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

Cedar Springs Public School District

Administrative Guidelines

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

These administrative guidelines are organized with reference to the applicable lettered paragraphs 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.

These administrative guidelines may be modified, expanded, abridged, or otherwise amended by the Superintendent only after consultation with Bond Counsel (but without any notice to or consent from any trustee, bondholder or any other person), in order to: (a) ensure efficiency of administration; (b) establish and maintain appropriate assignments of staff responsibility; (c) reflect changes in the District's system of accounting, financial controls, procurement practices, or other internal procedures and practices; (d) respond to changes in law or interpretation that may, from time to time, be reported to the District by Bond Counsel; or (e) otherwise ensure compliance with the policy in the most efficient and effective manner.

Defined terms not otherwise defined herein shall have the meaning given to them in Policy 6146.

A.	Investment and Expenditure of Proceeds

	1.	The Finance Director 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 Accountant will enter purchase orders and the Finance Director will pay and capture such purchase orders in the general ledger by the specific account code.

		3.	The Accountant will electronically scan, file and retain all purchase orders, invoices, checks, wire transfers and any other records with respect to Financed Facilities.

		4.	Until final allocation of bond proceeds, on a monthly basis, at a minimum, the Finance Director will analyze each project for expenditures and will summarize such expenditures on a spreadsheet showing the year-to-date expenditures for that project and will identify facilities or equipment financed or refinanced by Obligations ("Financed Facilities"). A copy of the District's transaction activity report and/or summary report by account code generated from the general ledger will be used to back up this spreadsheet and filed with that spreadsheet.

		5.	The Finance Director 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.

		6.	The Finance Director 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.


B.	Financed Facilities

	1.	The Accountant will provide adequate advance notice to the Finance Director of contracts or agreements relating to management services, other services or other special legal entitlements that relate to the District's real or personal property (collectively, "Use Arrangements") or any contract or agreement for the sale, lease, sublease or other disposition of Financed Facilities.

	2.	The Finance Director will meet at least annually and coordinate with the Superintendent to review and evaluate Use Arrangements.

	3.	If any Use Arrangement involves more than one (1%) percent of Financed Facilities and a term of 200 days or less, the Superintendent must review and provide approval for the Use Arrangement before any contract or agreement is executed.

	4.	If any Use Arrangement involves more than one (1%) percent of Financed Facilities and a term of more than 200 days, the Superintendent and Bond Counsel must review and provide approval for the Use Arrangement before any contract or agreement is executed.

	5.	Any contract or agreement for the sale, lease, sublease or other disposition of Financed Facilities must be reviewed and approved by the Superintendent and Bond Counsel before any such contract or agreement is executed.


C.	Periodic Review

	1.	Promptly after the adoption of Policy 6146, the Finance Director will cause an evaluation of tax compliance to be undertaken for outstanding Obligations (the "Initial Evaluation"). Upon the completion of the Initial Evaluation, the Finance Director will prepare a report to the Superintendent 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, lease, sublease or other disposition 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 Finance Director 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 Superintendent a report (the "Annual Report") of the findings of the Annual Evaluation and an updated spreadsheet as provided in the Initial Evaluation.

	3.	The Finance Director will monitor compliance with the six (6) month, eighteen (18) month and two (2) year spending exceptions to rebate requirements under the Code and Treasury Regulations. If necessary, Finance Director will consult with the Rebate Analyst as identified below.


	4.	The Finance Director will monitor compliance with "temporary period" expectations for expenditures of proceeds of Obligations, typically three (3) years for new money Obligations, and provide for yield restriction of investment or "yield reduction payments" if expectations are not satisfied. If necessary, the Finance Director will consult with Bond Counsel.

	5.	Not later than eighteen (18) months after completion of any Financed Facilities, the Finance Director will make and retain a final allocation of the expenditure of proceeds of Obligations and other amounts used to finance such improvements. Such allocation may be conducted in connection with the preparation of the District's audited financial statements for the fiscal year in which the final expenditure was made. This may be accomplished through a project completion review certificate.

D.	Potential Noncompliance

	1.	If the Initial Evaluation or any Annual Evaluation discloses potential non-compliance with the tax requirements applicable to outstanding Obligations, the Superintendent 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 Superintendent 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.


E.	Retention of Professionals; Rebate Analyst

	1.	The Superintendent 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, including the engagement of Bond Counsel.

	2.	If the District determines that any of 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 Superintendent 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 Superintendent 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.

F.	Purchase of Investments

	1.	All investments of the proceeds of Obligations will be made by the District at the direction of the Finance Director, who will ensure that such proceeds are invested in compliance with the Code and Treasury Regulations and that all such investments are made at fair market value.


	2.	The Finance Director will consult with Bond Counsel prior to investing any proceeds of Obligations in guaranteed investment contracts or certificates of deposit not publicly traded on any investment exchange so it will comply with the requirements of the Code and Treasury Regulations relating to yield restriction or yield reduction payments.

G.	Credit Enhancement Transactions

	Prior to bidding for, purchasing, entering into, or otherwise engaging in any post-issuance credit enhancement 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 Superintendent will consult with Bond Counsel.

H.	Subsidy Payments

	1.	See the implementing administrative guidelines in A - Investment and Expenditure of Proceeds above.

	2.	The Finance Director will timely file any required return or other documentation relating to Federal subsidy payments in respect of any direct-pay tax credit bonds.

I.	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 Superintendent will consult with Bond Counsel.


J.	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 three (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:

		a.	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.


			b.	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.

			c.	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.

			d.	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.


		e.	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.

		f.	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 Finance Director will be custodian of the foregoing records.

K.	Continuing Disclosure

	1.	Promptly after the adoption of Policy 6146, the Finance Director will prepare a report and provide such report to the Superintendent 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 Finance Director will annually prepare a report and provide such report to the Superintendent 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:

	a.	The District will file:

		1)	audited financial statements for the most recently ended fiscal year prepared pursuant to State laws, administrative rules and guidelines and pursuant to accounting and reporting policies conforming in all material respects to generally accepted accounting principles as applicable to governmental units as such principles are prescribed, in part, by the Financial Accounting Standards Board and modified by the Government Accounting Standards Board and in effect from time to time; and

		2)	additional annual financial information and operating data as set forth in the applicable Undertaking.

	b.	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.

	c.	The Finance Director will file all annual operating and financial information as required by the specific Undertaking by December 27th of each year, unless a different deadline is specified in the Undertaking (the District will be mindful of non-business days and file before the applicable deadline).


	d.	The Finance Director will file notices of the following material events within ten (10) days of the occurrence and as otherwise required by the specific Undertaking: Principal and interest payment delinquencies; non-payment related defaults (if material); 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 (if material); bond calls (if material); tender offers; defeasances; release, substitution, or sale of property securing repayment of the securities (if material); 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 (if material); appointment of a successor or additional trustee (if material), or the change of name of a trustee; failure to provide annual financial information as required; and other material events as determined by the Finance Director after consulting with Bond Counsel.

4.	If the District has failed to make proper filings with respect to any Undertaking, the Superintendent will consult with Bond Counsel.


		5.	If the District enters into a contract with a third party to assist the District in complying with its continuing disclosure obligations, the Finance Director will (a) review the contract on an annual basis, (b) provide required information and perform all District obligations on a timely basis and (c) confirm all filings by the third party are made by the applicable deadline.

Summary of Responsibilities

Superintendent

	A.	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.

	B.	Meet at least annually with the Finance Director to evaluate use of Financed Facilities. (Paragraph B).

	C.	Monitor Use Arrangements and the sale, lease, sublease or other disposition of Financed Facilities and consult with Bond Counsel, as necessary, prior to entering into contracts or agreements. (Paragraph B)

	D.	Review the Initial Report and Annual Reports. (Paragraph C)

	E.	Report potential non-compliance to the District's attorney and Bond Counsel and consult with same. (Paragraph D)

	F.	Engage professionals as deemed necessary to ensure compliance. (Paragraph E)

	G.	Retain and manage relationship with Rebate Analyst and ensure filing of returns relating to rebate. (Paragraph E)

	H.	Consult with Bond Counsel before entering into credit enhancement transactions with respect to Obligations (Paragraph G)


	I.	Consult with Bond Counsel prior to any modification of the terms of any Obligation. (Paragraph I)

	J.	Review the Initial Undertaking Report and Annual Undertaking Reports. (Paragraph K)

Finance Director

	A.	Monitor, record, and allocate expenditure of bond proceeds by project location and functional description. (Paragraph A)

	B.	Until final allocation of bond proceeds, prepare a monthly report of project expenditures. (Paragraph A)

	C.	Prepare and retain separate records for investment performance of bond proceeds. (Paragraph A)

	D.	Make and record final allocations of expenditures of proceeds of Obligations. (Paragraph A)

	E.	Meet at least annually with the Superintendent to evaluate use of Financed Facilities. (Paragraph B)

	F.	Ensure preparation of and review Initial Report and Annual Reports. (Paragraph C)

	G.	Monitor compliance with spending exceptions to rebate. (Paragraph C)

	H.	Monitor compliance with "temporary period" expectations for expenditures of proceeds of Obligations. (Paragraph C).

	I.	Make and retain a final allocation of the expenditure of proceeds of Obligations. (Paragraph C)

	J.	Consult with Bond Counsel before purchasing guaranteed investment contracts or non-publicly traded certificates of deposit with proceeds of Obligations. (Paragraph F)


	K.	Timely file any required return or other documentation required for Federal subsidy payments. (Paragraph H)

	L.	Ensure compliance with record retention policies and act as custodian of retained records. (Paragraph J)

	M.	Ensure preparation of and review Initial Undertaking Report and Annual Undertaking Reports. (Paragraph K)

	N.	File annual operating and financial information and material event notices. (Paragraph K)

Accountant

	A.	Coordinate with the Finance Director on purchase orders and expenditures with respect to Financed Facilities. (Paragraph A)

	B.	Scan and file all purchase orders, invoices, checks, wire transfers and any other records with respect to Financed Facilities. (Paragraph A)

	C.	Provide advance notice to the Finance Director of any Use Arrangements that relate to Financed Facilities or sale, lease, sublease or other disposition of Financed Facilities. (Paragraph B).