Post-Issuance Compliance Policy for Tax-Exempt Obligations

Code No.: 802.6
POST-ISSUANCE COMPLIANCE POLICY FOR TAX-EXEMPT OBLIGATIONS
Purpose: To provide post-issuance compliance for tax-exempt obligations
Policy:
1. Compliance Coordinator: Business Manager
a. The Business Manager (“Coordinator”) shall be responsible for monitoring post-issuance compliance.
b. The Coordinator will maintain a copy of the transcript of proceedings in connection with the issuance of any
tax-exempt obligations. Coordinator will obtain such records as are necessary to meet the requirements of
this policy.
c. The Coordinator shall consult with bond counsel, a rebate consultant, financial advisor, IRS publications
and such other resources as are necessary to understand and meet the requirements of this policy.
d. Training and education of Coordinator will be sought and implemented upon the occurrence of new
developments and upon the hiring of new personnel to implement this policy.
2. Financing Transcripts. The Coordinator shall confirm the proper filing of an 8038 Series return, and maintain a
transcript of proceedings for all tax-exempt obligations issued by the Anamosa Community School District, including but
not limited to all tax-exempt bonds, notes and lease-purchase contracts. Each transcript shall be maintained until eleven
(11) years after the tax-exempt obligation it documents has been retired. Said transcript shall include, at a minimum:
a. Form 8038s;
b. minutes, resolutions, and certificates;
c. certifications of issue price from the underwriter;
d. formal elections required by the IRS;
e. trustee statements;
f. records of refunded bonds, if applicable;
g. correspondence relating to bond financings; and
h. reports of any IRS examinations for bond financings.
3. Proper Use of Proceeds. The Coordinator shall review the resolution authorizing issuance for each tax-exempt
obligation issued by the Anamosa Community School District, and that the School District shall:
a. obtain a computation of the yield on such issue from the School District’s
financial advisor;
b. create a separate Project Fund (with as many sub-funds as shall be necessary to allocate proceeds among the
projects being funded by the issue) into which the proceeds of issue shall be deposited;
c. review all requisitions, draw schedules, draw requests, invoices and bills requesting payment from the
Project Fund;
d. determine whether payment from the Project Fund is appropriate, and if so, make payment from the Project
Fund (and appropriate sub-fund if applicable);
e. maintain records of the payment requests and corresponding records showing payment;
f. maintain records showing the earnings on, and investment of, the Project Fund;
g. ensure that all investments acquired with proceeds are purchased at fair market value;
h. identify bond proceeds or applicable debt service allocations that must be invested with a yield-restriction
and 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;
i. maintain records related to any investment contracts, credit enhancement transactions, and the bidding of
financial products related to the proceeds;
4. Timely Expenditure and Arbitrage/Rebate Compliance. The Coordinator shall review the Tax-Exemption Certificate
(or equivalent) for each tax-exempt obligation issued by the School District and the expenditure records provided in
Section 2 of this policy, above, and shall:
a. monitor and ensure that proceeds of each such issue are spent within the temporary period set forth in
such certificate;
b. if the School District does not meet the “small issuer” exception for said obligation, monitor and ensure
that the proceeds are spent in accordance with one or more of the applicable exceptions to rebate as set
forth in such certificate;
c. not less than 60 days prior to a required expenditure date confer with bond counsel and a rebate
consultant if the School District will fail to meet the applicable temporary period or rebate exception
expenditure requirements of the Tax-Exemption Certificate; and
d. in the event the School District fails to meet a temporary period or rebate exception:
i. procure a timely computation of any rebate liability and, if rebate is due, file a Form 8038-T
and arrange for payment of such rebate liability;
ii. ii. arrange for timely computation and payment of “yield reduction payments” (as such term is
defined in the Code and Treasury Regulations), if applicable.
5. Proper Use of Bond Financed Assets. The Coordinator shall:
a. maintain appropriate records and a list of all bond financed assets. Such records shall include the actual
amount of proceeds (including investment earnings) spent on each of the bond financed assets;
b. with respect to each bond financed asset, the Coordinator will monitor and confer with bond counsel
with respect to all proposed:
i. management contracts,
ii. service agreements,
iii. research contracts,
iv. naming rights contracts,
v. leases or sub-leases,
vi. joint venture, limited liability or partnership arrangements,
vii. sale of property; or
viii. any other change in use of such asset;
c. maintain a copy of the proposed agreement, contract, lease or arrangement, together with the response
by bond counsel with respect to said proposal for at least three (3) years after retirement of all taxexempt
obligations issued to fund all or any portion of bond financed assets; and
d. In the event the School District takes an action with respect to a bond financed asset, which causes the
private business tests or private loan financing test to be met, the Coordinator shall contact bond counsel
and ensure timely remedial action under IRS Regulation Sections 1.141-12.
6. General Project Records. For each project financed with tax-exempt obligations, the Coordinator shall maintain, until
three (3) years after retirement of the tax-exempt obligations or obligations issued to refund those obligations, the
following:
a. appraisals, demand surveys or feasibility studies,
b. applications, approvals and other documentation of grants,
c. depreciation schedules,
d. contracts respecting the project.
7. Advance Refundings. The Coordinator shall be responsible for the following current, post issuance and record
retention procedures with respect to advance refunding bonds:
a. Identify and select bonds to be advance refunded with advice from internal financial personnel, and a
financial advisor;
b. The Coordinator shall identify, with advice from the financial advisor and bond counsel, any possible
federal tax compliance issues prior to structuring any advance refunding;
c. The Coordinator shall review the structure with the input of the financial advisor and bond counsel, of
advance refunding issues prior to the issuance to ensure (i) that the proposed refunding is permitted
pursuant to applicable federal tax requirements if there has been a prior refunding of the original bond
issue; (ii) that the proposed issuance complies with federal income tax requirements which might
impose restrictions on the redemption date of the refunded bonds; (iii) that the proposed issuance
complies with federal income tax requirements which allow for the proceeds and replacement proceeds
of an issue to be invested temporarily in higher yielding investments without causing the advance
refunding bonds to become “arbitrage bonds”; and (iv) that the proposed issuance will not result in the
issuer’s exploitation of the difference between tax exempt and taxable interest rates to obtain an
financial advantage nor overburden the tax exempt market in a way that might be considered an abusive
transaction for federal tax purposes.
d. The Coordinator shall collect and review data related to arbitrage yield restriction and rebate
requirements for advance refunding bonds. To ensure such compliance, the Coordinator shall engage a
rebate consultant to prepare a verification report in connection with the advance refunding issuance.
Said report shall ensure said requirements are satisfied.
e. The Coordinator shall, whenever possible, purchase SLGS to size each advance refunding escrow. The
financial advisor shall be included in the process of subscribing SLGS. To the extent SLGS are not
available for purchase, the Coordinator shall, in consultation with bond counsel and the financial
advisor, comply with IRS regulations.
f. To the extent as issuer elects to the purchase of a guaranteed investment contract, the Coordinator shall
ensure, after input from bond counsel, compliance with any bidding requirements set forth by the IRS
regulations.
g. In determining the issue price for any advance refunding issuance, the Coordinator shall obtain and
retain issue price certification by the purchasing underwriter at closing.
h. After the issuance of an advance refunding issue, the Coordinator shall ensure timely identification of
violations of any federal tax requirements and engage bond counsel in attempt to remediate same in
accordance with IRS regulations.
8. Continuing Disclosure. The Coordinator shall assure compliance with each continuing disclosure certificate and
annually, per continuing disclosure agreements, file audited annual financial statements and other information required
by each continuing disclosure agreement. The Coordinator will monitor material events as described in each continuing
disclosure agreement and assure compliance with material event disclosure. Events to be reported shall be reported
promptly, but in no event not later than ten (10) Business Days after the day of the occurrence of the event. Currently,
such notice shall be given in the event of:
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 relating to the bonds 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 5701-TEB) or other material notices or
determinations with respect to the tax-exempt status of the bonds, or material events affecting the taxexempt
status of the bonds;
g. Modifications to rights of Holders of the Bonds, if material;
h. Bond calls (excluding sinking fund mandatory redemptions), if material, and tender offers;
i. Defeasances of the bonds;
j. Release, substitution, or sale of property securing repayment of the bonds, if material;
k. Rating changes on the bonds;
l. Bankruptcy, insolvency, receivership or similar event of the Issuer;
m. The consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or
substantially all of the assets of the Issuer, other than in the ordinary course of business, the entry into 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; and
n. Appointment of a successor or additional trustee or the change of name of a trustee, if material.
Approved 2/6/12
Revised 4/18/16