Title
Consideration of and action on amending the Post-Issuance Compliance Policy and Procedures Manual.
Body
Summary: On November 5, 2013, the City adopted a Post-Issuance Compliance Policy and Procedures Manual to monitor the requirements of section 148 of the IRS Tax Code. These procedures should address matters related to post-issuance of tax-exempt debt including proper and timely use of debt proceeds, arbitrage, private business use, records retention, etc. The current policy does reference the continuing disclosure requirements of SEC Rule 15c2-12. The updated policy includes a list of the 16 material events that would require a timely material event notice to be filed with the Municipal Securities Rulemaking Board (the “MSRB”) through the Electronic Municipal Market Access (“EMMA”) system:
a. Principal and interest payment delinquencies
b. Non-payment related defaults, if material
c. Unscheduled draws on debt service reserves reflecting financial difficulties
d. Unscheduled draws on credit enhancements reflecting financial difficulties
e. Substitution of credit or liquidity providers, or their failure to perform
f. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form S701-TEB), or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security
g. Modifications to rights of holders of the security, if material
h. Bond calls, if material, and tender offers
i. Defeasances
j. Release, substitution, or sale of property securing repayment of the security, if material
k. Rating changes
l. Bankruptcy, insolvency, receivership, or similar event of the City or another obligated person
m. The consummation of a merger, consolidation, or acquisition involving the City or another obligated person or the sale of all or substantially all of its assets, other than in the ordinary course of business, the entry into of a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material
n. Appointment of a successor or additional trustee or the change of name of a trustee, if material
o. Incurrence of a financial obligation (other than municipal securities for which a continuing disclosure agreement is entered into and an official statement is filed with the MSRB) of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material
p. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties
Items “o” and “p” were most recently added to the above list of material events. Relative to those two events, the term “financial obligation” means (i) a debt obligation, (ii) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) a guarantee of (i) or (ii). The term “financial obligation” shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with Rule 15c2-12.
Fiscal/Budgetary Impact:
N/A.
Recommended action:
Approve the Post-Issuance Compliance Policy and Procedures Manual dated January 21, 2020.