POST-ISSUANCE COMPLIANCE FOR TAX-EXEMPT AND TAX-ADVANTAGED OBLIGATIONS | Administrative Guideline Manual

6146 - POST-ISSUANCE COMPLIANCE FOR TAX-EXEMPT AND TAX-ADVANTAGED OBLIGATIONS

FOR RELEASE "UPON REQUEST"

These Administrative Guidelines are organized with reference to the applicable lettered paragraphs in Policy 6146. All capitalized terms used but not defined herein have the meanings assigned in Policy 6146.

Certain of these Administrative Guidelines assign responsibilities to named officials of the District. The named officials may delegate certain assigned responsibilities but will remain responsible for compliance with these Administrative Guidelines. The official with ultimate responsibility for compliance with the Policy and these Administrative Guidelines will be the Superintendent.

Investment and Expenditure of Proceeds
1. The Treasurer will charge capital expenditures that are financed by Obligations to the corresponding capital projects fund. Each project will have a specific fund number used to track that project, and discrete expenditures will be further categorized by project location (by street address or name of facility) and functional description of the financed improvement.
2. The Administrative Assistant of Each Federal program will enter purchase orders and the Treasurers Office Accounts Payable personnel will pay and capture such purchase orders in the general ledger by the specific account code.
3. TheTreasurers Office along with the Federal program administrative assistant will , file and retain all purchase orders, invoices, checks, wire transfers and any other records with respect to facilities or equipment financed or refinanced with the proceeds of Obligations.
4. The Treasurers Office along with the federal program administrative assistant will ensure that the investment of all proceeds of Obligations is tracked by fund or account (e.g., debt service fund, debt service reserve fund, project or construction fund, etc.) and investment yield.
5. The Treasurers Office along with the federal program administrative assistant will avoid formal or informal creation of funds reasonably expected to be used to pay debt service on Obligations without determining in advance whether such funds must be invested at a restricted yield.
Periodic Review
1. Promptly after the adoption of Policy 6146, the coordinator of each Federal progam will cause an evaluation of tax compliance to be undertaken for outstanding Obligations (the "Initial Evaluation"). Upon the completion of the Initial Evaluation, the coordinator of each Federal program will prepare a report to the Treasurer on the results of the Initial Evaluation (the "Initial Report") which will identify outstanding Obligations and the Financed Facilities relating to specific Obligations. The Initial Report will express the findings of the Finance Director whether the Obligations satisfy the requirements of the Policy and these Administrative Guidelines and will contain (A) a spreadsheet setting forth any Use Arrangement with respect to any Financed Facilities or sale, or other disposition, lease or sublease of Financed Facilities and the Obligations to which they relate, and (B) a statement that any arbitrage rebate then due has properly been paid or that an exception or exemption from such payment is available.
2. The Coordinator of each Federal program will cause a follow-up evaluation annually of tax compliance to be undertaken for outstanding Obligations (the "Annual Evaluation") with the same objectives and scope as the Initial Evaluation and will provide to the Treasurer a report (the "Annual Report") of the findings of the Annual Evaluation and an updated spreadsheet as provided in the Initial Evaluation.
Potential Noncompliance
1. If the Initial Evaluation or any Annual Evaluation discloses potential non-compliance with the tax requirements applicable to outstanding Obligations, the Treasurer will promptly consult with the District's attorney and Bond Counsel. Such consultation will consider whether the evaluations were properly performed and whether any amendments to Use Arrangements, sale, lease or sublease agreements, adjustments to allocation methodologies, mixed financing sources, or other accounting techniques may avoid non-compliance.
2. If the District determines after consultation with the District's attorney and Bond Counsel that non-compliance has occurred, the Treasurer will promptly consult Bond Counsel concerning the ability of the District to remedy the non-compliance under the Code and Treasury Regulations or to seek a voluntary closing agreement.
Retention of Professionals; Rebate Analyst
1. The Treasurer will engage such professionals or consultants as are necessary to ensure that the requirements of the Code and Treasury Regulations necessary to preserve the tax advantages of such Obligations are satisfied, including the engagement of Bond Counsel.
2. If the District determines that any of the outstanding Obligations are not exempt from rebate, the District will engage an arbitrage rebate firm as its arbitrage rebate computation agent (the "Rebate Analyst"). The Treasurer will ensure that records of investment and expenditure of the proceeds of Obligations are timely delivered to the Rebate Analyst and that the Rebate Analyst prepares annual computation reports that advise the District of any rebatable arbitrage accrued with respect to any such bonds.
3. The Treasurer will ensure that the Rebate Analyst timely prepares returns relating to payment of arbitrage rebate (currently on IRS Form 8038-T) and that such forms are timely filed with and any rebatable arbitrage are timely paid to the United States as required under Section 148(f)(4) of the Code.
Purchase of Investments
Credit Enhancement Transactions

Prior to bidding for, purchasing, entering into, or otherwise engaging in any post-issuance credit enhancement or hedging transactions relating to the proceeds of or debt service on Obligations (including, without limitation, bond insurance policies, letters of credit, guaranteed investment contracts, interest rate swaps, and market hedges), the Treasurer will consult with Bond Counsel.
Subsidy Payments
Post-Issuance Modifications

Prior to entering into any modification of the terms of any Obligations (including, without limitation, changes in maturity date, interest rate, call provisions, financial or earnings covenants, or use of proceeds), the Treasurer will consult with Bond Counsel.
Records Retention
1. Retention Period - Records material to Obligations will be retained by the District for a period equal to the maturity of such Obligations, plus 3 years. In the event any Obligations are refunded, records of the original Obligations will be retained until the maturity of the refunding Obligations, plus three (3) years.
2. Form of Records - Records may be in hard copy and/or CD or other electronic copy.
3. Records to be Retained - The District will retain records of the following:
  1. Issuance and Sale of the Obligations - The Transcript and, to the extent not included in the Transcript, minutes, resolutions and records relating to elections authorizing the issuance of the Obligations; allocation of proceeds of Obligations to expenditures, reimbursement of pre-issuance expenditures and issuance costs; Federal tax or informational returns (i.e. Form 8038-G); use of funds from other sources for Financed Facilities; certification of the issue price for the Obligations; escrow statements relating to refunding Obligations, the investment and expenditure of the original proceeds of the Obligations; bidding certificates for guaranteed investment contracts; credit enhancement contracts, swap or other derivative contracts; certifications relating to any of the foregoing; any filings or correspondence with the IRS; and any correspondence, letters, faxes relating to the foregoing.
  2. Post-Issuance - Any sources of payment or security for the Obligations; allocation of proceeds of Obligations to expenditures, escrow statements relating to refunding Obligations, use of funds from other sources for Financed Facilities; reimbursement of pre-issuance expenditures and issuance costs; investment earnings including requisitions, trust or investment statements, investment contracts (i.e. guaranteed investment contracts), credit enhancement transactions (i.e. bond insurance), financial derivatives (i.e. swaps, caps, etc.), or bidding of financial products; rebate computations; yield reduction payments; Federal tax or informational returns (i.e. Form 8038-T or 8038-R); certifications relating to any of the foregoing; any filings or correspondence with the IRS; and any correspondence, letters, faxes relating to the foregoing.
  3. Financed Facilities - Listing of Financed Facilities (whether such facilities are land, buildings or equipment); economic life calculations; architectural or construction drawings; contracts or agreements for construction, renovation and improvements of Financed Facilities; use of proceeds arising from the sale or disposition of Financed Facilities after the issuance of Obligations; governmental grants financing or refinancing a portion of Financed Facilities; appraisals; feasibility studies; information regarding depreciation; and any correspondence, letters, faxes relating to the foregoing.
  4. Expenditures of Proceeds - Allocation of proceeds of Obligations to expenditures, reimbursement pre-issuance expenditures and issuance costs; requisitions; draw schedules; draw requests, invoices; bills; cancelled checks; wire transfer remittances; resolutions authorizing reimbursement of pre-issuance expenditures; certifications relating to any of the foregoing; any filings or correspondence with the IRS; and any correspondence, letters, faxes relating to the foregoing.
  5. Use Arrangements - Use Arrangements relating to Financed Facilities and contracts or agreements for the sale, lease or sublease of Financed Facilities, including management contracts, service contracts, naming rights agreements or title retention agreements; and any correspondence, letters, faxes relating to the foregoing.
  6. Miscellaneous - Elections for accounting methods, rebate matters, or application of regulatory provisions; publications, brochures and newspaper articles relating to the Obligations; and reports of any prior IRS examination of the District or Obligations; and any correspondence, letters, faxes relating to the foregoing.
4. Custodian - The Treasurers office and Administrative Assistant of each Federal program will be custodian of the foregoing records.
Continuing Disclosure
1. Promptly after the adoption of Policy 6, the coordinator of each Federal program will prepare a report and provide such report to the Treasurer for Obligations (the "Initial Undertaking Report") which will identify all Obligations, whether there is a related undertaking by the District to comply with the Rule (each, an "Undertaking"), what information is required to be provided, how, where and when such information must be filed and whether the District has made the proper filings to date with respect to each Undertaking.
2. The coordinator of each Federal program will annually prepare a report and provide such report to the Treasurer which provides updated information for the information provided in the Initial Undertaking Report (the "Annual Undertaking Report").
3. If the District has entered into an Undertaking:
  1. All filings will be made by electronically transmitting such filings through the Electronic Municipal Market Access System (EMMA) of the MSRB (http://www.emma.msrb.org), or such other system, internet website or repository prescribed by the MSRB, unless specifically required otherwise in the Undertaking.
  2. The Treasurer in conjunction with the coordinator of each Federal program will file all annual operating and financial information as required by the specific Undertaking.
  3. The the Treasurer in conjunction with the coordinator of each federal program will file notices of the following material events as required by the specific Undertaking: Principal and interest payment delinquencies; non-payment related defaults; unscheduled draws on debt service reserves reflecting financial difficulties; unscheduled draws on credit enhancements reflecting financial difficulties; substitution of credit or liquidity providers, or their failure to perform; 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 status of the security, or other material events affecting the tax status of the security; modifications to rights of securities holders; bond calls; tender offers; defeasances; release, substitution, or sale of property securing repayment of the securities; rating changes; bankruptcy, insolvency, receivership or similar event of an obligated person; the consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, 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; appointment of a successor or additional trustee, or the change of name of a trustee; failure to provide annual financial information as required; and other material events as determined by the Treasurer in conjunction with the coordinator of each Federal program after consulting with Bond Counsel.
4. If the District has failed to make proper filings with respect to any Undertaking, the Treasurer will consult with Bond Counsel.

Summary of Responsibilities

Treasurer

Ensure overall compliance with the Policy and these Administrative Guidelines; monitor responsibility assignments of these Administrative Guidelines; periodically review the Policy and these Administrative Guidelines.
Meet at least annually with the Finance Director to evaluate use of Financed Facilities. (Paragraph B).
Monitor Use Arrangements and the sale or other disposition, lease or sublease of Financed Facilities and consult with Bond Counsel, as necessary, prior to entering into contracts or agreements. (Paragraph B)
Review the Initial Report and Annual Reports. (Paragraph C)
Report potential non-compliance to the District's attorney and Bond Counsel and consult with same. (Paragraph D)
Engage professionals as deemed necessary to ensure compliance. (Paragraph E)
Retain and manage relationship with Rebate Analyst and ensure filing of returns relating to rebate. (Paragraph E)
Consult with Bond Counsel before entering into credit enhancement transactions with respect to Obligations. (Paragraph G)
Consult with Bond Counsel prior to any modification of the terms of any Obligation. (Paragraph I)
Review the Initial Undertaking Report and Annual Undertaking Reports. (Paragraph K)

Coordinator of each Federal program

Monitor, record, and allocate expenditure of bond proceeds by project location and functional description. (Paragraph A)
Until final allocation of bond proceeds, prepare a monthly report of project expenditures. (Paragraph A)
Prepare and retain separate records for investment performance of bond proceeds. (Paragraph A)
Make and record final allocations of expenditures of proceeds of Obligations. (Paragraph A)
Meet at least annually with the Superintendent and Treasurer to evaluate use of Financed Facilities. (Paragraph B)
Ensure preparation of and review Initial Report and Annual Reports. (Paragraph C)
Monitor compliance with spending exceptions to rebate. (Paragraph C)
Monitor compliance with "temporary period" expectations for expenditures of proceeds of Obligations. (Paragraph C).
Make and retain a final allocation of the expenditure of proceeds of Obligations. (Paragraph C)
Consult with Bond Counsel before purchasing guaranteed investment contracts or non-publicly traded certificates of deposit with proceeds of Obligations. (Paragraph F)
Timely file any required return or other documentation required for federal subsidy payments. (Paragraph H)
Ensure compliance with record retention policies and act as custodian of retained records. (Paragraph J)
Ensure preparation of and review Initial Undertaking Report and Annual Undertaking Reports. (Paragraph K)
File annual operating and financial information and material event notices. (Paragraph K)

Coordinator of each Federal program

Coordinate with theTreasurer on purchase orders and expenditures with respect to Financed Facilities. (Paragraph A)
Scan and file all purchase orders, invoices, checks, wire transfers and any other records with respect to Financed Facilities. (Paragraph A)
Provide advance notice to the Treasurer of any Use Arrangements that relate to Financed Facilities or sale, lease, sublease or other disposition of Financed Facilities. (Paragraph B).