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DETERMINATION OF DEBT ISSUANCE <br />Prior to any issuance of debt, the requesting department and, when appropriate, the Finance & <br />Management Services Agency ("Finance"), will conduct a comprehensive assessment to ensure <br />the following criteria are met: <br />a) All debt must: <br />i. Be in alignment with the City's Strategic Plan goals & objectives as well as the City's <br />Capital Improvement Plan; <br />ii. Promote an economic or public benefit; <br />iii. Provide for economic vitality; <br />iv. Lessen the burden of the City during economic uncertainties; <br />V. Not cause undue burden on the City's General Fund; <br />A. Extend the useful life of existing assets. <br />b) Any prospective debt issuance must have an identified revenue source for repayment, <br />which may include the general fund, enterprise funds, special revenue funds and/or <br />community development funds; <br />c) A feasibility analysis will also be performed on the fund that has been identified as the <br />source of repayment that includes determining: <br />i. Operating Position (Gain/Loss: Operating revenues less Operating Expenditures); <br />ii. Existing Fund Balance (unassigned/unrestricted) capacity for current and future <br />years; <br />iii. Debt Service Coverage; and <br />iv. Future economic outlook (multi-year forecast or pro forma). <br />d) Evaluating any other material factors, including but not limited to: <br />i. Risk of litigation or potential litigation; <br />ii. Potential negative revenue and expenditure variances; and <br />iii. Compliance to pertinent legislation. <br />Generally, there will be a recommendation to issue debt when: 1) the aforementioned <br />assessment has been completed, 2) if current operational resources are insufficient to finance <br />the project, and 3) when debt financing is the optimal structure given the City's long-term <br />financial outlook. <br />When appropriate, Finance will evaluate the long-term impact of all outstanding and planned <br />debt issuance on the City's finances. Such evaluation recognizes that the City has limited capacity <br />for debt service in its budget and that each newly issued financing will obligate the City to a series <br />of payments until the debt is repaid. Subsequent to the evaluation, Finance will provide a <br />recommendation for the City Manager's consideration. The City Manager will make the <br />determination to proceed with the issuance of debt, subject to City Council and, if necessary, <br />voter approval. <br />Resolution No. 2018 -XXX <br />Page 4 of 9 <br />5501-6 <br />