4.8 SR 10-21-2024 - Laserfiche WebLink

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Financial Management Policies Page 15 Background The Internal Revenue Service (IRS) is responsible for enforcing compliance with the Internal Revenue Code (the “Code”) and related regulations governing certain obligations (for example: tax- exempt obligations, Build America Bonds, Recovery Zone Development Bonds and various “Tax Credit” Bonds). The IRS expects issuers and beneficiaries of these obligations to adopt and implement a post-issuance debt compliance policy and procedures to safeguard against post- issuance violations. Post-Issuance Debt Compliance Policy Objective The city desires to monitor these obligations to ensure compliance with the IRS Code and related regulations governing such obligations. To help ensure compliance, the city has developed a “Post- Issuance Debt Compliance Policy.” This policy shall apply to the obligations mentioned above, including bonds, notes, loans, lease purchase contracts, lines of credit, commercial paper or any other form of debt that is subject to compliance. The finance manager is designated as the city’s agent responsible for post-issuance compliance of these obligations. However, to the extent obligations are issued for municipal utility purposes, the ERMU finance manager assumes the duties of post-issuance debt compliance as described in this policy. The finance manager shall assemble all relevant documentation, records and activities required to ensure post-issuance debt compliance as further detailed in corresponding procedures. At a minimum, the Post-Issuance Debt Compliance Procedures for each qualifying obligation will address the following: 1. General post-issuance compliance; 2. Proper and timely use of bond proceeds and bond-financed property; 3. Arbitrage yield restriction and rebate; 4. Timely filings and other general requirements; 5. Additional undertakings or activities that support points 1 through 4 above; 6. Other requirements that become necessary in the future. The finance manager shall apply the Post-Issuance Debt Compliance Procedures to each qualifying obligation and maintain a record of the results. Further, the finance manager will ensure that the Post-Issuance Debt Compliance Policy and Procedures are updated on a regular and as needed basis. The finance manager or any other individuals responsible for assisting the finance manager in maintaining records needed to ensure post-issuance debt compliance, are authorized to expend funds as needed to attend training or secure use of other educational resources for ensuring compliance such as consulting, publications, and compliance assistance. Most of the provisions of this policy are not applicable to governmental bonds, the interest on which is includable in gross income for federal income tax purposes. On the other hand, if an issue of taxable governmental bonds is later refunded with the proceeds of an issue of tax-exempt governmental refunding bonds, then the uses of the proceeds of the taxable governmental bonds and the uses of the facilities financed with the proceeds of the taxable governmental bonds will be relevant to the tax-exempt status of the governmental refunding bonds. Therefore, if there is any reasonable possibility that an issue of taxable governmental bonds may be refunded, in whole or in Page 64 of 294