7.3. SR 11-02-2020 - Laserfiche WebLink

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savings resulting from the issuance of taxablerefunding bonds are possible because current taxable interest rates are estimated to be lower than the tax-exempt rates at the time of issuance of the 2014BBonds. Post Issuance Compliance POST ISSUANCEThe issuance of the Bonds will result in post-issuance compliance responsibilities. The responsibilities arein two primary areas: (i)compliance with federal arbitrage COMPLIANCE: requirements and (ii)compliance with secondary disclosure requirements. Note: The 2020C Bonds are beingissued as taxable obligations of the City, the proceeds of which, are not subject to federal arbitrage requirements. Federal arbitrage requirementsinclude a wide range of implications that have been taken into account as thisissue has been structured. Post-issuance compliance responsibilities for thistax-exempt issue include both rebate and yield restriction provisions of the IRS Code. In 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 for spend-down exceptions for proceeds that are spent within either a 6-month, 18-month or, for certain construction issues, a 24-month period each 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 24-month spending exception for the 2020A Bonds. The 2020B Bonds are being issued for the purpose of conducting a current refunding, therefore, the City will meet the 6-month spending exception on the 2020B Bonds. Regardless of whether the issue qualifies for an exemption from the rebate provisions, yield restriction provisions will apply to the 2020A and 2020B Bond proceeds (including interest earnings) unspent after three years and the debt service fund throughout the term of the 2020A Bonds and the 2020B Bonds. These moneys should be monitored until these issuesare retired. Secondary disclosure requirementsresult from an SEC requirement that underwriters provide ongoing disclosure information to investors. To meet this requirement, any prospectiveunderwriter will require the Cityto commit to providing the information needed to comply under a continuing disclosure agreement. Baker Tilly Municipal Advisors, LLC (“Baker Tilly MA”) currently provides both arbitrage and continuing disclosure services to the City. Baker Tilly MA will work with City staff to include the Bonds under the existing Agreement for Municipal Advisor Services. Page 8