicant is proposing be financed in relation to these aggregate needs and decide
what is an appropriate amount to extend in public financing to the identified public improvements.
G. The total maximum annual special taxes that can be collected from taxable property in a district, taking
into account any potential changes in land use or development density or rate, and less all projected
administrative expenses, must be equal to at least one hundred ten percent (110%) of the gross annual
debt service on any bonds issued by or on behalf of the CFD in each year that said bonds will remain
outstanding.
H. The rate and method of apportionment of the special tax mayinclude a provision for a back up tax or
other assurances to protect against any changes in development that would result in insufficient special
tax revenues to meet the debt service requirements of the CFD. Such backup tax or other assurances
will be structured in such a manner that it will not violate any provisions of the Act regarding cross-
collateralization limitations for residential properties.
I. A formula to provide for the prepayment of the special tax may be provided; however, neither the
County nor the CFD will be obligated to pay for the cost of determining the prepayment amount which
is to be paid by the requesting property owner.
SECTION VI: STRUCTURING THE FINANCING
In structuring a CFD financing, the County and its financing team will insure that the following issues are
addressed in connection with the CFD bond issue.
APPENDIX 4
A. Limited Obligations of the County
Both the statutory authority providing for the issuance of CFD bonds as well as the proceedings resulting
in the sale and issuance of the bonds must ensure the bonds are limited obligations of the County payable
only from the revenue source identified and do not require the expenditure of the general funds or any other
revenues of the County to satisfy debt service obligations or to replenish any reserve fund established for
the bonds.
B. Structuring of Debt Service
While the County prefers that debt service be structured with approximately level debt service, CFD
financings may be structured with level, escalating, or declining debt service. The bonds must mature
within forty (40) years of the date of the initial bonds issued. No bonds will be issued with a maturity date
greater than the expected useful life of the majority of the facilities being financed.
C. Reserve Funds
The County will require that for CFD financings a reserve fund be established at a required funding level
as determined appropriate by the financing team.
D. Capitalized Interest
Interest will be capitalized for a bond issue only as long as necessary to place the special tax installments
on the assessment roll; provided, however, that interest may be capitalized for a longer term to be
established in the sole discretion of the County on a case by cas e basis, not to exceed an aggregate of 18
months, taking into consideration the value to lien ratio for such bonds, the expected timing of initial
occupancies of residential dwelling units or nonresidential structures within the CFD, expected absorption
and buildout of the property within the applicable Community Facilities District, expected construction and
completion schedule for the facilities to be funded from the proceeds of the bonds, the size of the bond
issue, the development pro forma and the equity position of the applicant and such other factors as the
County may consider relevant.
E. Foreclosure Covenant
In collecting delinquent special taxes, the County seeks to balance the bondholders’ right to receive timely
payment with fairness to property owners within the CFD who, due to extenuating circumstances, may have
difficulty paying their special taxes in a timely manner. Because CFD financings generally are repaid from
special tax receipts and solely secured by liens against property within the CF D, the investment market
expects to see appropriate foreclosure covenants in the CFD bond documents. A foreclosure covenant
would compel the County to take action to file a foreclosure action against a parcel with certain delinquency
thresholds are reached. For example, a covenant may require the County to institute foreclosure if an
APPENDIX 4
individual delinquency exceeds a certain threshold (e.g., $5,000) or the total amount of delinquencies for
all properties in a CFD exceeds a specified percentage of the total special taxes to be received (e.g., 5%).
Those standards may differ if the reserve fund for the issue remains fully funded.
For each bond issue, the County and its financing team will analyze key aspects of the proposed CFD (e.g.,
number of parcels, special tax rates, and debt service) to structure foreclosure covenants in a manner that
satisfies the bondholders’ need to reduce the likelihood of a shortfall in special taxes to pay debt service
with the desire to provide flexibility in treatment of individual special tax payers.
F. Underwriter and Original Issue Discount
The underwriter's discount will be negotiated and determined solely by the County and will be competitive
with and comparable to such discounts on similar financings being issued by the County and other public
entities. The County will consider any other compensation the underwriter may be receiving in connection
with the bond financing in determining the appropriate amount of the discount.
An original issue discount will be permitted only if it is expected that such discount will result in a lower
true interest cost on the bonds and that, for CFD financings, the use of an original issue discount will not
adversely affect the ability of the CFD to construct public facilities identified by the bond documents.
SECTION VII: AGREEMENTS WITH AFFECTED PUBLIC ENTITIES
A. County Initiated CFD Financings
1. For CFDs, the joint community facilities agreement(s) required with other public entities which
will own, maintain or operate the facilities to be financed must be adopted and approved by all
parties at or prior to the adoption of the resolution providing for the issuance of bonds for the CFD.
2. Should a CFD bond issue be for the construction of public facilities required to be sized to exceed
the service needs of the properties within the boundaries of the financing district, the County may
negotiate the following:
a) To the extent that the affected public entity's regulations allow, a credit against connection fees
or other fees such that the credit will preclude the affected properties from contributing twice
toward the cost of the identified public facilities.
b) To the extent that the affected public entity's regulations allow, a reimbursement for oversized
facilities that will allow the CFD to balance the bonded indebtedness incurred with the level of
benefit the properties are to receive from the public facilities that are to be financed.
c) Any reimbursements for oversizing received from the affected public entity are to be paid to
the CFD and, depending upon date of receipt, will be used either to augment construction
proceeds or to reduce the outstanding bonded indebtedness of the financing district as
determined appropriate by the County.
APPENDIX 4
B. CFD Financings Not Initiated by the County
An administrative review will be made by the Department of all non-County initiated CFD financings that
will require a joint community facilities agreement with the County to ensure compliance with the following
minimum requirements. Only those financings that do not satisfy these minimum requirements will be
referred to the Debt Affordability Advisory Committee for review and comment.
1. For CFDs containing residential projects, the rate and method of apportionment of the special tax
will not provide for an annually increasing maximum special tax for any residential classification.
However, for commercial and industrial projects within the CFD, the County will accept a
maximum special tax for such classifications that escalates at a rate not to exceed two percent (2%)
per year.
2. For CFDs, the total projected annual special tax revenues, less estimated annual administrative
expenses, must exceed the projected annual gross debt service on the bonds by ten percent (10%).
In structuring the rate and method of apportionment of the special tax, projected annual interest
earnings may also be included as part of the projected annual revenues to satisfy this coverage
requirement. Annual bond reserve fund interest earnings will be calculated at a rate to be
determined by the County but, in no event greater than the then current passbook savings rate.
3. Whether the projected ad valorem property tax and other direct and overlapping debt for the
property within the proposed boundaries of the CFD, including the proposed maximum special tax,
does meet the County's objective of not exceeding two percent (2%) of the anticipated assessed
value of each improved parcel upon completion of the private improvements as articulated in
Section V.E. will be reviewed. This review will include current or estimated County Service Area
or Community Service District charges, benefit assessments, levies for authorized but unissued
debt and any other anticipated charge which may be included on the property tax bill.
4. With regard to any bonds to be issued, there will be created a reserve fund that will be established
for each series of bonds.
5. If the County or its related districts or agencies are to:
a) own, operate, or maintain a majority of the facilities to be financed, or,
b) be the single largest recipient of the facilities to be financed, or,
c) own, operate or maintain facilities having a combined construction cost of $100,000 or more,
including design, engineering, construction contingencies and related costs of the construction
project,
then the County will require that all of the appropriate Policies set forth herein will be adhered to
before entering into a joint community facilities agreement.
APPENDIX 4
SECTION VIII: CREDIT ENHANCEMENTS
Credit enhancements, if required by the County, are to be utilized either to improve the credit worthiness
of the proposed financing or to insure that the debt service requirements of the proposed debt issue are met
in a timely manner. It is important to the County to minimize the possibility of a debt issue being placed in
default and to insure that sufficient cash flows are available to meet debt service requirements. Section IV.
D. contains a potential requirement for credit enhancement related to the ownership of 20% or more of the
property within a CFD.
The County will examine carefully the provider of the required credit facility and the form that the credit
facility will take. The rating of the provider, as well as the provider's capitalization, are of principal concern,
and a reduction in either during the term of the credit facility to a level unacceptable to the County may
require that an alternate credit facility be secured from an acceptable provider. The County reserves the
right, in its sole discretion, to determine the acceptability of both the credit facility and its provider.
SECTION IX: OFFERING STATEMENTS AND DISCLOSURE
It is the intent of the County to comply with all applicable federal or state requirements regarding disclosure
to insure that fair and accurate descriptions of debt issues are provided to the purchasers of the bonds. The
County and any owner of property within a CFD that has not reached its entitled development and that will
be responsible for the payment of special taxes representing such portion (as determined by bond counsel)
of annual debt service on an issue of bonds that would cause such person or entity to be an “obligated
person” under federal securities law (each, an “Obligated Person”) will use all reasonable means to ensure
compliance with applicable federal securities laws in connection with the issuance of debt and the provision
of financial information and operating data regarding any CFD established by the County with respect to
which bonds have been issued.
The County will retain disclosure counsel for any particular land secured or conduit financing having an
aggregate principal value of $1,000,000 or more. Decisions as to the adequacy of the disclosure will be
determined by the County, its counsel, bond counsel and disclosure counsel. No preliminary or final
offering statement for a particular land secured or conduit financing will be released for circulation unless
it is deemed final by the County on the advice of its counsel, bond counsel or disclosure counsel.
With regard to the initial disclosure, each Obligated Person will be required to provide for inclusion in the
official statement or other offering materials distributed in connection with the offering and sale of such
bonds, such information as may be required to satisfy any requirements of, or avoid any liability under, any
applicable federal or state securities laws.
The proponent(s) of a particular land secured or conduit financing and all principal participants therein are
expected to provide the information requested by the County, its counsel, the underwriter, its counsel,
disclosure counsel, or bond counsel that is deemed necessary for disclosure purposes. Failure on the part of
the proponent and any principal participants to comply with such requests will jeopardize completion of
the debt issue.
With regard to continuing disclosure, each Obligated Person will be required to enter into a continuing
disclosure agreement pursuant to which such Obligated Person will agree to provide financial information
APPENDIX 4
and operating data, on an ongoing basis, as may be required for the underwriter of such bonds to satisfy the
requirements pursuant to Rule 15c2-12 under the Securities Exchange Act of 1934.
The proponent of a particular land secured or conduit financing and all Obligated Persons will be required
to execute those certificates and provide those written opinions of their respective counsel that are required
by the terms of the bond purchase agreement. Failure to do so will result in the bonds not being sold and
issued.
Failure of the proponent of a particular land secured or conduit financing or of any Obligated Person to
comply with such proponent’s or Obligated Person’s initial or continuing disclosure obligations pertaining
to bonds previously issued for any other CFD will be grounds for denial of the application for the formation
of a CFD. Any such failure should be remedied by the time of providing the preliminary official statement
and such failure will be disclosed in the preliminary and final official statements as required by bond
counsel and/or disclosure counsel.
SECTION X: ADMINISTRATION
All matters related to administration of issued bonds are to be handled consistent with the terms of the trust
indenture or fiscal agent agreement pursuant to which the bonds were sold. Administrative responsibilities
with regard to the bonds and the project being financed by bond proceeds will vary depending upon the
nature of the project.
A. Debt Administration
CFD bonds are issued pursuant to bond indentures or fiscal agent agreements which identify where relevant
the Auditor-Controller of the County to have administrative responsibility for these debt issues. This
includes, among other duties, the computation and enrollment of the special tax, payment of principal and
interest on the bonds, initiation of foreclosure proceedings with regard to delinquent parcels, and
management and investment of monies held in all funds and accounts created by the bond indentures or
fiscal agent agreements.
B. Notice to Future Property Owners
The Act requires that certain disclosure certificates regarding the existence of a CFD and the special tax
obligation be provided to those individuals purchasing property within the CFD, including to interim
purchasers and merchant builders. The County will require that the statutorily prescribed disclosure be
made to the initial purchaser of property within a CFD, and the proponent of the CFD and/or developer will
make available the information necessary to complete the disclosure certificate required for subsequent
property transfers.
APPENDIX 4
C. Annual Reporting
The County departments or related districts or agencies identified in Section X. of these Policies as having
responsibility for bond administration will prepare and timely file with the state and federal agencies all
statutorily required reports.
Consistent with Section III of these Policies, County departments or related districts or agencies having
responsibility for bond administration are to prepare and submit annually to the Auditor Controller of the
County a report on the status of their respective debt issues on forms to be provided by the Debt
Affordability Advisory Committee. The occurrence of technical default, or the likelihood thereof, is to be
reported immediately to the Auditor Controller of the County by the administering department or related
district or agency. For the purposes of these Policies, the term "technical default" will mean the occurrence
of an event or omission that may result in the inability to make timely payment of debt service on the
financing or would jeopardize the tax exempt status of the financing (e.g., the need to draw on a reserve
fund, the insolvency or bankruptcy of a principal property owner, the insolvency of a provider of a cre dit
enhancement, or insufficient funds to make a required rebate payment).
The information contained in these reports will allow the Auditor Controller of the County to prepare an
analysis of the outstanding debt of the County and its related districts or agencies.
SECTION XI: REFUNDINGS
The principal objective of the County in refunding an outstanding debt issue is to secure a public benefit
which may include an interest rate savings that will result in both an annual and present value savings to
the property owners responsible for paying special taxes that are used to pay the debt service on the bonds.
The actual value of the savings must significantly exceed the costs of the refunding and any increase in the
principal amount of bonds that will be outstanding as a result of the refunding.
Refunding of a particular CFD financing must at minimum be structured to reflect the following:
1. The refunding bonds will mature on a date not later than the date on which the bonds being refunded
(the "prior bonds") mature.
2. Annual debt service savings to be realized from the refunding are to be apportioned over the
remaining life of the refunding bonds.
3. The prior bonds (or any portion thereof being refunded) are to be legally defeased in accordance
with the indenture or fiscal agent agreement authorizing their issuance. If there is no provision for
their defeasance, a defeasance escrow will be established that will contain only cash or direct
obligations of the United States.
The County will also consider refunding an outstanding land secured financing to address unacceptable or
unworkable bond covenants, debt service schedules or bond maturities.
APPENDIX 4
SECTION XII: AMENDMENTS AND EXCEPTIONS
The County reserves the right to amend or modify these policies at any time and the right to make exceptions
or grant waivers for specific financing projects, as facts and circumstances warrant.
APPENDIX 4
APPENDIX 5
Contra Costa County
Debt Management Policies
For
Multifamily Mortgage Revenue Bond Program
1
I. SUMMARY
This Appendix 5 provides specific policies and procedures for multifamily mortgage revenue
bond (MFMRB) issues, which are in addition to those established by the County in the
Contra Costa County, California Debt Management Policy (County Policy). The MFMRB
program is administered by the County’s Department of Conservation and Development
(DCD)1.
Federal, state and local legislation authorize issuance of mortgage revenue bonds by local
governments to finance the acquisition, development, and rehabilitation of multifamily rental
housing projects pursuant to Section 52075 of the California Health and Safety Code, and
applicable provisions of the Internal Revenue Code. The allocation of private activity bond
authority needed for the issuance of tax-exempt bonds is secured through the California
Debt Limit Allocation Committee (CDLAC). The interest on the bonds can be exempt from
federal and state taxation. As a result, bonds provide below market financing for qual ified
rental projects located within Contra Costa County (the “County”)2. In addition, the bonds
issued under the program can qualify projects for allocations of federal low -income housing
tax credits (LIHTC), that provide a significant portion of the equity funding necessary to
develop affordable housing.
There is no direct legal liability to the County in connection with the repayment of bonds;
there is no pledge of the County’s faith, credit or taxing power and the bonds do not
constitute general obligations of the County because the security for repayment of bonds is
limited to project revenue and other sources specified under each financing. Project loans
are, in most cases, secured by a first deed of trust on the bond-financed property. The
program is completely self-supporting; developers must secure funding to pay for costs of
issuance of the bonds and all other costs under each financing.
The bonds may be used for construction, rehabilitation and permanent financing. The
effective mortgage rate is the aggregate of the applicable bond rate and the add-on fees
charged under the program such as lender, trustee, issuer’s fee, etc. The bond rate, for fixed
rate bonds, is determined at the time of a bond sale, and the resulting mortgage rate typically
is approximately 1.5-2 percent below conventional mortgage rates. The project loans
generally have a 30-year amortization schedule.
The goals of the program include:
• Increase and preserve the supply of affordable rental housing;
• Encourage economic diversity within residential communities;
• Maintain a quality living environment for residents of assisted projects and
surrounding properties; and
• In the event of provision of public funds towards the project, optimize the
effectiveness of those funds by maximizing the leveraging of private sector funds.
1 DCD also manages a single-family mortgage revenue bond (SF MRB) program. It seeks an annual
allocation of SFMRB financing authority from the California Debt Limit Allocation Committee and converts the
allocation to Mortgage Credit Certificates (MCCs). MCC program information is available on the County
website at http://ca-contracostacounty2.civicplus.com/4768/Mortgage-Credit-Certificate-Program.
2 The County receives resolutions (or letters of support) from the cities and towns in which projects are
located for each applicable transaction prior to seeking a reimbursement resolution from the Board of
Supervisors.
2
II. ELIGIBILITY
The project must be located within the County and consist of complete rental units,
including full kitchens and bathrooms, and cannot be used for transient or student housing,
although in certain cases single room occupancy projects may be financed.
There is no limit on the minimum or maximum project size or number of units. However,
smaller size projects (fewer than 40 units or less than $2 million loan) may not find tax
exempt financing economically efficient due to the costs of issuance, services of the financial
team, rating fees, etc. Proposed combined or pooled projects will be considered on a case
by case basis.
Loan funds may be used for costs of property acquisition (no more than 25% of tax-exempt
bond proceeds can be used for the acquisition of land), construction, rehabilitation,
improvements, architectural and engineering services, construction interest, loan fees and
other capital costs of the project incurred after the Bond Reimbursement date (specified in
Section VII -Financing Process).
Pursuant to federal requirements, if bonds are used for acquisition and rehabilitation, an
amount at least equal to 15 percent of the portion of the acquisition cost of the building and
related equipment financed with the proceeds of the bonds must be used for rehabilitation
of the project.
No more than two percent of any tax-exempt bond loan can be used to finance costs of
issuance, such as the services of the financing team members, rating and printing of bonds,
bond allocation, etc.
III. COUNTY COMPENSATION
The County’s fees are comprised of (1) a non-refundable application fee due prior to drafting
a Reimbursement Resolution, (2) an issuance fee due upon bond closing, and (3) an annual
fee due in advance to cover costs of monitoring compliance with State and federal law
requirements as contained in a Regulatory Agreement for each bond issue. The annual fees
may be negotiated, however the standard fee is 1/8 of 1 percent (or 0.125 percent) of the
principal amount of bonds outstanding. Annual fees are charged for the full term of the
Regulatory Agreement, generally 55 years. At the County’s discretion, annual fees above a
$5,000 minimum may be subordinated to payment of debt service. The County fees are
summarized in the table below:
3
Issuer Fee Schedule
Application (1) Issuance Fee Annual Fee (2)
Rate (3) 0.125% Rate (3) 0.125%
$2,500 Minimum $5,000 Minimum $5,000
Maximum $75,000 Maximum $25,000
(1) Payable upon request of a Reimbursement Resolution. Amount is applied to
Issuance Fee at closing. DCD may waive this requirement in its sole
discretion.
(2) Amounts above the minimum may be subordinated to bond debt service, at
the County’s option.
(3) Percentage applied to the outstanding bond issuance amount.
IV. TYPES OF BONDS
The County may issue either tax-exempt or taxable bonds. Taxable bonds would generally
be issued in combination with tax-exempt bonds. Tax-Exempt Private Activity Bonds (non-
refunding) require an allocation of bond authority from CDLAC. To obtain the allocation the
County must submit an application to CDLAC on behalf of the developer (Project Sponsor).
Submittal of the application is at the discretion of the County, not the Project Sponsor. The
Project Sponsor must pay all required CDLAC fees when due.
The interest on taxable bonds is not exempt from federal taxation. These bonds are not
subject to federal volume “cap” limitations and therefore do not require allocation authority
from CDLAC. Taxable bonds can be used in combination with low -income housing tax
credits awarded by the Tax Credit Allocation Committee. Taxable bond issues must meet all
applicable requirements of this Policy (including rating requirements) and any additional
regulations that may be promulgated, from time to time, by the County or as set forth in the
County Policy.
The County may issue 501(c)(3) bonds on behalf of qualified nonprofit organizations. 501
(c)(3) bonds are tax-exempt and do not require an allocation from CDLAC, but cannot be
used with the LIHTC Program.
Refunding Bonds will be allowed if the issuance meets the following conditions:
1. The Project Sponsor agrees to cover all costs of the issuer.
2. Projects originally financed by tax-exempt bonds prior to the 1986 Tax Act will
have to make a minimum 10 percent of the units affordable to persons earning
50 percent of the median area income with the rents affordable at the same
level.
3. The affordability restrictions of the existing bond regulatory agreement are
subject to extension and/or additional restrictions. All specifics of refunding
proposals must be approved by the County.
4. Default refunding applications require a default refunding analysis (to
determine the eligibility for a default refunding). The County shall choose the
firm to conduct the analysis. The Project Sponsor will deposit the cost for the
study with the County before the study begins.
4
V. AFFORDABILITY REQUIREMENTS
A. Term
The project must remain as rental housing and continuously meet the affordabil ity
requirements for at least 55 years from the date of 50 percent occupancy of the
project (the “Qualified Project Period” or “QPP”). At the conclusion of the regulatory
period, rent of “in-place” tenants will continue to be governed by the applicable
affordability restriction, so long as those tenants continue to live in the development.
B. Income Restrictions
To be eligible for tax-exempt bond financing, federal and State law require that the
project meet one of the following conditions:
1. A minimum of 20 percent of the units in the project must be set aside for
occupancy by households whose income does not exceed 50 percent of area
median income, as adjusted for family size; or
2. A minimum of 10 percent of the units in the project must be set aside for
occupancy by households whose incomes do not exceed 50 percent of area
median income, as adjusted for family size AND an additional 40 percent of
the units in the project must be set aside for occupancy by households whose
incomes do not exceed 60 percent of area median income, as adjusted for
family size.
In general, project owners must certify their tenant’s eligibility annually. If at the
annual certification it is found that a tenant’s income exceeds 140 percent of the
current income limit, the owner must rent the next available unit of comparable size
to a new income eligible tenant. The owner may raise the current tenant’s rent to
market rent only upon renting the next available unit to a new low -income or very low-
income household, as applicable. A unit occupied only by full time students does not
count towards the set-aside requirement.
C. Rent Restrictions
The maximum rents for all the affordable units are equal to 30 percent of the
applicable monthly maximum income level, assuming one person in a studio, two
persons in a one-bedroom, three persons in a two-bedroom and four persons in a
three-bedroom unit. These assumptions differ for projects using LIHTC. If applicable,
the County may use TCAC rents pursuant to AB 1714. The maximum rents are further
reduced by the amount of the utility allowance applicable to those units , based on unit
size. Utility allowances are set by the Housing Authority of the County of Contra Costa
(HACCC) and are based solely upon the utilities paid by the tenant. The utility
allowance does not include phone, cable or internet connections.
The set-aside units must proportionately reflect the mix of all units in the project, be
distributed throughout the project, and generally have the same floor area, amenities,
and access to project facilities as market-rate units.
D. Regulatory Agreement
The rental and affordability unit requirements will be contained in a regulatory
agreement that is recorded against the property and must be complied with by the
project owner and any subsequent buyers for the applicable compliance period. The
5
Regulatory Agreement will be drafted by the County’s bond counsel and mus t be in
a form acceptable to and approved by the County. Pursuant to Section 5220(c)(1) of
the CDLAC Regulations, the Regulatory Agreement for any tax-exempt financing that
received a CDLAC allocation must incorporate by reference and as an attachment
the CDLAC resolution allocating private activity bond authority to the County for the
project. The requirements are terminated at the later of the end of the applicable
compliance period and repayment in full of the bonds, or in the event of total casualty
loss or foreclosure.
VI. FINANCING TEAM
Bond counsel and a municipal advisor, if desired, specifically represent the interests and
concerns of the County in ensuring the integrity of the bond transaction. The Project Sponsor
may, at its own expense, add additional members to the finance team to rep resent its
interests.
A. Municipal Advisor
If deemed necessary, the Municipal Advisor will be designated by DCD. They may be
requested to prepare a feasibility study of whether it is economically advisable to
proceed with the financing, including: evaluations of the financial strength of the
project; assumptions regarding income and expenses; sources of security for bon ds
in addition to the project; Project Sponsors financial situation and experience in
operating and managing rental projects; marketability of the bond s; rights and
resources of parties to the transaction in the event of default; and provide financial
advice on all relevant financial issues to best protect the interests of the County. The
compensation for any municipal advisory services to determine whether it is advisable
to proceed with a financing will not be contingent on the sale of the bonds.
B. Bond Counsel
Bond counsel will be designated for each financing by the County Board of
Supervisors. Bond counsel will prepare the necessary legal documentation for each
financing, including provisions regarding compliance with any applicable continuing
disclosure requirements, provide an opinion regarding the validity of the bonds and if
applicable their tax exemption, and provide legal advice on all relevant legal issues
to best protect the interests of the County. (See also Section IV.B, Financing Team
in the County Policy.)
C. Additional Parties
The Bond Underwriter, Private Placement Purchaser, Disclosure Counsel and Bond
Trustee, if any is required, will be selected by the County in consultation with the
project sponsor. The fees for such services will be paid solely out of bond proceeds
or otherwise by the project sponsor.
VII. THE FINANCING PROCESS
A. Request for Financing (New or Refunding) – A letter of request must be sent
to the DCD to review for consistency with County and CDLAC policy. The letter
and accompanying information must state the desire to use the County’s
Multifamily Mortgage Revenue Bond Program. The letter should include:
1. Name of Development Project,
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2. Name of Project Sponsor, including the Project Sponsor’s experience
with multifamily housing development
3. Location by street address and assessor’s parcel number (if known);
4. Estimated number units,
5. Estimated development costs including land (bonds to be issued cannot
exceed this amount),
6. Exact legal name of the ownership entity at the time of bond closing
(e.g. name of individual, partnership, corporation, etc.),
7. If different, name of the operating entity at the time of bond closing,
8. Proposed management company with a statement of experience in
managing income restricted housing, and
9. Non-refundable application fee of $2,500 to cover the administrative
costs of reviewing the project feasibility, Inducement and TEFRA
Hearing processes.
B. Board of Supervisor Approval of Reimbursement Resolution – The
Reimbursement Resolution is a conditional statement of intent on the part of
the County to provide tax-exempt financing for the project. The Resolution is
non-binding, however it authorizes the submittal of an application to CDLAC
by the County (if tax-exempt bonds are to be issued) and it sets the date (which
is 60-days earlier than the Reimbursement Date) from which costs related to
the project are eligible for tax-exempt financing.
C. Public Hearing/Section 147(f) Resolution (“TEFRA”) – Tax law requires that a
public hearing be held for any proposed tax-exempt financing to take
comments on the nature of and location of the facility proposed to be financed
with private activity bonds. The hearing must be noticed in a local newspaper
of general circulation or to be posted on the County’s website, at least 7 days
prior to the hearing. After the public hearing, the Board of Supervisors then
adopts a resolution approving the issuance of bonds pursuant to Section 147(f)
of the Internal Revenue Code. This is not the final approval of the bond
issuance. The DCD holds the hearing administratively and the Board of
Supervisors approves the Section 147(f) Resolution at a subsequent Board
meeting. DCD may opt to schedule the required public hearing with the Board
of Supervisors.
D. Obtaining a CDLAC Allocation –CDLAC allocation of private activity bond
authority needed for the issuance of tax-exempt bonds is subject to an
application process. The application must be submitted to the County by the
project sponsor for review and comment at least 10 days prior to the CDLAC
deadline. The final application must include the current application fee for
CDLAC and a performance deposit to be held by the County. The deposit is
returned according to CDLAC procedures, but is subject to rever sion to
CDLAC if the financing does not close according to their procedures. The
CDLAC process includes approximately 60 days for review of applications
prior to allocation.
E. Bond Sale Resolution – When an allocation is received the County and
financing parties will have a limited time in which to complete the financing and
sell and close on the issuance of the bonds. All real estate, lender and bond
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documents are completed. The Board of Supervisors must approve a Bond
Sale Resolution, typically 30 days in advance of the proposed bond closing.
VIII. BOND SALE MODES/ISSUING CRITERIA
Under its tax exempt financing program the County, as a conduit issuer, facilitates loans
typically secured by a first deed of trust. A fundamental requirement for financings is that the
project have loan underwriting and if applicable, credit enhancement from a third party
institution that bears the ultimate risk and responsibility of repayment of the loan. The County
may consider unrated bonds on a case-by-case basis. Subordinate financing from other
federal, state, or local agencies may be integrated into a plan of finance for the project. Early
consultation with County staff is encouraged.
Any bonds issued under the program that are sold to the public should generally be rated
“A”, or its equivalent, or better from a nationally recognized rating agency. The same rating
requirement applies in the case of a substitution of existing credit facility for publicly held
bonds that are outstanding.
A preferred way of obtaining the required rating on the bonds is through the provision of
additional, outside credit support for the bond issue provided by rated, financially strong
private institutions, such as bond insurance companies; domestic an d foreign banks and
insurance companies; FHA mortgage insurance or co -insurance, etc. The rating on the
bonds is based on the credit worthiness of the participating credit enhancement provider.
The applicant is required to identify and obtain credit enhancement for each bond issuance
to be publicly held. As the primary source of security for the repayment of bonds, the credit
enhancement provider reviews and approves the borrower and the project and its feasibility,
including the size of the loan and the terms of repayment using their own underwriting
criteria.
Fixed rate bonds, or their portion, can be issued without credit enhancement if the prop osed
financing structure results in the required minimum rating on the bonds by a nationally
recognized rating agency. Bonds issued without credit enhancement will be sold to
institutional investors in minimum $100,000 denominations.
Private Placement Bonds
Private Placement Bonds are allowed under the following conditions:
• The bonds are privately placed with “qualified institutional buyers” under Rule
144A of the Securities Act of 1933, or “accredited investors,” as generally defined
under Regulation D of the Securities Act of 1933.
• The bonds must be sold in minimum $100,000 denominations.
• All initial and subsequent purchasers (unrelated to the initial purchaser) must be
willing to sign a sophisticated investor letter in a form approved by the County.
While the bonds remain unrated, their transferability will be restricted to qualified
institutional buyers or accredited investors who sign an Investor Letter, unless the
transferee is related to the initial purchaser.
• The County may limit the number of investors.
• The owner must indemnify the County against any costs incurred by the County
related to the financing, including any lawsuit initiated by the bondholder or any
other party, regardless of whether the developer is negligent .
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IX. OTHER
Underwriter criteria: See Section V. Method of Sale in the County Policy for underwriter
selection criteria.
X. OTHER ISSUERS
Projects financed with subordinate financing from the County (CDBG, HOME, etc.) will be
financed by bonds issued by the County. The County may consent to the use of statewide
issuers for private activity bonds (including 501c3 bond s) to finance projects located within
the unincorporated County when such projects are part of a common plan of finance with
one or more projects located within the County. DCD may waive the limitations on the use
of statewide issuers.
XII POST-ISSUANCE
See County Policy, Post-issuance Tax Compliance Procedures (Appendix 2) and
Continuing Disclosure Procedures (Appendix 3). The following policies and procedures are
in addition to those procedures and are specific to multifamily mortgage revenue bond
issues. Project sponsors that received tax-exempt financing with an allocation from
CDLAC are also required to maintain compliance with the CDLAC resolution associated
with each such bond issuance.
A. Change of Ownership
The County reserves the right to approve any voluntary change in ownership (i) that
results in a transfer of 50% or more of the total equity interests in a developer or (ii) that
results in a transfer of any general partner or managing member interest in the developer.
Such approval to transfer ownership shall be at the discretion of the County. Transfers
made by a limited partner tax credit investor to its affiliates may, at the County’s
discretion, be exempted from this requirement. The County shall review proposed owner
management practices on current and previously owned properties, inspections,
financial statements and credit histories.
B. Compliance
Post-issuance compliance activities are carried out by DCD staff, including its
Redevelopment Housing Specialist, under the supervision of the County’s Assistant
Deputy Director. The County currently has a license agreement with Compliance
Services for its FOCUS program. Project Sponsors access information and submit
reports through FOCUS at http://www.housingcompliance.org/ . (The County reserves
the right to change vendors at any time.)
1. Issuance Report: Following bond issuance, Bond Counsel submits the Report of
Final Sale pursuant to CDIAC regulations.
2. Qualified Project Period: The QPP begins when the development has achieved
50 percent occupancy. Project Sponsors of new construction projects are
required to submit a recorded Certificate of Commencement of Qualified Project
Period. For acquisition/rehabilitation projects, the QPP begins upon bond
issuance.
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3. Quarterly Reports: Upon commencement of the QPP, reports are due 15 days
following the end of each quarter based on a calendar year using the form
embedded in FOCUS.
4. Annual Reports: Annual reports for projects that received a CDLAC allocation
must provide annual reports using the CDLAC Self-Certification Compliance
forms are due to the County 45 days prior to the CDLAC report deadline. The
County submits its comprehensive reports on all applicable developments prior
to the CDLAC deadline.
5. Compliance Verification:
a. Rent and income limits are calculated annually and are available to the
Project Sponsors through FOCUS. The HACCC utility allowance
schedule is uploaded in FOCUS. The Project Sponsor supplies the
tenant-paid utility costs to the County and to FOCUS. The FOCUS
program automatically compares the project rent and income information
with the current limits and flags any non-compliance issues.
b. Service amenities are included in any applicable CDLAC resolution and
are verified by County staff at project completion, through annual reports,
and during periodic site visits.
c. Site visits are conducted at least once every three years during the
compliance period. Staff reviews tenant files to confirm rent and incomes
are appropriate and consistent with the on-line reports. Staff also confirms
that amenities included in any applicable CDLAC resolution are being
provided. Any findings or discrepancies are included in any applicable
annual compliance report submitted by the County to CDLAC.
d. Non-compliance is reported to CDLAC with anyannual required reports.
Any such report will include the nature of the non-compliance and County
staff’s efforts to remedy the non-compliance. The County requires that the
Regulatory Agreement for each development include identification of
default and enforcement actions.
6. Record Retention: Any CDLAC application, County resolutions (TEFRA,
reimbursement, and intent to issue), the bond legal documents, and compliance
reports are retained for five years following the later of bond defeasance or
expiration of the applicable project regulatory agreement.
7. Site-based Record Retention: Tenant income certification information for all
initial tenants is retained for five years following the later of bond defeasance or
expiration of the applicable regulatory agreement. Tenant files for future tenants
a retained for five years following tenant move-out.
APPENDIX 6
Contra Costa County
Debt Management Policies
For
Successor Agency to the former Contra Costa County Redevelopment Agency
This Appendix 6 provides specific policies and procedures for tax allocation bond (TAB)
issues, which are in addition to those established by the County in the Contra Costa
County, California Debt Management Policy (County Policy). The TABs are administered
by the County’s Department of Conservation and Development (DCD).
I. Purpose
The purpose of this Successor Agency to the former Redevelopment Agency of Contra
Costa County (“Agency”) Debt Management Policy is to organize and formalize the
Agency’s debt-related policies and practices and establish a framework for administering
and potentially refinancing the Agency's debt.
The primary objectives of the policy are to:
• Promote sound financial management
• Assist the Agency in evaluating debt refinancing options
• Ensure full and timely repayment of debt
• Maintain full and complete financial disclosure and good investor relations
• Ensure compliance with applicable state and federal laws
II. Responsibility/Approval Process
The Director of the Department of Conservation and Development, or designee, shall be
responsible for managing and coordinating all activities related to the administration and
potential refinancing of the Agency’s debt, including investment of bond proceeds,
compliance with bond covenants, continuing disclosure, and arbitrage compliance.
III. Debt Issuance
Refinancing The Agency may refinance all or a portion of an outstanding debt
issue when such refinancing enables the Agency to realize significant debt service savings
or other policy goals. In general, refinancing that produces a net present value savings of
at least three percent of the refinanced debt, without extending the term of the refinanced
debt, will be considered economically viable. Refinancing that produce a net present value
savings of less than three percent will be considered on a case-by-case basis if there is a
compelling public policy objective that is accomplished by retiring the debt. For example,
the Agency may pursue a non-economic refinancing to eliminate undesirable legal
covenants in outstanding bond documents, to restructure the debt service profile, or to
change the tax status of the debt.
IV. Debt Structure
Debt Service Reserve Fund The Agency may finance a debt service reserve fund
from bond proceeds or other funds, consistent with federal tax law, to enhance the
marketability of the bonds and/or to satisfy requirements of outstanding debt covenants.
The Agency may purchase a reserve fund equivalent (such as a reserve fund surety) when
such purchase is considered to be advantageous to the economics of the debt issuance.
Bond Insurance The Agency may purchase bond insurance (or secure a letter of
credit) for any proposed financing if the economic benefit of the insurance realized through
lower interest costs exceeds the cost of the insurance. The Director of the Department of
Conservation and Development, or designee will solicit quotes from providers, and shall
have the authority to select a provider whose bid is most cost effective, and whose terms
and conditions are satisfactory to the County.
Call Provisions In general the bonds will include a call feature that is no longer
than 10 years from the date of delivery of the bonds. The Agency will seek to avoid the sale
of non-callable bonds absent careful evaluation by the Agency of the value of the call
option.
Original Issue Discount An original issue discount will be permitted only if the
Agency determines that such discount results in a lower true interest cost on the bonds and
that the use will not adversely affect the projects to be financed.
Interest Rate Mode The Agency shall use only fixed-rate debt to refinance its
bonds.
VI. Financing Team
Bond counsel and a municipal advisor, if applicable, specifically represent the interests and
concerns of the Agency in ensuring the integrity of the bond transaction.
A. Municipal Advisor
If deemed necessary, the Municipal Advisor will be designated by DCD. They will
prepare a feasibility study of whether it is economically advisable to proceed with the
financing, including: evaluations of the financial strength of the project; assumptions
regarding income and expenses; sources of security for bonds in addition to the
project. The compensation for municipal advisory services to determine whether it is
advisable to proceed with a financing will not be contingent on the sale of the bonds.
B. Bond Counsel
Bond counsel will be designated for each financing by the County Board of
Supervisors. Bond counsel will prepare the necessary legal documentation,
including provisions regarding compliance with any applicable continuing disclosure
requirements, provide an opinion regarding the validity of the bonds and their tax
exemption, and provide legal advice on all relevant issues to best protect the
interests of the Agency.
C. Additional Parties
The Bond Underwriter, Remarketing Agent, Private Placement Purchaser,
Disclosure Counsel, if any, and Bond Trustee, if required, will be selected by the
Agency in consultation with the municipal advisor. The fees for such services will be
paid solely out of bond proceeds or otherwise by the project sponsor.
(See also Section IV.B. – Financing Team in the County Policy)
VII. Method of Sale
The Agency may select a method of sale that is most appropriate for a particular financing
or debt program in light of the financial, market, transaction-specific, and Agency-related
conditions. The Director of the Department of Conservation and Development, or designee
shall be responsible for determining the appropriate manner in which to offer any securities
to investors, and may consider negotiated sale, competitive bid or private placement, as
appropriate. The Agency’s bonds have traditionally been sold via negotiated sale. This has
been reflective of a complex structure which has required significant up-front work by the
bond underwriter, and a strong pre-marketing effort at sale. The Agency may elect to
privately place its debt if it is demonstrated to result in a cost savings to the Agency relative
to other methods of debt issuance.
VIII. Debt Administration
Investment of Bond Proceeds Investments of bond proceeds shall be consistent
with federal tax requirements, the County’s adopted Investment Policy as modified from
time to time, and with requirements contained in the governing bond documents.
Continuing Disclosure The Agency is committed to full and complete primary and
secondary market financial disclosure in accordance with disclosure requirements
established by the Securities and Exchange Commission and Municipal Securities
Rulemaking Board, as may be amended from time to time. The Agency is also committed
to cooperating fully with rating agencies, institutional and individual investors, other levels
of government, and the general public to share clear, timely, and accurate financial
information.
Arbitrage Compliance The Agency shall maintain a system of record keeping and
reporting to meet the arbitrage compliance requirements of federal tax law or procure an
outside contractor for such service.