Debt Management Policy

Policy Title:      Debt Management Policy

Policy Number:       3101

 

3101.1.      Purpose:

 

To provide guidance to the Buena Park Library District (District) on capital planning and the governance, administration, and management of any debt accumulated and outstanding to ensure sound fiscal management.

 

This policy establishes the procedure and level of debt management to achieve the following specific goals:

 

  1. To comply with Government Code Section 8855(i), which became effective on January 1, 2017, and shall be applicable to all debt undertaken by the District. 

 

  1. To guide the Board of Trustees in governing the debt of the District in recognition that a fiscally prudent debt policy is required in order to:

 

     

       

         

           

             

            1. To be utilized by staff to ensure debt management with recommendations to the Board of Trustees are sound and compliant with pertinent laws, rules, regulations, and policies.

             

            1. To be utilized by staff to deviate as determined appropriate by the District Library Director, and may be amended by the Board of Trustees of the District as it deems appropriate from time to time in the prudent management of the fiscal affairs, debt and financing needs of the District.

             

             

            3101.2.      Policy:

             

            3101.2.1.     Purposes For Which Debt May Be Issued

             

            A.     Long-Term Debt:

            Long-term debt may be issued to finance the construction, acquisition, and/or rehabilitation of capital improvements and facilities, property and other assets, equipment and land to be owned and operated by the District or funded for the benefit of the District.

             

            1.      Long-term debt financings are appropriate when the following conditions exist:

             

            •      When the project to be financed is necessary to provide basic services.

             

            •      When the project to be financed will provide benefit to constituents over multiple years.

             

            •      When total debt does not constitute an unreasonable burden to the District and its constituents.

             

            •      When the debt is issued to refinance outstanding debt in order to produce savings or to realize other benefits of a debt restructuring.

             

            2.      Long-term debt financings will not generally be considered appropriate for recurring operating expenses and routine maintenance expenses.

             

            3.      The District may use long-term debt financings subject to the following conditions:

             

            •      The project and/or costs to be financed must be approved by the Board of Trustees.

             

            •      The weighted average maturity of the debt will generally not exceed the average useful life of project being financed.

             

            •      The District estimates that sufficient revenues will be available to service the debt through its maturity.

             

            •      The District determines that the issuance of the debt will comply with the applicable state and federal law.

             

            B.     Short-Term Debt:

            Short-term debt may be issued to provide financing for the District’s operational cash flows in order to maintain a steady and even cash flow balance and/or prevent cash-flow deficits. Short-term debt may also be issued to finance capital projects with short useful lives; for example, the District may undertake lease-purchase financing for equipment.

             

            3101.2.2.     Types of Debt

             

            A.   The following types of debt are allowable under this Debt Policy:

            1.      Installment sale agreements, loans and similar debt-financing contracts

             

            2.      Loans and contracts with State or Federal agencies

             

            3.      Lines of credit

             

            4.      General obligation bonds (GO Bonds)

             

            5.      Bond or grant anticipation notes (BANs)

             

            6.      Lease revenue bonds, certificates of participation (COPs) and lease-purchase transactions

             

            7.      Tax and revenue anticipation notes (TRANs)

             

            8.      Refunding bonds, notes, loans, and other obligations

             

            B.    The District Board may from time to time find that other forms of debt would be beneficial to further its public purposes and may approve such debt without an amendment of this Debt Policy.

             

            C.   Debt shall be issued as fixed rate debt unless the District makes a specific determination as to why a variable rate issue would be beneficial to the District in a specific circumstance.

             

            3101.2.3.    Relationship of Debt to Capital Improvement Program and Budget

             

            A.     The District is committed to long-term capital planning. The District intends to issue debt for the purposes stated in this Debt Policy and to implement policy decisions incorporated in the District’s capital budget and the capital improvement plan. Items outside the capital budget or capital improvement plan may also be financed.

             

            B.     The District shall strive to fund the upkeep and maintenance of its infrastructure and facilities due to normal wear and tear through the expenditure of available operating revenues. 

             

            C.    The District shall integrate its debt issuances with the goals of its capital improvement program by timing the issuance of debt to ensure that funding is available for capital and non-capital projects when needed in furtherance of the District’s public purposes.

             

            D.     The District shall seek to issue debt in a timely manner to avoid having to make unplanned expenditures from its general fund.

             

            3101.2.4.     Policy Goals Related to Planning Goals and Objectives

             

            A.     When issuing debt, in addition to complying with the terms of this Debt Policy, the District shall comply with any other applicable policies regarding initial bond disclosure, continuing disclosure, post-issuance compliance, and investment of bond proceeds. 

             

            B.     Without limiting the foregoing, the District will periodically review the requirements of and will remain in compliance with the following:

             

            1.      Any continuing disclosure undertakings entered into by the District in accordance with Securities and Exchange Commission (SEC) Rule 15c2-12.

             

            2.      Any reporting obligations to the California Debt and Investment Advisory Commission (CDIAC).

             

            3.      Any federal tax compliance requirements, including, without limitation, arbitrage and rebate compliance.

             

            4.      The District’s investment policies as they relate to the use and investment of bond proceeds.

             

            C.    Proceeds of debt will be held either (a) by a third-party trustee or fiscal agent, which will disburse such proceeds to or upon the order of the District upon the submission of one or more written requisitions by the District Administrator (or his or her designee), or (b) by the District, to be held and accounted for in a separate fund or account, the receipt and expenditure of which will be carefully accounted for by the District.

             

            3101.3.      General Procedure:

             

            Responsibility

             

            Action

            Library Director or his/her designee

             

            1.

            During the budget process or at any appropriate time during the fiscal year, determines if District expenditures (operating and/or capital projects) require financing per the conditions and criteria of the District’s Debt Policy.

             

            2.

            When appropriate, makes recommendations to the Board of Trustees on long-term and/or short-term financing.

             

            3.

            Upon approval of the Board of Trustees, execute, administer, and manage the debt financing with the appropriate agencies and financial institutions.

             

            4.

            Report back to the Board of Trustees on the status of the District’s debt status as part of the budget process and the periodic financial reporting (i.e., monthly, quarterly, and/or annually).

             

             

             

             

             

            Last Review Date:

            December 2, 2025

             

             

            Adoption and Previous Revisions:

             

            Adopted:  December 2, 2025

             

             

            Relevant Policies and Procedures:

             

            Budget Policy

             

            Capital Improvement Policy

             

            Investment Policy

             

            Fund Balance and Reserve Policy

            Debt Policy - approved 2025 12 16.pdf