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I. Original Issue Discount& Deep Discount Bonds An original issue discount and deep discount bonds will be permitted only if the City determines that such discount results in a lower true interest cost on the bonds and that the use of an original issue discount or deep discount bonds will not materially reduce the value of the bonds' call provisions and adversely affect the project identified by the bond documents. J. Multiple Series In instances where multiple series of bonds are to be issued,the City shall make a final determination as to which allocations are of the highest priority. K. No Variable Rate Debt or Derivative Products: The City shall not issue variable rate debt. The City will not utilize derivative products. 7. CREDIT ENHANCEMENTS The City will consider the use of credit enhancement on a case-by-case basis, evaluating the economic benefit versus cost for each case. Only when a clearly demonstrable savings can be shown shall enhancement be considered. The City will consider each of the following enhancements as alternatives by evaluating the cost and benefit of such enhancement. A. Bond Insurance The City may purchase bond insurance when such purchase is deemed prudent and advantageous. The predominant determination shall be based on such insurance being less costly than the present value of the difference in the interest on insured bonds versus uninsured bonds. B. Debt Service Reserves When required, a reserve fund equal to the lesser of 10%of the original principal amount of the bonds,maximum annual debt service, or 125% of average annual debt service, and if permitted, 10%of par value of bonds outstanding, (the "Reserve Requirement") shall be funded from the proceeds of each series of bonds, subject to federal tax regulations and in accordance with the requirements of credit enhancement providers and/or rating agencies. The City may purchase reserve equivalents (e.g., a reserve fund surety policy)when such purchase is deemed prudent and advantageous. Such equivalents shall be evaluated in comparison to cash funding of reserves on a net present value basis,the creditworthiness of the surety provider and market acceptance. e k ! _ - 9 '. DEBT ISSUANCE PRACTICES Selection of Professionals Pursuant to the provisions of Sections 37209 and 40805.5 of the Government Code of the State of California,the Finance Director(Director of Finance) shall be the head of the Finance Department and shall be responsible for all of the financial affairs of the City. This City Debt Management Policy grants the Director of Finance the authority to select the financing team,coordinate the administration and issuance of debt, communicate with the rating agencies, as well as to fulfill all the pre-issuance and post-issuance disclosure