Title:
Title
Revised City of Sacramento Supplemental Policy on Disclosure
End
FileID
File ID: 2019-01498
Location
Location: Citywide
Recommendation:
Recommendation
Adopt a Resolution approving the revised City of Sacramento Supplemental Policy on Disclosure.
Contact: Brian Wong, Debt Manager, (916) 808-5811, Office of the City Treasurer
Body
Presenter: None
Attachments:
1-Description/Analysis
2-Resolution
3-Supplemental Policy on Disclosure adopted on December 10, 2019
4-Supplemental Policy on Disclosure [Redline]
5-Exhibit A - Supplemental Policy on Disclosure
Description/Analysis
Issue Detail: The City and its related entities (e.g., the Sacramento Public Financing Authority) issue and sell municipal bonds to raise funds needed for capital projects. The City’s Supplemental Policy on Disclosure (the Policy) specifies how the City will satisfy its obligation under federal securities laws-in particular, Rule 15c2-12 of the Securities and Exchange Commission-to keep the bond market apprised of important events that could affect the security of those bonds. The Policy was most recently revised on April 23, 2019, to comply with the amendment to Rule 15c2-12 that added the following new events to the list of events for which an issuer of bonds or other obligated person* must provide notice to the bond market:
• “Incurrence of a financial obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material.” (Italics added.)
• “Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.” (Italics added.)
After further discussion with the City Attorney’s Office and Stradling Yocca Carlson & Rauth, the City’s disclosure counsel, the City Treasurer’s Office recommends that the Policy be further revised to clarify what the italicized term “financial obligation” means.
Policy Considerations: The City Council’s formal approval of the revised Policy is considered a “best practice” by the Government Finance Officers Association and California Debt and Investment Advisory Commission.
Economic Impacts: Not applicable.
Environmental Considerations: Approval of the recommendation is not a “project” subject to CEQA because it (a) has no potential to cause the significant effect on the environment; (b) approves a continuing administrative activity (general policy and procedure making) and is thus excluded from the definition of “project”; and (c) concerns governmental fiscal activities that do not involve any commitment to any specific project that may result in a potentially significant physical impact on the environment (14. Cal Code Regs §§15061(b)(3) and 15378(b)(4)).
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: Approval of the revised Policy will help clarify the City’s continuing-disclosure obligations for outstanding debt.
Financial Considerations: Approval of the revised Policy has no direct financial impact or cost. The revised Policy simply clarifies the City’s reporting requirements under Rule 15c2-12.
Local Business Enterprise (LBE): Not applicable.