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E~ REQUEST FOR ACTION <br />..,.. <br />Rive <br />TO ITEM NUMBER <br />Ma or and Ci Council 4.5 <br />AGENDA SECTION MEETING DATE PREPARED BY <br />Consent Februa 6, 2012 Tim Simon, Finance Director <br />ITEM DESCRIPTION REVIEWED By <br />Post-Issuance Debt Compliance Policy Cal Portner, Ci Administrator <br /> REVIEWED BY <br />ACTION REQUESTED <br />City Council is requested to approve the Post-Issuance Debt Compliance Policy. <br />BACKGROUND/DISCUSSION <br />All issuers of tax-exempt bonds are required to file Internal Revenue Service (IRS) Form 8038-G (see <br />sample attached). Last September, the IRS added three additional lines (43, 44, and 45 A&B). The most <br />significant change was asking if issuers have written procedures to ensure compliance with the Internal <br />Revenue Code. The IRS expects issuers and beneficiaries of these obligations to adopt and implement a <br />post-issuance debt compliance policy and procedures to safeguard against post-issuance violations. These <br />are procedures the city has been doing but is now asked to be in writing. Many governmental entities are <br />currently adopting a policy. <br />The attached policy has been reviewed by Ehlers and our bond attorney. As finance director, I will have <br />to maintain a checklist on all the bond issues. This policy will cover Elk River Municipal Utilities so no <br />additional polity will need to be adopted by the Utilities Commission. The Economic Development <br />Authority will need to adopt a similar policy since on occasion we issue Lease Revenue Bonds. <br />The Post-Issuance Debt Compliance Procedures will address the following: <br />1. General post-issuance compliance. <br />2. Proper and timely use of bond proceeds and bond-financed property. <br />3. Arbitrage yield restriction and rebate. <br />4. Timely filings and other general requirements. <br />5. Additional undertakings or activities that support points 1 through 4 above. <br />6. Other requirements that become necessary in the future. <br />FINANCIAL IMPACT <br />No additional financial impact as all required post-compliance debt procedures will be complete. <br />ATTACHMENTS <br />Post-Issuance Debt Compliance Policy <br />Sample IRS form 8038-G (Information Return for Tax-Exempt Governmental Obligations) <br />Action Motion by Second by Vote <br />'®ILE1E~ IIT <br />N:\Public Bodies\City Council\Council RCA\Agenda Packet\02-OG-2012\Post Issuance Compliance.docx ~~ <br />