[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[1] (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.
[1]
Editor's Note: See 17 CFR 240.15c2-12.
A.
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.
B.
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:
A.
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;
B.
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;
C.
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;
D.
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;
E.
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:
A.
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;
B.
"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;
C.
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
D.
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
E.
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.
A.
The records to be maintained are to include:
(1)
The official transcript of proceedings (including the issuance documentation)
for the original issuance of the bonds;
B.
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.
A.
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.
B.
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.
