Town of Albion, NY
Orleans County
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Table of Contents
Table of Contents
[HISTORY: Adopted by the Town Board of the Town of Albion 8-11-2014. Amendments noted where applicable.]

§ 35-1 Statement of purpose.

A. 
This post-issuance compliance policy (the "policy") sets forth specific policies of the Town of Albion, Orleans County, New York (the "borrower") designed to monitor post-issuance compliance with the Internal Revenue Service ("IRS") in connection with the issuance of tax-exempt bonds ("obligations").
B. 
This policy documents practices and describes various procedures and systems designed to identify on a timely basis facts relevant to demonstrating compliance with the requirements that must be satisfied subsequent to the issuance of obligations to ensure that the interest on such obligations is eligible for exclusion from gross income for federal income tax purposes. The federal tax law requirements applicable to the obligations will be described in the tax questionnaire and tax regulatory agreement prepared by bond counsel and signed by officials of the issuer and borrower. This policy establishes a permanent, ongoing structure of practices and procedures that will facilitate compliance with the requirements for individual borrowings.
C. 
To ensure compliance with applicable federal tax requirements, the borrower must monitor the various direct and indirect uses of proceeds of the obligation and the investment of such proceeds, including but not limited to:
(1) 
Monitoring the use of financed property over the life of the obligation.
(2) 
Determining the sources of debt service payments and security for the obligation.
(3) 
Calculating the percentage of any nonqualified use of the financed property.
(4) 
Calculating the yield on investments of proceeds.
(5) 
Determining appropriate restrictions on investments.
(6) 
Determining the amount of any arbitrage on the investments.
(7) 
Calculating any arbitrage rebate payments that must be paid to the U.S. Treasury.
D. 
The borrower recognizes that compliance with the pertinent law is an ongoing process, necessary during the entire term of the obligations. Accordingly, the implementation of the policy will require ongoing monitoring and consultation with bond counsel and the borrower's accountants and advisors.

§ 35-2 General policies and procedures.

The following policies relate to procedures and systems for monitoring post-issuance compliance generally.
A. 
The Town Supervisor, Matthew Passarell, (the "Compliance Officer") shall be responsible for monitoring post-issuance compliance issues.
B. 
The Compliance Officer will coordinate procedures for record retention and review of such records.
C. 
All documents and other records relating to obligations must be maintained by or at the direction of the Compliance Officer. In maintaining such documents and records, the Compliance Officer will comply with applicable IRS requirements, such as those contained in Revenue Procedure 97-22.
D. 
The Compliance Officer shall be aware of remedial actions under § 1.141-12 of the Treasury Regulations and the Treasury's Tax-Exempt Bonds Voluntary Closing Agreement Program (VCAP) and take such corrective action when necessary and appropriate.
E. 
The Compliance Officer will review post-issuance compliance procedures and systems on a periodic basis, but not less than annually.
F. 
The Compliance Officer will be responsible for training any designated officer or employee who is delegated any responsibility for monitoring compliance pursuant to this policy. To the extent the Compliance Officer needs training or has any questions with respect to any item in this policy, he or she should contact bond counsel and/or the borrower's accountants and advisors. The IRS recognizes that the Compliance Officer and any delegated individual are not expected to act as lawyers who know the proper response to all compliance situations that may arise, but they should be familiar enough with federal tax issues that they know when to ask for legal or other compliance advice.

§ 35-3 Issuance of obligations: documents and records.

With respect to each issue of obligations, the Compliance Officer will:
A. 
Obtain and store a closing binder and/or CD or other electronic copy of the relevant and customary transaction documents (the "transcript").
B. 
Confirm that the applicable information reports (e.g., Form 8038 series) for such issue are filed timely with the IRS. The borrower should consult with its accountants and/or bond counsel with questions regarding the filing of such forms.
C. 
Coordinate receipt and retention of relevant books and records with respect to the investment and expenditure of the proceeds of such obligations.

§ 35-4 Arbitrage.

The following policies relate to the monitoring and calculating of arbitrage and compliance with specific arbitrage rules and regulations.
A. 
The Compliance Officer will:
(1) 
Confirm that a certification of the initial offering prices of the obligations with such supporting data, if any, required by bond counsel is included in the transcript.
(2) 
Confirm that a computation of the yield on such issue from the borrower's financial advisor or bond counsel (or an outside arbitrage rebate specialist) is contained in the transcript.
(3) 
Maintain a system for tracking investment earnings on the proceeds of the obligations.
(4) 
Coordinate the tracking of expenditures, including the expenditure of any investment earnings. If the project(s) to be financed with the proceeds of the obligations will be funded with multiple sources of funds, the Compliance Officer will confirm that the borrower has adopted an accounting methodology that maintains each source of financing separately and monitors the actual expenditure of proceeds of the obligations.
(5) 
Maintain a procedure for the allocation of proceeds of the issue and investment earnings to expenditures, including the reimbursement of pre-issuance expenditures. This procedure shall include an examination of the expenditures made with proceeds of the obligations within 18 months after each project financed by the obligations is placed in service and, if necessary, a reallocation of expenditures in accordance with § 1.148-6(d) of the Treasury Regulations.
(6) 
Monitor compliance with the applicable "temporary period" (as defined in the Code and Treasury Regulations) exceptions for the expenditure of proceeds of the issue and provide for yield restriction on the investment of such proceeds if such exceptions are not satisfied.
(7) 
Ensure that investments acquired with proceeds of such issue are purchased at fair market value. In determining whether an investment is purchased at fair market value, any applicable Treasury Regulation safe harbor may be used.
(8) 
Avoid formal or informal creation of funds reasonably expected to be used to pay debt service on such issue without determining in advance whether such funds must be invested at a restricted yield.
(9) 
Consult with bond counsel prior to engaging in any post-issuance credit enhancement transactions or investments in guaranteed investment contracts.
(10) 
Identify situations in which compliance with applicable yield restrictions depends upon later investments and monitor implementation of any such restrictions.
(11) 
Monitor compliance with six-month, eighteen-month or two-year spending exceptions to the rebate requirement, as applicable.
(12) 
Procure a timely computation of any rebate liability and, if a rebate is due, file a Form 8038-T and arrange for payment of such rebate liability.
(13) 
Arrange for timely computation and payment of "yield reduction payments" (as such term is defined in the Code and Treasury Regulations), if applicable.

§ 35-5 Private activity: use of proceeds.

The following polices relate to the monitoring and tracking of private uses and private payments with respect to facilities financed with the obligations.
A. 
The Compliance Officer will:
(1) 
Maintain records for determining and tracking facilities financed with specific obligations and the amount of proceeds spent on each facility.
(2) 
Maintain records, which should be consistent with those used for arbitrage purposes, to allocate the proceeds of an issue and investment earnings to expenditures, including the reimbursement of pre-issuance expenditures.
(3) 
Maintain records allocating to a project financed with obligations any funds from other sources that will be used for otherwise nonqualifying costs.
(4) 
Monitor the expenditure of proceeds of an issue and investment earnings for qualifying costs.
(5) 
Monitor private use of financed facilities to ensure compliance with applicable limitations on such use. Examples of potential private use include:
(a) 
Sale of the facilities, including sale of capacity rights;
(b) 
Lease or sublease of the facilities (including leases, easements or use arrangements for areas outside the four walls, e.g., hosting of cell phone towers) or leasehold improvement contracts;
(c) 
Management contracts (in which the borrower authorizes a third-party to operate a facility, e.g. cafeteria) and research contracts;
(d) 
Preference arrangements (in which the borrower permits a third-party preference, such as parking in a public parking lot);
(e) 
Joint ventures, limited liability companies or partnership arrangements;
(f) 
Output contracts or other contracts for use of utility facilities (including contracts with large utility users);
(g) 
Development agreements which provide for guaranteed payments or property values from a developer;
(h) 
Grants or loans made to private entities, including special assessment agreements; and
(i) 
Naming rights arrangements.
B. 
Monitoring of private use should include the following:
(1) 
Procedures to review the amount of existing private use on a periodic basis but not less than annually; and
(2) 
Procedures for identifying in advance any new sale, lease or license, management contract, sponsored research arrangement, output or utility contract, development agreement or other arrangement involving private use of financed facilities and for obtaining copies of any sale agreement, lease, license, management contract, research arrangement or other arrangement for review by bond counsel.
C. 
If the Compliance Officer identifies private use of facilities financed with tax-exempt debt, the Compliance Officer will consult with bond counsel to determine whether private use will adversely affect the tax status of the issue and if so, what remedial action is appropriate. The Compliance Officer should retain all documents related to any of the above potential private uses.

§ 35-6 Reissuance.

The following policies relate to compliance with rules and regulations regarding the reissuance of obligations for federal law purposes.
A. 
The Compliance Officer will identify and consult with bond counsel regarding any post-issuance change to any terms of an issue of obligations which could potentially be treated as a reissuance for federal tax purposes.

§ 35-7 Record retention.

The following polices relate to retention of records relating to the obligations issued.
A. 
The Compliance Officer will:
(1) 
Coordinate with staff regarding the records to be maintained by the borrower to establish and ensure that an issue remains in compliance with applicable federal tax requirements for the life of such issue.
(2) 
Coordinate with staff to comply with provisions imposing specific recordkeeping requirements and cause compliance with such provisions, where applicable.
(3) 
Coordinate with staff to generally maintain the following:
(a) 
The transcript relating to the transaction (including any arbitrage or other tax questionnaire, tax regulatory agreement, and the bond counsel opinion);
(b) 
Documentation evidencing expenditure of proceeds of the issue;
(c) 
Documentation regarding the types of facilities financed with the proceeds of an issue, including, but not limited to, whether such facilities are land, buildings or equipment, economic life calculations and information regarding depreciation;
(d) 
Documentation evidencing use of financed property by public and private entities (e.g., copies of leases, management contracts, utility user agreements, developer agreements and research agreements);
(e) 
Documentation evidencing all sources of payment or security for the issue; and
(f) 
Documentation pertaining to any investment of proceeds of the issue (including the purchase and sale of securities, yield calculations for each class of investments, actual investment income received by the investment of proceeds, guaranteed investment contracts, and rebate calculations).
(4) 
Coordinate the retention of all records in a manner that ensures their complete access to the IRS.
(5) 
Keep all material records for so long as the issue is outstanding (including any refunding), plus seven years.