5.4.
CC Regular Session
- Meeting Date:
- 11/10/2020
- By:
- Diana Lund, Finance
Information
Title
Amend Policy: Post-Issuance Compliance Policies and Procedures
Purpose/Background:
The city adopted its Post-Issuance Compliance Policy on April 24, 2012.
The following is a description from our Bond Counsel in regard to why the city needs to adopt a policy in regard to Post-Issuance Bond Compliance:
The following is a description from our Bond Counsel in regard to why the city needs to adopt a policy in regard to Post-Issuance Bond Compliance:
| Following issuance by the City of Ramsey, Minnesota (the “City”) of tax-exempt governmental bonds, the City must continue to take certain actions with respect to the bonds in order that they retain their tax-exempt status. In particular, the City must be sure that the project financed with the bonds continues to be used for public purposes and that the proceeds of the bonds are applied in a manner that complies with the arbitrage rules on the Internal Revenue Code of 1986, as amended (the “Code”), and its related regulations. Over the last couple of years, the IRS has increased its scrutiny of tax-exempt bonds and has strongly expressed an expectation that issuers of tax-exempt bonds have written procedures in place to ensure compliance with these rules. Most recently, in September, 2011, the IRS released a new Form 8038-G, which is the form that issuers file upon the issuance of each tax-exempt bond issue. The new version of the form specifically asks the issuer to check a box that it has established written procedures “to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations.” There is a second box asking if the issuer has written procedures “to monitor the requirements of Section 148,” which is the Code section governing arbitrage. There is no statutory or rule requirement that the City have such written procedures. By including these questions on Form 8038-G (the same questions also appear on Form 8038), however, the IRS is strongly emphasizing its view of the importance of having such procedures in place. Informally, the IRS has also indicated that having such procedures in place may result in a lower penalty in the event of any audit or voluntary compliance agreement related to an issuer’s bonds. Therefore, we strongly recommend that the City adopt the proposed Post-Issuance Compliance Policies and Procedures. The proposed Policies and Procedures have been drafted to cover the concerns and expectations that have been expressed by the IRS. Yet, at the same time, we recognize that the City, along with its bond counsel and financial advisor, are already doing many of the tasks set forth in the document. It simply demonstrates that the City is, in fact, taking the appropriate actions to ensure that its bonds remain tax-exempt. Since this policy was adopted in 2012, numerous industry experts have suggested updating policy and procedure documents to ensure issuers are ready to comply with their continuing disclosure obligations. Paragraph 9 of the city's policy has been added to document continuing disclosure obligations. It has been recommended by the city's financial consultant that the city revise its current policy to reflect this addition prior to the sale of the CIP bonds for the Public Works Campus in December. |
Funding Source:
Not applicable.
Recommendation:
Per recommendation of financial consultant, to adopt amended policy on Post-Issuance Compliance Policies and Procedures to include Continuing Disclosure Obligations.
Action:
Adopt amended Policy Entitled Governmental Bonds Post-Issuance Compliance Policies and Procedures.
Attachments
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Kurt Ulrich | Kurt Ulrich | 11/05/2020 02:36 PM |
- Form Started By:
- Diana Lund
- Started On:
- 11/02/2020 12:09 PM
- Final Approval Date:
- 11/05/2020