HomeMy WebLinkAboutResolution No. 191-12 4
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• RESOLUTION
BE IT RESOLVED by the Common Council of the City of Rochester that the City adopt a
financial policy on bonded debt post issuance compliance. A copy of the policy is attached.
PASSED AND ADOPTED BY THE COMMON COUNCIL OF THE CITY OF
ROCHESTER, MINNESOTA, THIS 7 D F C( , 2012.
PRESIDENT OF SAID COMMON COUNCIL
ATTEST: ✓C0�1,! n
laapuiry CITY CLER6
APPROVED THIS DAY OF , 2012.
• MAYOR OF SAID CITY
(Seal of the City of
Rochester, Minnesota)
Resl MAdcpt.FinPolicy2
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THE CITY OF ROCHESTER,MINNESOTA
POST-ISSUANCE COMPLIANCE PROCEDURE AND POLICY
FOR TAX-EXEMPT GOVERNMENTAL BONDS
Adopted May 7,2012
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400716v1 MMD RC110-31
Post-Issuance Compliance Procedure and Policy •
for Tax-Exempt Governmental Bonds
The City of Rochester, Minnesota(the"Issuer") issues tax-exempt governmental bonds("TEBs")
to finance capital improvements. As an issuer of TEBs, the Issuer is required by the terms of Sections
103 and 141-150 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury
Regulations promulgated thereunder (the "Treasury Regulations"), to take certain actions after the
issuance of TEBs to ensure the continuing tax-exempt status of such bonds. In addition, Section 6001 of
the Code and Section 1.6001-1(a) of the Treasury Regulations impose record retention requirements on
the Issuer with respect to its TEBs. This Post-Issuance Compliance Procedure and Policy for Tax-
Exempt Governmental Bonds (the "Policy") has been approved and adopted by the Issuer to ensure that
the Issuer complies with its post-issuance compliance obligations under applicable provisions of the Code
and Treasury Regulations.
1. Effective Date and Term. The effective date of this Policy is the date of approval by the
Common Council of the Issuer(May 10, 2012) and this Policy shall remain in effect until superseded or
terminated by action of the Common Council of the Issuer.
2. Responsible Parties. The Finance Director of the City of Rochester, Minnesota (the
"Compliance Officer") shall be the party primarily responsible for ensuring that the Issuer successfully
carries out its post-issuance compliance requirements under applicable provisions of the Code and
Treasury Regulations. The Compliance Officer will be assisted by the staff of the Finance Department of
the Issuer and by other Issuer staff and officials when appropriate. The Compliance Officer of the Issuer
will also be assisted in carrying out post-issuance compliance requirements by the following
organizations: • i
(a) Bond Counsel (as of the date of approval of this Policy, bond counsel for the
Issuer is Kennedy&Graven, Chartered);
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(b) Financial Advisor (the person, organization, or officer of the Issuer primarily
responsible for providing financial advisory services to the Issuer; as of the date of approval of
this Policy,the financial advisor of the Issuer is Springsted Incorporated);
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(c) Paying Agent (the person, organization, or officer of the Issuer primarily
responsible for providing paying agent services for the Issuer); and
(d) Rebate Analyst (the organization primarily responsible for providing rebate
analyst services for the Issuer).
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The Compliance Officer shall be responsible for assigning post-issuance compliance responsibilities to
other staff of the Issuer,Bond Counsel,Paying Agent, and Rebate Analyst. The Compliance Officer shall
utilize such other professional service organizations as are necessary to ensure compliance with the post-
issuance compliance requirements of the Issuer. The Compliance Officer shall provide training and
educational resources to Issuer staff responsible for ensuring compliance with any portion of the post-
issuance compliance requirements of this Policy.
3. Post-Issuance Compliance Actions. The Compliance Officer shall take the following
post-issuance compliance actions or shall verify that the following post-issuance compliance actions have
been taken on behalf of the Issuer with respect to each issue of TEBs:
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400716v 1 MMD RC 110-31 _1_
• (a) The Compliance Officer shall prepare a transcript of principal documents (this
action will primarily be the responsibility of Bond Counsel or the Financial Advisor). _...
(b) The Compliance Officer shall file with the Internal Revenue Service (the"IRS"),
within the time limit imposed by Section 149(e)of the Code and applicable Treasury Regulations,
an Information Return for Tax-Exempt Governmental Obligations, Form 8038-G (this action will
be the primary responsibility of Bond Counsel).
(c) The Compliance Officer (in consultation with the Financial Advisor and Bond
Counsel) shall prepare an "allocation memorandum" for each issue of TEBs in accordance with
the provisions of Treasury Regulations, Section 1.148-6(d)(1), that accounts for the allocation of
the proceeds of the tax-exempt bonds to expenditures not later than the earlier of-
(i) 18 months after the later of(A)the date the expenditure is paid,or(B)the date
the project, if any,that is financed by the tax-exempt bond issue is placed in service; or
(ii) 60 days after the earlier of(A) the fifth anniversary of the issue date of the
tax-exempt bond issue, or (B) the date 60 days after the retirement of the tax-exempt
bond issue.
(d) The Compliance Officer, in consultation with Bond Counsel, shall identify
proceeds of TEBs that must be yield-restricted and shall monitor the investments of any yield-
restricted funds to ensure that the yield on such investments does not exceed the yield to which
such investments are restricted.
• (e) In consultation with Bond Counsel, the Compliance Officer shall determine
whether the Issuer is subject to the rebate requirements of Section 148(f)of the Code with respect
to each issue of TEBs. In consultation with Bond Counsel, the Compliance Officer shall
determine, with respect to each issue of TEBs of the Issuer, whether the Issuer is eligible for any
of the temporary periods for unrestricted investments and is eligible for any of the spending
exceptions to the rebate requirements. The Compliance Officer shall contact the Rebate Analyst
(and, if appropriate, Bond Counsel) prior to the fifth anniversary of the date of issuance of each
issue of TEBs of the Issuer which are subject to such rebate requirements, and each fifth
anniversary thereafter, to arrange for calculations of the rebate requirements with respect to such
TEBs. If a rebate payment is required to be paid by the Issuer, the Compliance Officer shall
prepare or cause to be prepared the Arbitrage Rebate, Yield Reduction and Penalty in Lieu of
Arbitrage Rebate, Form 8038-T, and submit such Form 8038-T to the IRS with the required
rebate payment. If the Issuer is authorized to recover a rebate payment previously paid, the
Compliance Officer shall prepare or cause to be prepared the Request for Recovery of
Overpayments Under Arbitrage Rebate Provisions, Form 8038-R, with respect to such rebate
recovery,and submit such Form 8038-R to the IRS.
4. Procedures for Monitoring Verification and Inspections. The Compliance Officer shall
institute such procedures as the Compliance Officer shall deem necessary and appropriate to monitor the
use of the proceeds of TEBs issued by the Issuer, to verify that certain post-issuance compliance actions
have been taken by the Issuer, and to provide for the inspection of the facilities financed with the
proceeds of such bonds. At a minimum,the Compliance Officer shall establish the following procedures:
(a) The Compliance Officer shall monitor the use of the proceeds of TEBs to: (i)
ensure compliance with the expenditure and investment requirements under the temporary period
• provisions set forth in Treasury Regulations, Section 1.148-2(e); (ii) ensure compliance with the
400716v1 MMD RC110-31 _2_
safe harbor restrictions on the acquisition of investments set forth in Treasury Regulations, •
Section 1.148-5(d); (iii) ensure that the investments of any yield-restricted funds do not exceed
the yield to which such investments are restricted; and (iv)determine whether there has been
compliance with the spend-down requirements under the spending exceptions to the rebate
requirements set forth in Treasury Regulations, Section 1.148-7.
(b) The Compliance Officer shall monitor the use of all bond-financed facilities in
order to: (i) determine whether private business uses of bond-financed facilities have exceeded
the limits set forth in Section 141(b) of the Code as a result of leases and subleases, licenses,
management contracts, research contracts, naming rights agreements, or other arrangements that
provide special legal entitlements to nongovernmental persons;and(ii)determine whether private
security or payments that exceed the limits set forth in Section 141(b) of the Code have been
provided by nongovernmental persons with respect to such bond-financed facilities. The
Compliance Officer shall provide training and educational resources to any Issuer staff who have
the primary responsibility for the operation, maintenance, or inspection of bond-financed
facilities with regard to the limitations on the private business use of bond-financed facilities and
as to the limitations on the private security or payments with respect to bond-financed facilities.
(c) The Compliance Officer shall undertake the following with respect to each
outstanding issue of TEBs of the Issuer: (i) an annual review of the books and records
maintained by the Issuer with respect to such bonds; and (ii) an annual physical inspection of the
facilities financed with the proceeds of such bonds, conducted by the Compliance Officer with
the assistance with any Issuer staff who have the primary responsibility for the operation,
maintenance,or inspection of such bond-financed facilities.
5. Record Retention Requirements. The Compliance Officer shall collect and retain the
following records, if applicable, with respect to each issue of TEBs of the Issuer and with respect to the •
facilities financed with the proceeds of such bonds: (i) audited financial statements of the Issuer;
(ii)appraisals, demand surveys, or feasibility studies with respect to the facilities to be financed with the j
proceeds of such bonds; (iii) publications and brochures related to the bond financing; (iv)trustee or
paying agent statements; (v) records of all investments and the gains (or losses) from such investments;
(vi) paying agent or trustee statements regarding investments and investment earnings;
(vii)reimbursement resolutions and expenditures reimbursed with the proceeds of such bonds; (viii)
allocations of proceeds to expenditures (including costs of issuance) and the dates and amounts of such
expenditures (including requisitions, draw schedules, draw requests, invoices, bills, and cancelled checks
with respect to such expenditures); (ix)contracts entered into for the construction,renovation,or purchase
of bond-financed facilities; (x)an asset list or schedule of all bond-financed depreciable property and any
depreciation schedules with respect to such assets or property; (xi) records of the purchases and sales of
bond-financed assets; (xii) private business uses of bond-financed facilities that arise subsequent to the
date of issue through leases and subleases, licenses, management contracts, research contracts, naming
rights agreements, or other arrangements that provide special legal entitlements to nongovernmental
persons and copies of any such agreements or instruments; (xiii)arbitrage rebate reports and records of
rebate and yield reduction payments; (xiv) resolutions or other actions taken by the governing body
subsequent to the date of issue with respect to such bonds; (xv)formal elections authorized by the Code
or Treasury Regulations that are taken with respect to such bonds; (xvi) relevant correspondence relating
to such bonds; (xvii) documents related to guaranteed investment contracts or certificates of deposit,
credit enhancement transactions, and financial derivatives entered into subsequent to the date of issue;
(xviii)copies of all Form 8038Ts and Form 8038-Rs filed with the IRS; and(xix)the transcript prepared
with respect to such TEBs.
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400716v1 MMD RC110-31 -3-
The records collected by the issuer shall be stored in any format deemed appropriate by the
Compliance Officer and shall be retained for a period equal to the life of the TEBs with respect to which
the records are collected (which shall include the life of any bonds issued to refund any portion of such
TEBs or to refund any refunding bonds)plus 3 years.
6. Remedies. In consultation with Bond Counsel, the Compliance Officer shall become
acquainted with the remedial actions under Treasury Regulations, Section 1.141-12, to be utilized in the
event that private business use of bond-financed facilities exceeds the limits under Section 141(b)(1) of
the Code. In consultation with Bond Counsel,the Compliance Officer shall become acquainted with the
Tax Exempt Bonds Voluntary Closing Agreement Program described in Notice 2008-31, 2008-11 I.R.B.
592, to be utilized as a means for an issuer to correct any post-issuance infractions of the Code and
Treasury Regulations with respect to outstanding tax-exempt bonds.
7. Continuing Disclosure Obligations. In addition to its post-issuance compliance
requirements under applicable provisions of the Code and Treasury Regulations, the Issuer has agreed to
provide continuing disclosure, such as annual financial information and material event notices, pursuant
to a continuing disclosure certificate or similar document (the "Continuing Disclosure Document")
prepared by Bond Counsel and made a part of the transcript with respect to each issue of bonds of the
Issuer that is subject to such continuing disclosure requirements. The Continuing Disclosure Documents
are executed by the Issuer to assist the underwriters of the Issuer's bonds in meeting their obligations
under Securities and Exchange Commission Regulation, 17 C.F.R. Section 240.15c2-12, as in effect and
interpreted from time to time ("Rule 15c2-12"). The continuing disclosure obligations of the Issuer are
governed by the Continuing Disclosure Documents and by the terms of Rule 15c2-12. The Compliance
Officer is primarily responsible for undertaking such continuing disclosure obligations and to monitor
compliance with such obligations.
• 8. Other Post-Issuance Actions. If, in consultation with Bond Counsel, Financial Advisor,
Paying Agent, Rebate Analyst, or the Common Council, the Compliance Officer determines that any
additional action not identified in this Policy must be taken by the Compliance Officer to ensure the
continuing tax-exempt status of any issue of governmental bonds of the Issuer, the Compliance Officer
shall take such action if the Compliance Officer has the authority to do so. If, after consultation with
Bond Counsel, Financial Advisor, Paying Agent, Rebate Analyst, or the Common Council, the
Compliance Officer and the Administrator determine that this Policy must be amended or supplemented
to ensure the continuing tax-exempt status of any issue of governmental bonds of the Issuer, the
Administrator shall recommend to the Common Council that this Policy be so amended or supplemented.
9. Taxable Governmental Bonds. Most of the provisions of this Policy, other than the
provisions of Section 7, are not applicable to governmental bonds the interest on which is included in
gross income for federal income tax purposes. On the other hand, if an issue of taxable governmental
bonds is later refunded with the proceeds of an issue of tax-exempt governmental refunding bonds, then
the uses of the proceeds of the taxable governmental bonds and the uses of the facilities financed with the
proceeds of the taxable governmental bonds will be relevant to the tax-exempt status of the governmental
refunding bonds. Therefore, if there is any reasonable possibility that an issue of taxable governmental
bonds may be refunded, in whole or in part, with the proceeds of an issue of TEBs, then for purposes of
this Policy, the Compliance Officer shall treat the issue of taxable governmental bonds as if such issue
were an issue of TEBs and shall carry out and comply with the requirements of this Policy with respect to
such taxable governmental bonds. The Compliance Officer shall seek the advice of Bond Counsel as to
whether there is any reasonable possibility of issuing TEBs to refund an issue of taxable governmental j
bonds.
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400716vI MMD RCI10-31 -4-
10. Qualified 501(c)(3)Bonds. If the Issuer issues bonds to finance a facility to be owned by •
the Issuer but which may be used, in whole or in substantial part, by a nongovernmental organization that
is exempt from federal income taxation under code section 501(c)(3) (a "501(c)(3) organization"), the
Issuer may elect to issue the bonds as "qualified 501(c)(3) bonds" the interest on which is exempt from
federal income taxation. Although such qualified 501(c)(3) bonds are not governmental bonds, the
Compliance Officer may treat such bonds as if they were TEBs and will comply with the requirements of
this policy regarding such bonds. Alternatively, in cases where compliance activities are reasonably
within the control of the relevant 501(c)(3) organization, the finance director may determine that all or
some portion of compliance responsibilities described in this policy will be assigned to the relevant
organization.
11. Conduit Bonds. The Issuer may also issue tax-exempt bonds, the proceeds of which are
loaned to certain private entities(the`Borrower"),including qualified 501(c)(3)organizations(referred to
as "conduit bonds"). The Issuer will require, as part of approval of any conduit bonds, that the Borrower
assumes the duties of post-issuance compliance described in this policy, including provisions for
reporting to the Issuer.
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• CERTIFICATION
DEPUTY
1,the undersigned City Clerk of the City of Rochester,Minnesota,do hereby certify the
following:
The foregoing is true and correct and a copy of the Resolution is on file and of record in the
offices of the City,which Resolution relates to approving Post-Issuance Compliance Procedure and
Policy for Tax-Exempt Governmental Bonds and said Resolution was duly adopted by the Rochester
Common Council at a regular or special meeting of the Council held on the date therein indicated. Said
meeting was duly called and regularly held and was open to the public and was held at the place at which
meetings of the Council are regularly held,a quorum of the Council being present and acting throughout.
Councilmember_ SY%L&A&y— moved the adoption of the Resolution,which motion was
seconded by Councilmember E}-'V( - . A vote being taken on the motion,the
following members of the Council voted in favor of the Resolution:
syny erl S� Ve_(�' ��'usXa, MeaAs ,5` Zk, U�c�e�.k. , C�Y1SOYl
and the following voted against the same: ,,�O Yl 'e
Whereupon said Resolution was declared duly passed and adopted. The Resolution is in full force and
effect and no action has been taken by the Council which would in any way alter or amend the
Resolution.
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WITNESS MY HAND officially as the City Clerk of the City of Rochester,Minnesota,this 14-) day
of May,2012.
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City Clerk DEPUj
City of Rochester,Minnesota j
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400714v1 MMD RC110-31