8 CCR 1508-2-1.6 - Planning and Criteria of Issuance or Incurrence of Financial Obligations

A. Minimum Required Approval Information. Section 24-36-121, C.R.S. states that "Senate Bill 12-150, enacted in 2012, is not intended to grant the State Treasurer any authority that supersedes a State Agency's authority to enter into or incur a Financial Obligation, nor is Senate Bill 12-150 intended to affect other state laws regarding the General Assembly's approval of any capital lease or lease purchase agreement over five hundred thousand dollars." With that in mind, in order to initiate the management process, the State Treasurer requires that the following minimum information be submitted in writing:

1. A brief description of the proposed financing, including source of repayment for the Financial Obligation;

2. Evidence of statutory authority, or legislation that authorizes the Financial Obligation; and

3. Timeline of project and proposed financing.

B. Additional Information Requirements. The State Agency will provide the State Treasurer with any additional information that the State Treasurer considers necessary or appropriate to act as the issuing manager for the issuance or incurrence of the Financial Obligation. This may include but is not limited to the following:

1. Assumptions of underlying cash flow projections associated with the repayment of the Financial Obligation;

2. Information to be delivered by the State Treasurer to credit ratings agencies, underwriters and other participants related to the security of the transaction;

3. Description of the State Agency, program, staff and operations that impact the issuance or incurrence of the Financial Obligation;

4. As applicable, details about the property proposed to be used as the leased property under any lease purchase agreement;

5. Information regarding the structure of and security for the proposed Financial Obligation; and

6. Evidence of approval from the Office of State Planning and Budget that any fiscal impact from the Financial Obligation or refinancing is understood and can be incorporated into long term financial planning.

C. Timeline Considerations. Each State Agency that anticipates issuing or incurring a Financial Obligation shall provide written notice to the State Treasurer no less than sixty (60) days prior to the date on which a State Agency anticipates issuing or incurring a Financial Obligation, for a new transaction, and no less than thirty (30) days prior to the date on which a State Agency anticipates issuing or incurring a Financial Obligation for a refinancing transaction. While this is the minimum requirement defined by statute, State Agencies should consult with the State Treasurer to consider the following factors that may affect the time frame needed to accomplish issuing or incurring a Financial Obligation:

1. Transaction size;

2. Complexity of the transaction;

3. Type and structure of proposed Financial Obligation; and

4. Market conditions.

D. General Limitations of Issuance or Incurrence. The issuance or incurrence of all Financial Obligations are subject to the following general limitations:

1. Financial Obligations shall comply with all applicable laws, regulations, and covenants and, if applicable, shall not jeopardize the federal or state tax-exempt (or other federal or state tax) status of outstanding Financial Obligations;

2. Financial Obligations shall not be issued or incurred to fund operations, except for short term tax anticipation notes issued by the State Treasurer pursuant to sections 29-15-112, 22-54-110 and 24-75-901, C.R.S.;

3. Capital improvements may be financed, but the plans for such projects should first be developed and approved in accordance with any state statute applicable to the projects;

4. Principal and interest payment schedules should generally be structured to result in level annual payments due on a Financial Obligation, but may vary when circumstances warrant;

5. Financial Obligations issued or incurred will generally be limited to fixed rate current interest serial or term maturities, but may be sold in the form of variable rate, capital appreciation or other structures, including short term securities if circumstances warrant; and

6. The average life of the issued or incurred Financial Obligation should generally be no greater than the projected average useful life of the asset(s) being financed.

Notes

8 CCR 1508-2-1.6

. Rules 1.11 emer. rule eff. 06/14/2013. . Rules 1.12 emer. rule eff. 06/14/2013. . Rules 1.4 emer. rule eff. 06/14/2013. Rule 1.11 eff. 09/14/2013. Rule 1.12 eff. 09/14/2013. Rules 1.4 eff. 09/14/2013.