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proposed issue, and 5) competition with other issuers for investor interest (bond supply) The Finance Director with the assistance of a financial advisor will examine and evaluate all available alternatives for new issues and make a recommendation to the City Manager Factors that should be considered include 1) Is the issuing option appropnate under existing laws? 2)Are there formal policies with respect to the method of sale? 3) Does the nature of the proposed offenng suggest that one method of marketing is more efficient than another? And, 4) Have the City's past issuance practices yielded acceptable results? Only after review and acceptance by the City Manager, will the proposed new bond issuance be presented to the City Council for review and consent. The following are the types of debt the City could issue 6 1New Money Bonds New Money bonds are bonds issued to finance the cost of capital improvement projects or other large and extraordinary costs as approved by the City Council 6 2 Refunding Bonds Refunding bonds are bonds issued to refinance (refund)previously issued outstanding debt The City may issue refunding bonds to refinance the pnncipal of and interest on outstanding bonds or other debt to achieve debt service savings, restructure scheduled debt service, convert from or to a variable or fixed interest rate, change or modify the source(s) of payment and security for the refunded debt, or modify covenants otherwise binding upon the City Refunding bonds may be issued either on a current or advance basis 6 3 Revenue Bonds Revenue Bonds are generally issued by enterprise funds that are financially self-sustaining without the use of taxes and therefore rely on the revenues collected by the enterpnse fund to repay the debt 6 4 Fixed vs Variable Rate Debt Fixed interest rate debt is typically preferred to maintain a more predictable debt service burden Variable rate debt can be utilized on a limited basis when the potential advantages of capturing the lowest interest rates available in the current market that outweigh forecasted risks 6 5 Variable Rate Debt Obligation (VRDO) Predetermine intervals are set where the rate can be reset to current market conditions VRDO's with a long maturity can be priced as short- term instruments making it potentially a less costly option in a normal upward sloping yield curve environment 6 6 Assessment Bonds The Improvement Bond Act of 1915 (Streets and Highways Code Section 8500 et seq) allows the City to issue bonds to finance the "specific benefit" improvements on the real property within its junsdiction provided by the City Installments are collected by posting to the secure property tax roll of the county 6.7 Mello Roos Bonds Mello-Roos districts may issue municipal bonds to help finance development projects. If