03-23-2015 Council Packet - Laserfiche WebLink

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POST ISSUANCE The issuance of the Bonds will result in post -issuance compliance responsibilities. The responsibilities COMPLIANCE: are in two primary areas: i) compliance with federal arbitrage requirements and ii) compliance with secondary disclosure requirements. Federal arbitrage requirements include a wide range of implications that have been taken into account as your issue has been structured. Post -issuance compliance responsibilities for your tax-exempt issue include both rebate and yield restriction provisions of the IRS Code. In very general terms the arbitrage requirements control the earnings on unexpended bond proceeds, including investment earnings, moneys held for debt service payments (which are considered to be proceeds under the IRS regulations), and/or reserves. Under certain circumstances any "excess earnings" will need to be paid to the IRS to maintain the tax-exempt status of the Bonds. Any interest earnings on gross bond proceeds or debt service funds should not be spent until it has been determined based on actual facts that they are not "excess earnings" as defined by the IRS Code. The arbitrage rules provide spend -down exceptions for proceeds that are spent within either a 6 -month, 18 -month or 24 -month period in accordance with certain spending criteria. Proceeds that qualify for an exception will be exempt from rebate. These exceptions are based on actual expenditures and not based on reasonable expectations, and expenditures, including any investment proceeds will have to meet the spending criteria to qualify for the exclusion. The City expects to meet the 18 -month spending exception. Regardless of whether an issue qualifies for an exemption from the rebate provisions, yield restriction provisions will apply to the debt service fund under certain conditions and any unspent bond proceeds remaining after three years. These funds should be monitored throughout the life of the Bonds. Secondary disclosure requirements result from an SEC requirement that underwriters provide ongoing disclosure information to investors. To meet this requirement, any prospective underwriter will require the City to commit to providing the information needed to comply under a continuing disclosure agreement. Springsted has entered into an Agreement for Municipal Advisor Services with the City under which Springsted provides arbitrage and continuing disclosure compliance services. PURPOSE: Proceeds of the Bonds will be used to finance the following: Abatement Bonds — improvements to County Road No. 2 and related sanitary and water main improvements. These improvements are related to the construction of the City's new fire hall. The total projected cost of the abatement projects is $830,900 of which the City is contributing cash of $355,980 from Trunk Highway funds. Street Reconstruction Bonds — various street reconstruction projects and related upgrades of the existing storm water management system designated as the Shenandoah Area Improvements as described in the City's Five -Year Street Reconstruction Plan (2015-2019). Springsted Page 2