City of Mill Creek, WA Appendix A DEBT MANAGEMENT POLICY

DEBT MANAGEMENT POLICY EXHIBIT A

Subject DISCLOSURE POLICY

Index: Finance Department Number: 300-04

Effective Date:	Supersedes:	Staff Contact:	Clerk ID Number:	Approved By and Date:
		Peggy Lauerman

§ 1.0 PURPOSE.

As an issuer of municipal securities, the City of Mill Creek, Washington (the “City”) is subject to the antifraud provisions of the Securities Act of 1933, and the Securities and Exchange Act of 1934 and the Securities Act of Washington (chapter 21.70 RCW). These acts impose various obligations on the City, including requiring disclosure of material information regarding its publicly-offered bonds to allow investors to make informed decisions. All documents and statements prepared or made in connection with the purchase or sale of the City’s securities cannot contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements not misleading.

This policy is designed to assist the City in its compliance with securities laws and to promote best practices regarding disclosure.

The City has three major disclosure obligations: (1) to prepare an official statement for all public offerings of its securities that is delivered to the underwriter(s) for distribution to potential and actual purchasers and that sets forth the terms of the securities and information regarding the City, (2) to provide ongoing disclosure in compliance with paragraph (b)(5) of Securities and Exchange Commission Rule 15c2-12 (“Rule 15c2-12”), and (3) if and when the City provides information that can reasonably be expected to be relied on by the market, to ensure that the information is not inaccurate or misleading.

§ 2.0 ORGANIZATIONS AFFECTED.

Executive and Finance Departments

§ 3.0 REFERENCE.

•	RCW Chapter 21.70 Securities Act of Washington
•	Debt Management Policy 300-04

§ 4.0 POLICY.

4.1 Official Statements and Other Disclosure Documents

The City will prepare an official statement for each publicly offered security offering. The Director of Finance and Administration and the City’s bond counsel, disclosure counsel or financial advisor (as determined prior to each publicly offered security offering) will be responsible for preparing the official statement. If the City requests a rating, a rating presentation will be prepared. In addition, an investor presentation for larger bond issues may be prepared.

4.2 Procedure and Timeline for Preparing Official Statements

In advance of each financing, the City Manager will determine the financing team, including financial advisor(s), bond counsel and underwriter(s) (for negotiated offerings only), and who will be responsible for compiling the official statement. The Director of Finance and Administration and preparer of the official statement are responsible for providing drafts of the official statement or sections of the official statement, as appropriate, and the Director of Finance and Administration and underwriter or financial advisor are responsible for providing drafts of the rating presentation and investor presentation, if applicable, to the financing team and other City officials in a timely manner to provide adequate time for such individuals to perform a thorough review of such documents. The financial advisor or underwriter will prepare a schedule for each financing, including dates for distributing drafts of the official statement and financing team calls and meetings to discuss the official statement.

The Director of Finance and Administration shall provide certain sections of the disclosure documents to individuals with subject matter knowledge of that section for their review and comments.

The City Manager shall review the disclosure documents to provide a broader perspective.

The City Council shall be given a copy of the official statement in advance of its publication and be given the opportunity to comment and ask questions.

4.3 Training

The City shall provide periodic training opportunities to finance staff who participate in the City’s debt offerings regarding disclosure obligations and best practices. Such training sessions shall include education on the City’s disclosure obligations under applicable securities laws and responsibilities and potential liabilities regarding such obligations.

4.4 Document Retention

The Director of Finance and Administration shall retain for a period of at least five years printed copies of each preliminary and final official statement and any written certifications or opinions relating to disclosure matters. The Director of Finance and Administration is not required to retain drafts of any disclosure materials.

4.5 Certifications and Opinions

In connection with the closing of securities, the transcript will include a disclosure counsel opinion, if applicable, a City attorney or other City official certificate or opinion regarding litigation, and a certificate of the City regarding the official statement.

4.6 Ongoing Disclosure

Each time the City issues publicly-offered securities it will enter into a written undertaking to provide continuing disclosure for the benefit of the holders and beneficial owners of the securities as required by Rule 15c2-12. The undertakings will require the City to provide to the Municipal Securities Rulemaking Board an annual report consisting of the City’s audited financial statements and specified historical financial and operating data within such time period after the end of each fiscal year as described in each such undertaking.

In each undertaking, the City also agrees to provide or cause to be provided, in a timely manner, currently not in excess of 10 business days after the occurrence of the event, to the MSRB notice of the occurrence of the “Listed Events,” as defined in the undertaking.

The Director of Finance and Administration (the “Compliance Officer”) will be responsible for complying with each undertaking, including to file the annual reports within the specified time and to provide timely notice of any Listed Event. The Compliance Officer is or will be registered with the Electronic Municipal Market Access website (“EMMA”) and familiar with the filing requirements and procedures. [The duty to comply with the undertaking is included in the Compliance Officer’s job description.] The Compliance Officer shall keep a record of each undertaking and a copy of each filing pursuant to the undertakings. Any failure to comply with an undertaking shall be disclosed in future City official statements for five years after such failure. [The City has signed up with EMMA for email reminders.]

Several of the Listed Events require that notice be filed if the occurrence is material. In determining whether a Listed Event is material, the Compliance Officer shall consider whether the Listed Event involves the same security as the security for the debt for which the City has an undertaking(s), the potential financial impact of the Listed Event, and other factors that the Compliance Officer determines are relevant. In making such determination, the Compliance Officer may consult with the City’s bond counsel, financial advisor or underwriter.

Certain of the Listed Events relate to debt and debt-like instruments other than bonds (“Financial Obligations”), such as bank loans, Public Works Trust Fund Loans, leases that operate as vehicles to borrow money, purchases of real estate on contract, and derivatives and guarantees of such Financial Obligations. The Compliance Officer shall maintain a list of Financial Obligations and any other agreements to covenants, events of default, remedies, priority rights, or other terms that may affect bondholders, if material, as well as provisions of Financial Obligations that if breached may reflect financial difficulties.

4.7 Speaking to the Market

The SEC has stated that when a municipal issuer of outstanding securities provides “information to the public that is reasonably expected to reach investors and the trading market, those disclosures are subject to the antifraud provisions”; the information cannot be misleading or contain incorrect information. In order to violate the antifraud rules, the misrep-resentation must be made publicly, must be material, must involve a security traded on an efficient market and must be such as would induce a reasonable, relying investor to misjudge the value of the security. Examples of information that could be relied on by investors in the City’s outstanding securities include ongoing disclosure filings, audited financial statements, investor presentations, and financial information posted on the City’s website.