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BRIGGS B R I G G S jo W2200 First National Bank Building 332 Minnesota Street St. Paul MN 55101 -1396 tel 651 .808.6600 fax 651.808.6450 MEMORANDUM Attachment C TO: Chris Miller, Finance Director for the City of Roseville, Minnesota FROM: Mary L. Ippel DATE: January 20, 2012 RE: Post -- Issuance Compliance Policies and Procedures Following issuance by the City of Roseville (the "City ") of tax - exempt governmental bonds, the City must continue to take certain actions with respect to the bonds in order that they retain their tax - exempt status. In particular, the City must be sure that the project financed with the bonds continues to be used for public purposes and that the proceeds of the bonds are applied in a manner that complies with the arbitrage rules on the Internal Revenue Code of 1986, as amended (the "Code "), and its related regulations. Over the last couple of years, the IRS has increased its scrutiny of tax - exempt bonds and has strongly expressed an expectation that issuers of tax - exempt bonds have written procedures in place to ensure compliance with these rules. Most recently, in September, 2011, the IRS released a new Form 8038-G. which is the form that issuers file upon the issuance of each tax - exempt bond issue. The new version of the form specifically asks the issuer to check a box that it has established written procedures "to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations." There is a second box asking if the issuer has written procedures "to monitor the requirements of Section 148," which is the Code section governing arbitrage. There is no statutory or rule requirement that the City have such written procedures. By including these questions on Form 8038-G (the same questions also appear on Form 8038), however, the IRS is strongly emphasizing its view of the importance of having such procedures in place. Informally, the IRS has also indicated that having such procedures in place may result in a lower penalty in the event of any audit or voluntary compliance agreement related to an issuer's bonds. Therefore, we strongly recommend that the City adopt the proposed Post - Issuance Compliance Policies and Procedures. The proposed Policies and Procedures have been drafted to cover the concerns and expectations that have been expressed by the IRS. Yet, at the same time, we recognize that the Briggs and Morgan, Professional Association I Inneapolis I St. Paul I ww ,briggs.corn Member - Lex Mond1, a Global Association of Independent Law Firrn5 4458453v1