Page 3 - Moreno Valley Citizen's Guide to the Budget

Bonded deBt public benefit of using MunIcIpAl Debt

Summary

The municipal debt markets provide a valuable tool for the construction of capital improvement projects. They provide
the funding necessary to build large, high priority capital improvements that benefit the citizens, such as roads and other
infrastructure, when needed rather than waiting until sufficient levels of cash have been built up. The municipal debt market
includes fixed-rate bonds, variable-rate bonds, private placement bonds, bank loans and other similar financing instruments.
These municipal financings can be either tax-exempt or taxable to the bond buyer. Generally, the municipal debt market
offers funding on a tax-exempt basis, which reduces the overall borrowing costs.

The City’s Debt Policy states that “debt will only be used to finance capital projects when it is an appropriate means to
achieve an equitable allocation of costs between current and future beneficiaries as determined by the City Council.”

MoReno VAlleY Debt pRogRAM
The City has utilized the financial markets to construct various local projects. The following pages summarize the City’s debt
portfolios, as well as important components in the overall management of the portfolio.

Debt polIcY
In compliance with state law and industry best practices, the City has developed and maintains a Debt Management
Policy. This policy directs all aspects of the debt program and is reviewed annually by the City Council. The Debt
Management Policy was last reviewed on June 20, 2023. The City’s Special District Financing Policy provides guidance
on conduit land secured financing. Copies of these policies are available on the City’s Investor Relations website.

bonD RAtIng
Bond ratings are designations used by rating agencies to give relative indications of credit quality or risk. Moreno Valley
has been rated “AA- stable outlook” by Standard & Poor’s (S&P) since September 2021 and undergoes an annual review
with the rating agency. A description of S&P’s rating process and what the ratings mean can be found on their website
at the following location: https://www.spglobal.com/ratings/en/about/intro-to-credit-ratings.

contInuIng DIsclosuRe
As a condition of issuing bonds, the City has agreed to provide continuing disclosure to bondholders or lenders. This data
consists of certain financial or demographic data or other material events identified by the Securities and Exchange
Commission (SEC). The City has agreed to these requirements as part of the Continuing Disclosure Agreement for each
financing. The data elements that must be reported are unique to each bond issue and the disclosure reports must
be filed within a specified time frame on the Electronic Municipal Market Access database (EMMA) which is managed
by the Municipal Securities Rulemaking Board (MSRB). As a result of the passage of SB 1029, signed by the governor
in 2016, certain data elements are also required to be reported annually to the California Debt & Investment Advisory
Commission (CDIAC). This will also be considered a requirement of the City’s ongoing continuing disclosure program.

The City is current on all continuing disclosure filings and working with outside third parties to ensure that the filings are
complete and on time. The complete filing history can be found on the EMMA website (https://emma.msrb.org) and the
latest filings can be found on the City’s website on the Investor Relations tab. The status of the most recent disclosure
filings can be found later in this document.