[HISTORY: Adopted by the Council of the Borough of Lansdale as indicated in article histories. Amendments noted where applicable.]
[Adopted 3-18-2015 by Ord. No. 2015-1867]
The purpose of these compliance policies and procedures ("compliance policy") is to ensure compliance with requirements of the Internal Revenue Code of 1986, as amended (the "code"), that must be satisfied to maintain the tax-exempt status of any tax-exempt bonds (the "bonds") issued by the Borough of Lansdale (the "issuer") and requirements of the Securities and Exchange Commission (the "SEC") and the Municipal Securities Rulemaking Board (the "MSRB") under SEC Rule 15c2-12 (the "rule") regarding secondary market disclosure filings relating to the issuer's bonds. In connection with the issuance of each series of bonds, the issuer will, or already has, executed a tax certificate, a continuing disclosure agreement and other documentation as advised by bond or tax counsel ("collectively, the "issuance documentation") which will require it to take certain actions with respect to the continuing disclosure requirements under the code and the rule for such bonds.
Editor's Note: See 17 CFR 240.15c2-12.
The Borough Council of the issuer (the "governing body") has the overall, final responsibility for monitoring ongoing compliance with the requirements of the code, the rule, this compliance policy and the issuance documentation. The governing body assigns to the Finance Director/Treasurer (the "Compliance Officer") the primary operating responsibility to monitor such compliance. The Compliance Officer may delegate aspects of such responsibility to other employees or contractors of the issuer, but shall retain overall responsibility for ensuring compliance and coordinating compliance when more than one individual or contractor is given responsibility.
This compliance policy shall be used in conjunction with the issuance documentation. This compliance policy is not a substitute for the specific compliance requirements related to each bond issue contained in the applicable issuance documentation, and the Compliance Officer shall review the issuance documentation in connection with each bond issue and consult with bond counsel and other professionals as to monitoring ongoing compliance with the requirements contained in the applicable issuance documentation.
The Compliance Officer shall maintain or cause to be maintained records of:
Purchases and sales of investments made with proceeds of bonds (including amounts treated as gross proceeds of bonds under Section 148 of the code), any documentation required to establish the fair market value of investments upon purchase and receipts of earnings on those investments;
Expenditures made with proceeds of bonds (including investment earnings on bond proceeds) for the governmental purposes of the bonds, such as for the costs of purchasing, constructing and/or renovating property and facilities;
Calculations that will be sufficient to demonstrate that the expenditure of proceeds has complied with an available spending exception to the arbitrage rebate requirement in respect of that bond issue;
Calculations that will be sufficient to demonstrate that the rebate amount, if any, that was payable to the United States of America in respect of investments made with gross proceeds of that bond issue and records showing that such rebate amount, if any, was paid and a Form 8038-T filed with the IRS on a timely basis;
Information and records showing that investments held in yield-restricted advance refunding or defeasance escrows for refunded bonds, investments made with unspent bond proceeds after the expiration of the applicable temporary period and any other bond proceeds subject to yield restriction were not invested in higher yielding investments; and such other information and records as required by the issuance documentation.
The Compliance Officer shall enforce the restrictions on private business use that apply to land, buildings, facilities and equipment ("property") which are financed with proceeds of bonds, and of the restriction on the use of proceeds of bonds to make or finance any loan to any person other than a state or local government unit, including:
Under Section 141 of the code, no more than generally 10% of the proceeds (5% in certain cases) of any bond issue (including the property financed with the bonds) may be used for private business use, and no more than the lesser of $5,000,000 or 5% of the proceeds of a bond issue may be used to make or finance a loan to any person other than a state or local government unit;
"Private business use" means use by any person other than a state or local government unit, including business corporations, partnerships, limited-liability companies, associations, nonprofit corporations, natural persons engaged in trade or business activity, and the United States of America and any federal agency, as a result of ownership of the property or use of the property under a lease, management or service contract (except for certain qualified management or service contracts), output contract for the purchase of electricity or water, privately sponsored research contract (except for certain qualified research contracts), naming rights contract, public-private partnership arrangement, or any similar use arrangement that provides special legal entitlements for the use of the bond-financed property;
Before entering into any use arrangement with a nongovernmental person that involves the use of bond-financed property, the Compliance Officer will evaluate whether that use arrangement, if put into effect, will be consistent with the restrictions on private business use of the bond-financed property; and
In connection with the evaluation of any proposed nongovernmental use arrangement under Subsection C, the Compliance Officer shall determine whether to engage nationally recognized bond counsel to obtain advice on whether that use arrangement, if put into effect, will be consistent with the restrictions on private business use of the bond-financed property, and, if not, whether any remedial action permitted under Section 141 of the code may be taken as a means of enabling that use arrangement to be put into effect without adversely affecting the tax-exempt status of any bonds; and
Records shall be maintained of such nongovernmental uses, if any, of bond-financed property, including copies of the pertinent leases, contracts or other documentation, and the related determination that those nongovernmental uses are not inconsistent with the status of the bonds that financed the property, including any advice received from bond counsel.
The Compliance Officer shall be responsible for the filing of annual reports and notices of material events as required by the rule and the issuer's continuing disclosure agreements. Such filings shall be made by the Compliance Officer using the MSRB's electronic filing system (currently referred to as the "Electronic Municipal Market Access system" or "EMMA") in accordance with the applicable continuing disclosure agreement. The Compliance Officer shall retain copies of each filing together with a receipt of filing or other acknowledgement from the MSRB.
It is the policy of the issuer that, unless otherwise permitted by future IRS regulations or other guidance, written records (which may be in electronic form) will be maintained with respect to each issue of bonds for as long as those bonds remain outstanding, plus six years. For this purpose, bonds include refunding bonds that refinance the property that was financed by the original bonds.
The records to be maintained are to include:
The official transcript of proceedings (including the issuance documentation) for the original issuance of the bonds;
The basic purpose of the foregoing record retention policy is to enable the issuer to readily demonstrate to the IRS upon an audit of any bond issue that the issuer has complied with all applicable requirements that it must satisfy after the issue date of the bonds under the code and to demonstrate compliance with the rule.
Internal Revenue Code. If the applicable requirements of the code have been violated with respect to any issue of bonds, the Compliance Officer shall determine whether to pursue any remedial actions available under the code or through the IRS to maintain the tax-exempt status of any bonds and recommend such remedial action to the governing body.
Secondary market disclosure. If any required filings described in § 34-5 or any of the issuance documentation have not been timely made or are inaccurate or incomplete, the Compliance Officer shall determine if and to what extent remedial action is required and recommend such remedial action to the governing body.
The Compliance Officer may consult with bond counsel if reasonably required in order to permit the Compliance Officer to perform his or her duties hereunder. The Compliance Officer may also request to attend such training, or to obtain such training materials, as are reasonably required in order to permit the Compliance Officer to perform his or her duties hereunder.