§ 3.11.090. Financing Criteria.

A.

Each debt issuance should be evaluated on an individual basis within the context of the District's overall financing objectives and current market conditions. The District will evaluate alternative debt structures (and timing considerations) to ensure the most cost-efficient financing under prevailing market conditions.

a.

Credit Enhancement — The District will consider the use of credit enhancement on a case-by-case basis. Only when clearly demonstrable savings can be realized shall credit enhancement be utilized.

b.

Cash-Funded Reserve vs. Surety — If the issuance of debt requires a cash-funded debt service reserve fund, the District may purchase a surety policy or replace an existing cash-funded debt service reserve fund when deemed prudent and advantageous. The District may permit the use of guaranteed investment agreements for the investment of reserve funds pledged to the repayment of any of its debt when it is approved by the Board.

c.

Call Provisions — In general, the District's securities should include optional call provisions. The District will avoid the sale of non-callable, long-term fixed rate bonds, absent careful evaluation of the value of the call option.

d.

Additional Bonds Test/Rate Covenants — The amount and timing of debt will be planned to comply with the additional bonds tests and rate covenants outlined in the appropriate legal and financing documents, and this policy.

e.

Short-Term Debt — The District may utilize short-term borrowing to serve as a bridge for anticipated revenues, construction financing or future bonding capacity.

f.

Variable Rate Debt — Variable rate debt products are rolling series of short-term investments that are resold periodically and are therefore priced at the short-end of the yield curve at low interest rates. If an issuer accepts the risks inherent in variable interest rates, the issuer can take advantage of some of the lowest rates available on the market. Variable rate debt may be appropriate for the District's portfolio, especially in an environment where increased interest earnings on invested funds offset the increased cost of variable rate debt. Variable rate debt products include variable rate demand obligations, commercial paper, and auction rate securities.

g.

Use of Variable Rate Debt — The District may consider the use of variable rate debt products to achieve a lower cost of borrowing or for short-term borrowing. In determining whether or not to use variable rate debt, the District will analyze, among other things, the risk associated with the variable rate debt and the impact on the District's overall portfolio. Before issuing variable rate debt, the District will analyze its cash position; the District will not issue variable rate debt in an amount that exceeds one hundred fifteen (115) percent of its unrestricted cash position at the time of issuance of any variable rate debt.

h.

Investment of Bond Proceeds - Bond proceeds will be invested in accordance with the permitted investment language outlined in the bond documents for each transaction. The District will seek to maximize investment earnings within the investment parameters set forth in the respective debt financing documentation. The reinvestment of bond proceeds will be incorporated into the evaluation of each financing decision; specifically addressing arbitrage/rebate position, and evaluating alternative debt structures and refunding savings on a "net" debt service basis, where appropriate.

i.

Lease Debt — The District may use lease debt for smaller purchases where the useful life of the asset exceeds five (5) years. Lease debt is subject to an identified source of repayment and approval by the Board of Directors.

j.

Length of Issue — The District will only issue debt where the useful life of the asset equals or exceeds the term of the debt.

( Policy No. 8.5, 10-14-2014 ; Res. No. 2018-8-3 , § 1(Exh. A, § 9), 8-28-2018)