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HomeMy WebLinkAbout7C, Conduit Debt PoliciesEN HILLS.. Request for Council Action Prepared By: Sue Iverson Council Meeting Date: September 14, 2009 Conduit Debt Policies. Budgeted Amount: Actual Amount: Funding Source: NA NA NA Recommendation: L Motion to approve the Arden Hills Private Activity Revenue Bond Financing Procedures effective September 14, 2009. 2. Motion to approve the Arden Hills Post -Issuance Debt Compliance Policy effective September 14, 2009. Supporting Documents: 1. See attached memo from Sue Iverson. 2. Private Activity Revenue Bond Financing Policy 3. Post -Issuance Debt Compliance Policy 4. Post -Issuance Debt Compliance Procedures ltm-_ ,-----ARQEN HILLS MEMORANDUM DATE: September 10, 2009 TO: Honorable Mayor and City Council Ron Moorse, City Administrator FROM: Sue Iverson, Finance Director SUBJECT: Conduit Debt Policies Background: The City has been approached on various occasions to issue Conduit Debt for organizations such as Presbyterian Homes. It is anticipated that Northwestern College is also going to approach the City on this subject. Each instance has been handled by the City Council on a case by case basis, but we have had no policy or application materials for these requests. Discussion: The Financial Planning and Analysis Committee has developed a "Private Activity Revenue Bond Financing" procedure which includes an application process and fees. City Bond Counsel has reviewed these procedures and applications, and they are very similar to what other municipalities in the Twin Cities metropolitan area are using. This procedure will provide a process whereby the applicant provides the City all the data needed about the offering and the fees that are to be paid. Another issue is Post -Issuance Compliance. The Financial Planning and Analysis Committee has developed a "Post -Issuance Compliance Policy" to comply with the Internal Revenue Code regulations. A set of procedures has also been developed to implement the compliance policy. Bond Counsel has also reviewed this policy and procedures. Staff Recommendation: Staff recommends a motion to approve the Arden Hills Private Activity Revenue Bond Financing Procedures effective September 14, 2009. Staff recommends a motion to approve the Arden Hills Post -Issuance Debt Compliance Policy effective September 14, 2009. �S EN HILLS PROCEDURE APPLICATION TO CITY OF ARDEN HILLS, MINNESOTA FOR PRIVATE ACTIVITY REVENUE BOND FINANCING Approved by the Arden Hills City Council Effective as of 52009 Finance Director City of Arden Hills 1245 West Highway 96 Arden Hills, MN 55112 PROCEDURE FOR APPLICATION TO THE CITY OF ARDEN HILLS FOR PRIVATE ACTIVITY REVENUE BOND FINANCING Table of Contents PP PartI General.......................................................................................................................... l PartII Guidelines.....................................................................................................................2 Part III Miscellaneous Matters.................................................................................................. 5 Part IV Application for Tax -Exempt Financing (Commercial, Industrial, Health Care or Other Non -Housing Projects) .....................7 Part V Application for Tax -Exempt Financing (Multi -Family Housing)..............................................................................................10 PartVI Addendum to Application..........................................................................................13 Part VII Indemnification Letter of Agreement.........................................................................14 MIN CTF.NF.R A T . Under the Minnesota Municipal Industrial Development Act, Minnesota Statutes, Sections 469.152 to 469.1651 (the "Industrial Development Act"), the City of Arden Hills has authority to issue revenue bonds or notes to attract or promote economically sound industry and commerce to the City. Under Minnesota Statutes, Chapter 462C (the "Housing Act") the City is authorized to issue housing revenue bonds to finance multi -family residential housing projects for low and moderate income persons and elderly persons. Projects must be embodied in a Housing Program as that term is defined in the Housing Act. The Council is aware that such financing for certain private activities may be of benefit to the City and will consider requests for tax exempt financing subject to these Guidelines. The Council considers tax exempt financing to be a privilege, not a right. It is the judgment of the Council that tax exempt financing is to be used on a selective basis to encourage certain development that offers a benefit to the City as a whole, including significant employment and housing opportunities. It is the applicant's responsibility to demonstrate the benefit to the City, both in writing and at the required public hearing. The applicant should understand that although approval may have been granted by the City for the issuance of financing for a similar project or a similar debt structure, that is not a basis upon which approval will be granted. Each application will be judged on the merits of the project as it relates to the public purposes of the Housing Act or the Industrial Development Act and the benefit to the City at the time the request for financing is being considered. In no event will the City issue private activity bonds for the primary purpose of financing operation expenses of any borrower; provided that bond proceeds may fund reasonable operating and replacement reserves where the primary use of proceeds is to finance capital expenditures. 1 PART II C~TT TTDF,T ,TNF,� 1. The Council will consider tax exempt financing for commercial, industrial health care, and any other projects authorized to be financed under the Industrial Development Act (referred to as "non -housing projects"), and housing projects under the Housing Act. An applicant for tax exempt financing for non -housing projects pursuant to the Industrial Development Act must submit to the City the application contained in Part IV of these Guidelines. An applicant for tax exempt financing for housing projects pursuant to the Housing Act must submit to the City the application contained in Part V of these Guidelines. 2. Projects must be compatible with the overall development plans and objectives of the City and comply with the zoning and land use regulations of the City. 3. An application will not be considered by the Council until tentative City Code findings and requirements have been made with respect to zoning, building plans, platting, streets, and utility services. The application must be accompanied by the addendum contained in Part VI of these Guidelines and must provide information as to the proj ect's need for municipal services including, but not limited to, street improvements, water and sewer services, and police and fire protection. 4. The project must be a positive benefit to the City. The project must be of a nature that the City wishes to attract, or an existing business which the City wishes to have expand within the City, considering employment opportunities, incentive for further development, impact on City services, and support for the industrial, commercial or health care or educational facilities currently located in the City. A housing project must provide significant housing opportunities for low and moderate income persons or the elderly. 5. The Council will, if requested, grant an applicant a pre -application review. The purpose of the pre -application review is to inform applicants of the possibility of rejection or the possible bases for such rejection. The fact that the project is not rejected at the pre - application stage is not to be construed as approval of the project or as an indication that the project will be approved upon formal request to the Council. Requests for tax exempt financing may be rejected by the City whether or not the project was submitted to a pre - application review and regardless of the outcome or recommendation of that pre -application review. A request for pre -application review must be in writing, addressed to the City Finance Director, and set forth the name of the project, the type of project intended and the name, address and telephone number of the person who will be representing the applicant at the pre -application review, together with such additional information as the applicant desires to submit. 6. The applicant must select a qualified financial adviser or underwriter to assist the applicant in preparing all necessary application documents and materials. The financial adviser will submit a letter that establishes the financial feasibility of the project. Applications may, in the alternative, include a signed letter from a responsible financial institution indicating that 2 the project is economically feasible and viable and stating that bonds can be successfully sold for the project or that an individual or institution intends to purchase all of the bonds. The applicant must receive approval from the appropriate state agencies, secure financing and commence construction within one year of the date of the resolution giving preliminary approval to the project or the housing program. Upon application, the Council may approve an extension of the preliminary approval. The City will appoint bond counsel for the bond issue, which will normally be the City's regularly retained bond counsel. 7. Pursuant to the Industrial Development Act and the Housing Act, consideration of an application for tax exempt financing must be done at a public hearing held by the Council. Modifications to the project after the public hearing and preliminary approval must be consistent with the scope of the project as proposed at the time of preliminary approval. 8. The City is to be reimbursed and held harmless for and from any out-of-pocket expenses related to the tax exempt financing including, but not limited to, legal fees, financial analyst fees, bond counsel fees, the City staff s expenses in connection with the application, and any deposits or application fees required under state law in order to secure allocation of bonding authority. The applicant must execute a letter to the City undertaking to pay all such expenses. A form of the required letter is set forth as Part VII of these Guidelines. A non- refundable application fee in the amount of $500 must be included with the submission of the application. 9. - Prior to closing and delivery of the bonds for the project, the applicant must pay, or commit to pay an annual administrative fee in the amount of 1/8 of 1 % (.125%) of the outstanding principal balance of the bonds. The administrative fee may be paid in a lump sum at closing on the bonds, or may be paid semiannually while the bonds are outstanding at the times specified in the bond documents. The administrative fees required by this paragraph will be adjusted at or paid prior to delivery of the bonds if necessary to ensure compliance with the Internal Revenue Code and regulations. If the City determines that issuance of the bonds requested by the applicant is reasonably expected to cause governmental bonds issued by the City in that calendar year to be ineligible for designation as "qualified tax exempt obligations" under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (also known as "bank qualified"), the applicant will be required to reimburse the City, at the time of issuance of the City's bonds, for any interest rate differential between bank qualified and non -bank qualified bonds. 10. Applications for financing must be made on the forms attached to these Guidelines. In addition, the applicant must furnish a description of the project, a plot plan, elevation of proposed buildings, landscape, lighting, and site preparation, together with a brief description of applicant and the proposed financing in such form as required at the time of application. 1 1. The Council may, in its sole discretion, impose conditions exceeding those required under the City building code in respect to exterior building materials, landscaping, signage 3 lighting, and such other aspects as the Council may consider appropriate on a case -by -case basis. 12. The Council may, in its sole discretion, withdraw its preliminary approval of a project any time if in its judgment the purposes of the Act will not be served by going forward with the project and its financing. MISCELLANEOUS MATTERS 1. Ratings. The City will give its most favorable consideration to proposed tax exempt bond issues that have the same rating as the City's obligations by Moody's Investment Service or Standard & Poor's Corporation. . Issues carrying lower ratings or non -rated issues may be sold only to institutional or other investors on a private placement basis and must be in denominations of at least $100,000. The Council may depart from this guideline when in its judgment the project is of a level of merit and public purpose to justify the departure; and in case of such a departure the Council must state its reasons therefor in the resolution awarding the sale of the bonds. 2. Refundings. The Council will normally approve the refunding of atom -exempt issue but only upon a showing by the applicant of (i) substantial debt service savings, (ii) the removal of bond covenants significantly impairing the financial feasibility of the project, or (iii) both (i) and (ii). In the case of refundings of bonds for which the administrative fee listed in paragraph 9 of Part II have been paid in full, no new administrative fees are required; but the non-refundable application fee must be paid together with all City expenses in excess of that fee. If the administrative fees for the refunded bonds are not paid in full upon closing on the refunding bonds, such fees must continue to be paid for the refunding bonds. In the case of refundings of bonds where no administrative fee has been paid, the administrative fees listed in paragraph 9 of Part II must be paid. The application form is to be appropriately modified. 3. Subsequent Proceedings. Where changes to the underlying documents or credit facilities of outstanding bond issues are to be made and require Council action (including changes that are a "deemed reissuance" under Internal Revenue Service regulations), no administrative fee is charged but a non-refundable fee of $500 must be deposited with the City to cover administrative costs. No formal application form is required. 4. Issue by Another Political Subdivision. The City will consider requests for tax exempt financing of projects in the City by other political subdivisions. In these cases the non- refundable application fee must be paid and all procedures through the approval of the preliminary resolution followed. No administrative fee is charged, except actual cost incurred by the City must be reimbursed. The City reserves the right to reject such requests for any reason, including without limitation a determination by the City that such issuance by another political subdivision would impair the City's ability to issue governmental bonds as "bank qualified bonds" (as defined in Part II, paragraph 9) in that calendar year. 5. City Contact. Initial contacts about tax-exempt financing are made by contacting: Finance Director City of Arden Hills 1245 West Highway 96 Arden Hills, MN 55112 5 6. Deadlines. The Council conducts all tax exempt financing matters at regularly scheduled Council meetings held on the second and last Monday of each month. Documents for Council consideration must be at the City office on the Monday preceding the Council meeting at which the matter is to be considered. In the case of a publicly offered bond, issue the documents, when submitted, may specify a maximum price and maximum effective interest rate if prices and rates have not yet been established. 7. Post -Issuance Compliance. The City will require that each borrower demonstrate to the City that the borrower will comply with substantially the same procedures for post -issuance compliance that apply to City governmental bonds under the City's Post Issuance Debt Compliance Policy, approved September 14, 2009, as amended from time to time. The City may require that borrowers retain a trustee and/or an independent arbitrage consultant for the term of the bonds. PART IV APPLICATION FOR TAX-EXEMPT FINANCING (Commercial, Industrial, Health Care or Other Non -Housing Projects) 1. APPLICANT a. Business Name: b. Business Address: C. Business Form (corporation, partnership, sole proprietorship, etc.): d. Authorized Representative: e. Principal contact person and telephone number: 2. PURPOSE OF REQUESTED FINANCING: a. New Facility (describe): b. Expansion (describe): C. Refunding (attach explanatory letter) 3. GIVE BRIEF DESCRIPTION OF NATURE OF BUSINESS, PRINCIPAL PRODUCTS, ETC.: 4. ESTIMATED PROJECT COSTS: (Not required for refunding) Land $ Building Equipment Architectural, Engineering Costs of Issuance Capitalized Interest, including discount Other Total Financing Requested $ 5. AMOUNT OF FINANCING REQUESTED: $ ( % of project costs) 7 6. TYPE OF FINANCING PROPOSED: Bonds Tax Exempt Mortgage Expected Term of Financing Years Security: Mortgage Letter of Credit Guaranty (third party) Guaranty (personal) Unsecured Other (specify) 7. BUSINESS PROFILE: (Not required for refunding) a. Is the business located in the City of Arden Hills now? b. Number of employees in City: 1) Before this project: 2) After this project: C. Approximate annual sales: d. Length of time in business: Length of time in business in City: e. Do you have plants in other locations? If so, where? 8. NAMES OF: a. Underwriter (name and contact person): b. Corporate Counsel: C. Underwriter's Counsel: 9 9. WHAT IS YOUR TARGET DATE FOR: a. Construction start: b. Construction completion: 10. Attachments: a. Project description: b. Draft application to Department of Trade and Economic Development — together with necessary attachments C. Initial application fee d. Indemnification Letter of Agreement I certify that the information provided above contains no misrepresentations, omissions or concealments of material facts and that the information given is true and complete to the best of my knowledge. I have been furnished a copy of the Procedure for Application to the City of Arden Hills for Private Activity Revenue Bond Financing and is aware of its content and agree to be bound by its terms and the terms of the indemnification letter. Signature Title Date R , J 0 0 APPLICATION FOR TAX-EXEMPT FINANCING APPLICANT: CONTACT PERSON: TITLE: ADDRESS: TELEPHONE (_) PROJECT NAME: PROJECT LOCATION: PROJECT INFORMATION Efficiency One Bedroom Two Bedroom Three Bedroom Parking (included in rent/ not included in rent) Laundry (Multi -Family Housing) DATE OF APPLICATION: T1 TA TT S UNITS 10 Utilities included in monthly rent: OPERATING EXPENSES of Gross (Annual) TOTAL PROJECT COST: $ DEVELOPER EQUITY: $ DEBT SERVICE: $ *HARD COSTS: $ LAND VALUE: $ SOFT COSTS: $ *(Hard Costs are all project costs the IRS has determined to be eligible items for depreciation.) ANTICII'ATED INTEREST RATES: AMORTIZATION SCHEDULE: -Year Amortization Schedule If the project were convention ally financed, what interest rate would you expect to pay? SALES ASSUMPTION: How many years do you plan to hold the property before you sell? years. At what percent do you feel the value of the project will appreciate? EQUIPMENT: DEPRECIATION METHOD: Years: Type: Amount of Total Basis: $ $ of project cost is for equipment (e.g., washers/dryers) ANTICIPATED INCREASES: ANTICIPATED VACANCY RATE: Revenue: % per year First Year: % Expenses: % per year After First Year: % CONSTRUCTION SCHEDULE Anticipated construction commencement date: 11 Anticipated construction completion date: ADDITIONAL INFORMATION: I certify that the information provided above contains no misrepresentations, omissions or concealments of material facts and that the information given is true and complete to the best of my knowledge. I have been furnished a copy of the Procedure for Application to the City of Arden Hills for Private Activity Revenue Bond Financing and is aware of its content and agree to be bound by its terms and the terms of the indemnification letter. Signature Title Date 12 PART VI ADDENDUM TO APPLICATIONS The following items must be attached to each application: A PPFNDTX A A brief description of the organizational structure of Applicant, including parent subsidiary and affiliate organizations (if applicant is other than an individual). A PPF,NnTX R Statement of Applicant's business history, including any multi -family rental projects. A PPF,NDTX C The name, address, and telephone number of: 1. The Applicant's legal counsel 2. The Applicant's accountant 3. The architect of the proposed Project 4. The engineer of the proposed Project 5. The general contractor of the proposed Project A PPF,NTMTX D l . Present ownership of the proposed Pro j ect site and Applicant's interest therein. 2. Present zoning of the Project site and a description of what city land use approvals are needed for this project. 3. The projected number of new employees to be added to the Applicant's permanent work force because of the Project (for Commercial, Industrial or Health Care only). 4. Other financing attempted or available to the Project including any interim financing. 5. Statement regarding whether or not this project has all required city approvals. If the project does not have all of the required approvals, list the approvals still needed and a tentative time schedule. APPF.NDTX F, Indemnification Letter of Agreement. APPFNDTX F Proforma Analysis of the Project 13 PART VII INDEMNIFICATION LETTER OF AGREEMENT The Mayor of the City of Arden Hills and Members of the City Council City of Arden Hills 1245 Highway 96 Arden Hills, MN 5 5112 RE: Application of Arden Hills for Tax Exempt Revenue Bond Financing by the City of Dear Mayor and Members of the City Council: This letter of agreement is given by , a under the laws of Minnesota ("Applicant") as required by the City of Arden Hills, Minnesota in connection with its consideration of an application for tax exempt revenue bond financing for the project described in the application. Applicant agrees as follows: 1. Applicant agrees to pay or reimburse the City for any and all costs and expenses which the City may incur in connection with its consideration of the project and the granting of tax exempt revenue bond financing therefor, whether or not the project is preliminarily approved by the City, whether or not the project is approved by the State of Minnesota, whether or not revenue bond financing is finally approved by the City, whether or not the bonds are issued and sold, and whether or not the project is carried to completion. 2. Applicant agrees to indemnify and hold the City, its officers, employees and agents harmless against any and all losses, claims, damages, expenses or liabilities, including attorneys fees incurred in their defense, to which the City, its officers, employees and agents may become subject in connection with the City's consideration, issuance or sale of the bonds for Applicant's project and the carrying out of the transactions contemplated by this agreement and any resolutions adopted, or agreements executed by the City in connection with the issuance of its bonds for this project. 3. Applicant hereby releases the City, its officers, agents and employees from any claims, causes of action, losses, damages, or liabilities which it may have against the City, its officers, agents, and employees or which it may incur in connection with: the City's consideration of the application for industrial development revenue bond financing for Applicant's project; the failure of the City, in its discretion, to issue tax-exempt revenue bonds for Applicant's project; the issuance and sale of the bonds; the construction of the project; or any other matter or thing of any type or nature whatsoever which may arise in connection with the foregoing. 14 4. Applicant is aware of the City's application and administrative fee structure for tax exempt financing and agrees and covenants that all such fees will be paid in the amount and at the times required. Dated: (Applicant) Its 15 �I�EN HILLS Post -Issuance Debt Compliance Policy The City Council of the City of Arden Hills has chosen, by policy, to take steps to help ensure that all tax- exempt debt obligations will be in compliance with all applicable state and federal regulations regarding the obligations. This policy may be amended, as necessary, in the future. Background Tax-exempt debt obligations (debt for which the interest paid to the debt holders is excludable from their gross income for federal income taxes) result in a lower interest cost to state and local governments (the issuer). The tax-exempt status remains throughout the life of the debt obligation provided all applicable state and federal tax laws are satisfied at the time of issuance and throughout the term of the obligation. The Internal Revenue Service (IRS) is responsible for enforcing compliance with the Internal Revenue Code and most other regulations governing tax-exempt obligations. The IRS expects issuers and beneficiaries of tax-exempt debt to adopt and implement a post -issuance debt compliance policy and procedures to safeguard against post -issuance violations that may result in the loss of the tax-exempt status of the debt. Post -Issuance Debt Compliance Policy Objective The City of Arden Hills desires to monitor all of its tax-exempt debt obligations to ensure that all tax- exempt debt obligations remain in compliance with the IRS Code and all other regulations governing tax- exempt obligations. To help ensure compliance, the City of Arden Hills has developed a "Policy". The following Policy shall apply to all tax-exempt debt obligations including bonds, notes, loans, lease purchase contracts, lines of credit, commercial paper, or any other form of tax-exempt debt. This Policy primarily applies to governmental bonds; for post -issuance policies specifically related to conduit /private activity bonds, see the Procedure for Application to City of Arden Hills, Minnesota for Private Activity Revenue Bond Financing. Post Issuance Debt Compliance Policy The Finance Director of the City of Arden Hills is designated as the City's agent who is responsible for post -issuance compliance of all tax-exempt debt obligations, and is referred to in this policy as the "Compliance Officer." The Compliance Officer shall assemble all relevant documentation, records and activities required to ensure post -issuance debt compliance as further detailing the "Post -Issuance Debt Compliance Procedures". At a minimum, the Post -Issuance Debt Compliance Procedures for each tax-exempt debt 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 restrictions and rebate; 4. Timely filings and other general requirements; 5. Additional undertaking or activities that support points 1 through 4 above; 6. Other requirements that become necessary in the future. The Compliance Officer shall apply the Post -Issuance Debt Compliance Procedures to each tax-exempt debt obligation and maintain a record of the results. Further, the Compliance Officer will ensure that the Post -Issuance Debt Compliance Policy and Procedures are updated on a regular and as needed basis. The Compliance Officer, or any other individuals responsible for assisting the Compliance Officer in maintaining records needed to ensure post -issuance 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. The compliance Officer will be assisted by other City staff and officials when appropriate. The compliance Officer of the City will also be assisted in carrying out post -issuance compliance requirements by the following organizations: a) Bond Counsel (as of the date of approval of this Policy, bond counsel for the City is Kennedy & Graven, charted and Steve Bubul is the attorney primarily responsible for providing bond counsel services for the City); b) Financial Advisor (as of the date of approval of this Policy, the financial advisor of the City is Ehelrs & Associates, Inc. and Mark Ruff is the person primarily responsible for providing financial advisor services to the City); c) Paying Agent (as of the date of approval of this Policy, the paying agent of the City is Bond Trust Services Corporation and Connie Kuck is the person primarily responsible for providing paying agent services for the City); and d) Rebate Analyst (as of the date of approval of this Policy, the rebate analyst of the City is Ehlers and Associates, Inc. and Gail Robertson is the person primarily responsible for providing rebate analyst services for the City). The Compliance Officer shall be responsible for assigning post -issuance compliance responsibilities to other staff of the City, Bond Counsel, Paying Agent, and Rebate Analyst. The Compliance Officer shall utilize such other professional service organizations as are necessary to ensure compliance with the post - issuance compliance requirements of the City. The Compliance Officer is authorized to expend funds as needed for training and educational resources for the Compliance Officer and any other City staff who are assigned responsibilities for ensuring compliance with any portion of the post -issuance compliance requirements of this Policy. Approval by the City Council the 14thDay of September, 2009. Stanley D. Harpstead, Mayor Date Ronald J. Moorse, City Administrator Date ---ARPEN HILLS Post -Issuance Debt Compliance Procedures The City Council of the City of Arden Hills has adopted the attached Post -Issuance Debt Compliance Policy dated September 14, 2009. The Post -Issuance Debt Compliance Policy applies to all tax-exempt debt obligations issued by the City of Arden Hills. As directed by the adoption of the Policy, the Finance Director will perform the following Post -Issuance Debt Compliance Procedures for the following tax-exempt debt obligation: (Title of tax-exempt debt obligation) 1. General Post -Issuance Compliance a. Ensure written procedures and/or guidelines have been put in place for individuals to follow when more than one person is responsible for ensuring compliance with Post -Issuance Procedures. b. Ensure training and/or educational resources for post -issuance compliance have been approved and obtained. c. The Finance Director of the City of Arden Hills understands that there are options for voluntarily correcting failures to comply with post -issuance compliance requirements (i.e. Treasury Regulations 1.141-12 remedial actions, Tax -Exempt Bonds Voluntary Closing Agreement Program and the ability to enter into a closing agreement under the Tax -Exempt Bonds Voluntary Closing Agreement Program describer in Notice 2001-60). 2. General Recordkeeping a. Retain records and documents for this tax-exempt debt obligation for a period of at least three years following the final payment of the obligation of the final payment of any tax- exempt refunding debt obligation unless otherwise directed by Bond Counsel. b. Retain both paper and electron versions of records and documents for this tax-exempt debt obligation. c. General Records and Documentation to be Assembled and Retained i. Description of the purpose of the tax-exempt debt obligation (referred to as the project) and the state statute authorizing the project. ii. Record of tax-exempt status or revocation of tax-exempt status iii. Any correspondence between the City of Arden Hills and the IRS. iv. Audited financial statements. v. Bond transcripts, official statements and other offering documents of tax-exempt debt obligations. vi. Minutes and resolutions authorizing the issuance of tax-exempt debt obligations. vii. Certifications of the issue price of tax-exempt debt obligations. viii. Any formal elections for tax-exempt debt obligations (i.e. election to employ an accounting methodology other than the specific tracing method). ix. Appraisals, demand surveys, or feasibility studies for property financed by tax- exempt debt obligations. x. Documents related to governmental grants, associated with construction, renovations or purchase of property financed with tax-exempt debt obligations. xi. Reports of any prior IRS examinations of the City of Arden Hills or City's tax- exempt debt obligations. 3. Arbitrage Yield Restrictions and Rebate Recordkeeping a. Investment and Arbitrage Documentation to be Assembled and Retained i. An accounting of all deposits, expenditures, interest income and asset balances associated with each fund established in connection with each tax-exempt debt obligations. This includes an accounting of all monies deposited to the Debt Service Account to make debt service payments on the tax-exempt debt obligations, regardless of the source derived. Accounting for expenditure and assets is described in further detail in Section 3b. ii. Statements prepared by Trustee or Investment Provider. iii. Documentation of at least quarterly allocations of investments and investment earnings to each tax-exempt debt obligation (i.e. uncommingling analysis). iv. Documentation for investments made with tax-exempt proceeds such as: 1. Investment contracts (i.e. guaranteed investment contracts). 2. Credit enhancement transactions (i.e. bong issuance contracts). 3. Financial derivatives (swaps, caps, etc). 4. Bidding of financial products. a. Investments acquired with tax-exempt proceeds are purchased at fair market value (i.e. three bids for open market securities needed in advance refunding escrows). b. Computations of the arbitrage yield. c. Computations of yield restriction and rebate amounts including but not limited to: i. Compliance in meeting the "Temporary Period from Yield Restriction Exception" and limiting the investment of funds after the temporary period expires. ii. Compliance in meeting the "Rebate Exception". 1.Qualifying for the "Small Issuer Exception". 2.Qualifying for a "Spending Exception". • 6 Month Spending Exception • 18 Month Spending Exception • 24 Month Spending Exception 3.Qualifying for the "Bona Fide Debt Service Fund Exception". 4. Quantifying arbitrage on all funds established in connection with the tax-exempt debt obligations in lieu of satisfying arbitrage exceptions (including Reserve Funds and Debt Service Funds). d. Computations of yield restriction and rebate payments. e. Timely Tax Form 803 8-T filing, if applicable. i. Remit any arbitrage liability associated with this tax-exempt debt obligation to the IRS at each five year anniversary date of the obligation, and the date in which the obligation is not longer outstanding (redemption or maturity date), whichever comes sooner, within 60 days of said date. f. Timely Tax Form 8038-R filing, if applicable. g. Procedures or guidelines for monitoring instances where compliance with applicable yield restriction requirements depends on subsequent reinvestment of tax-exempt proceeds in lower yielding investments (i.e. reinvestment in zero coupon SLGS). 4. Expenditure and Asset Documentation to be Assembled and Retained a. Documentation of allocations of tax-exempt proceeds to expenditures (i.e. allocation of proceeds to expenditures for the construction, renovation or purchase of facilities owned and used in the performance of exempt purposes). b. Documentation of allocations of tax-exempt proceeds to issuance costs. c. Copies of requisitions, draw schedules, draw requests, invoices, bills and cancelled checks related to tax-exempt proceed expenditures during the construction period. d. Copies of all contracts entered into for the construction, renovation or purchase of facilities financed with tax-exempt proceeds. e. Records of expenditures reimbursements incurred prior to issuing bonds for facilities financed with tax-exempt proceeds (Declaration of Official Intent/Reimbursement Resolutions including all modifications). f. List of all facilities and equipment financed with tax-exempt proceeds. g. Depreciation schedules for depreciable property financed with tax-exempt proceeds. h. Documentation that tracks the purchase and sale of assets financed with tax-exempt proceeds. i. Documentation of timely payment of principal and interest payments on the tax-exempt debt obligation. j . Tracking of all issue proceeds and the transfer of proceeds into the debt service fund as appropriate. k. Documentation that excess earnings from a Reserve Fund is transferred to the Debt Service Fund on an annual basis. Excess earnings are balances in a Reserve Fund that exceed the Reserve Fund requirement. 5. Miscellaneous Documentation to be Assembled and Retained a. Procedures to ensure that the project, while the tax-exempt debt obligation is outstanding, will avoid IRS private business concerns. b. Changes in the project that impact the terms or commitments of the tax-exempt debt obligation are properly documented and necessary certificates or opinions are on file. 6. Additional Undertaking and Activities that Support Sections 1 through 4 above a. The Finance Director will notify the City of Arden Hills Bond Counsel, Financial Advisor and Arbitrage Provider of any survey or inquiry by the IRS immediately upon receipt (Usually responses require the review of the above mentioned data and must be in writing. As much time as possible is helpful in preparing the response). b. The Finance Director will consult with the City of Arden Hills Bond Counsel, Financial Advisor and Arbitrage Provider before engaging in post -issuance credit enhancement transactions (i.e. bond insurance, letter of credit, or hedging transactions (i.e. interest rate swap, cap). c. The Finance Director will monitor all "qualified tax-exempt debt obligations" within the first calendar year to determine if the limit is exceeded, and if exceeded, will address accordingly. The limit is currently $10,000,000. d. Comply with Continuing Disclosure Requirements i. If applicable, the timely filing of annual information agreed to in the Continuing Disclosure Certificate. ii. Give notice of any Material Event. e. Identify any post -issuance change to terms of bonds which could be treated as a current refunding of "old" bonds by "new" bonds, often referred to as a "reissuance". f. Confirm whether any "remedial action" in connection with a "change of use" must be treated as a "reissuance". 7. Compliance with Future Requirements a. Take measure to comply with any future requirements issued beyond the date of these Post - Issuance Debt Compliance Procedures which are essential to preserving the tax-exempt status of this tax-exempt debt obligation.