Resolution 1265NOW01ROV01930M I
• RESOLUTION OF THE CITY COUNCIL • THE CITY OF
EDMONDS, WASHINGTON, ADOPTING A POLICY FOR
POST -ISSUANCE COMPLIANCE AND PROCEDURES FOR
BOND ISSUE&
September 2011 indicating issuers of tax-exempt bonds should have written post -issuance
policies and procedures in place to insure compliance with various requirements of Internal
WHEREAS, such policies must provide for a due diligence review at regulda
intervals, identification of the responsible individual to perform such review, training of the
responsible individual, retention of records related to the bond issuance, procedures for
identification of noncompliance in a timely basis, and procedures for taking appropriate steps if
noncompliance occurs; and
WHEREAS, the City currently has outstanding • tax-exempt, •
Section 1. The Post Issuance Compliance and Procedures for Bond Issues policy
is hereby adopted to be effective on December 6, 2011 and to continue in full force and effect
until amended. A copy of such Post Issuance Compliance and Procedures for Bond Issues policy
- 1 -
AirP ED
MAYOR, DAVID 0. EARLING
CITY CLERK, SANDRA S, CHASE
FILED WITH THE CITY CLERK: 114)1�20 i I
PASSED BY THE CITY COUNCIL.- 12-0&2011
RESOLUTION NO. 1265
Attachment A
CITY OF EDMONDS
Post -Issuance Compliance Policies
and Procedures for Bond Issues
Subject: Post Issuance Compliance and
Procedures for Bond Issues
Originating Department: Finance Division
I
1. Introduction and Purpose.
The purpose of this Policy is to ensure that the City of Edmonds (City) will be in compliance with the
following requirements of federal securities laws and federal tax laws that apply when the City issues
certain bonds:
2.1 Basic Responsibilily. In the Bond Ordinance (or other bond documents , e ity as agree to
provide ongoing disclosure regarding certain financial information and certain "material events"
to the securities markets. This is referred to as "Continuing Disclosure". The City's responsibility
to provide ongoing continuing disclosure to municipal securities markets is set forth in the bond
ordinance or in a separate continuing disclosure agreement for each publicly sold issue of bonds.
2.2 "Obligated Person" with respect to PFD BondsThe City is also an obligated person with respect
to certain outstanding bonds issued by the Edmonds Public Facilities District and guaranteed by
the City. The Finance Director will review this Continuing Disclosure Agreement and comply
with it in connection with its periodic filings relating to the City's outstanding bonds.
2.3 Responsible Official. The Finance Director shall maintain a file that includes a copy of each
Continuing Disclosure Undertaking entered into by the City and shall ensure that the information
required to be disclosed is disclosed in a timely fashion and that any failure to make disclosure is
remedied in a timely fashion.
3. Federal Tax Law.
3.1 Basic Responsibility. In the Bond Ordinance (or other bond documents), the City has agreed to
ensure that certain provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
will be satisfied, so that interest on the bonds will be and remain tax-exempt (or in some cas
eligible for a federal subsidy or tax credit). i
3.2 Basic Rules SummM' (This is a very brief summary, Review the bond transcript and consult
with Bond Counsel any time there are questions.)
(1) Eligibilityfor Small -Issuer Exemption. The City may have been eligible for the small
issuer exemption from arbitrage rebate compliance for some of its outstanding bond'
For each such bond issue, the City will maintain records sufficient to demonstrat
eligibility for this exemption.
(2) Construction Fund Spendingfor Arbitrage Rebate Exception. The Tax Exemption an,
Non -Arbitrage Certificate for each bond issue details the specific spending schedule thE
the City expected at the time of issuance to meet for each bond issue, and this documer
should •• retained in the r•• transcript. For•• • issue, that document should •referred to by the Finance Director and project manager(s) in determining complianc
with expenditure timelines. If it appears that the City is not meeting the spendin
exception described in that document, bond counsel should be consulted about what othc
exceptions ►` available.
retain(3) Refunding or Defeasance Escrows. For any refundings or defeasances, the City sha'
• . : • and records showing that investments held in yield -restricted . • . : •..
refunding or defeasance escrows for bonds, and investments made with unspent bon
proceeds after the expiration of the applicable temporary period, were not invested i
investments with a yield higher than the yield on the bonds.
(4) Arbitrage Rebate Calculations. On or before every fifth anniversary of each bond issu
that is subject to arbitrage rebate, the Finance Director shall calculate (or engage
consultant to calculate) the rebate amount (if any) due to the United States of AmericE
and shall ensure that a Form 8038-T (including any required payment to the IRS) I
timely filed and paid. (No filing need be made if no rebate is owed.) Bond counsel ca
provide referrals to arbitrage consultants if such assistance is needed.
(c) Restrictions on Private Business Use and Private Loans.
(1) Private Business Use Test. No more than 10% of the proceeds of any tax-exempt bon 0
issue (including the property `• with the ►• • ►` used for private busines
generally,use, of which no more than 5% of the proceeds of the tax-exempt bond issue (includin "I"
the property financed with the bonds) may be used for any "unrelated" private busines
use —that is, private business use that is not• • to th
"Private
"naming rights" contract, "public -private partnership" arrangement, or any
similar use arrangement that provides special legal entitlements for the use of the
bond -financed property;
"Functionally related" means used for the same function. For example, in a city
office building, of •lus space foroffices is related to the •
Privatefunction of the building, but rental of surplus space for a retail store is not�
rrn Financing Test. No more than the lesser of 111 111 or of
proceeds of r •• • issue may be used to make or •, to any person
other than a state or • government
training(a) Ongoing Education Policy. The Finance Director shall arranRe for education and ongoing
at least once every 3 years foror - for designated membersof or
staff, and for the heads of departments and key operational personnel who are responsible for
managing or overseeing any bond -financed facilities, land or cquipment� This may include
attendance at appropriate training programs offered by, among others, the City's bond
counsel, the Washington Municipal Treasurers Association (WMTA), the Washington
Finance Officers •c • and similar organizations.
retains final responsibility for• • • /•st-issuance compliance with federal
requirements for the City's tax -advantaged bonds, the City Council assigns to the Finance
Director of the City the primary operating responsibility for such monitoring. At least one
time per year, typically immediately prior to an annual principal payment date, the Finance
Director shall review the use of bond -financed property and check for compliance with the
applicable federal tax requirements and shall immediately consult with bond counsel if
instances of noncompliance are discovered.
Special r for Bond -Financed Property. Before • or
department) enters into a special use arrangement with a nongovernmental person that
involves bond -financed property, the City (or agency or department) must consu t wi t e
Finance Director, provide the Finance Director with a description of the proposed
nongovernmental use arrangement,and determine whether that use arrangement, if put into
effect, will be consistentthe restrictions on private business use of bond -financed
property.
r') Finance Director r Consult with Bond Counsel. When evaluating any such proposal,
Finance Director should consult with bond counsel as necessary regarding
the bond -financed property.
arrangement, if put into effect, will be consistent with restrictions on private business use of
. Record Retention.
4.1 Retention Policy, Written records with respect to each City bond issue (which may be in
electronic form) will be maintained for as Iona as those bonds remain outstanding, plus three
years. In the case of refunding bonds, the written records relating to the original (refunded) bonds
will be kept, along with those of the refunding bonds, until the refunding bonds are no longer
outstanding, • plus three years,
4.2 Records to be Maine& The City will maintain the following records-
(b) Investment of Bond Proceeds. Records showing how the bond proceeds were investe
including records of all purchases and sales of investments made with bond proceeds
recordsof s •:.... receipts on those
(c) Expenditures of Bond Proceeds, Records of all expenditures of bond proceeds (includin
investment earnings). • i include copiesbe electronic) of
requests,documentation, including property purchase and construction contracts, progress payme
• cancelled checks, payment of •• • issuance costs,and records •.
"allocations" of bond proceeds to make reimbursement for project expenditures made befoi -
the bonds e
(d) Records of Use of Bond Financed Facilities. Records of all special use arrangements wi
nongovernmental persons, if any, affecting bond -financed property. These records shou
include copies of the pertinent leases, contracts or other documentation, and the relat
deten-nination that those nongovernmental uses are not inconsistent with the tax-exem
status of the bonds that financed the propertyi
Exemption(s) for bond qualified.
Adoption • by • Resolution N•. 12,65 Af•f.. • •.'1 0:
In