Associated Policy
Policy III.3001.D, Debt Management
Procedures
This procedure sets forth the College’s methodology for ensuring continued post-issuance compliance with Internal Revenue Service (IRS) requirements pertaining to tax-exempt bonds and notes (TEBs), and post-issuance compliance with disclosure and contractual obligations pursuant to the requirements of the Exchange Act and the Securities Act including, in particular, Rule 15C2-12 and other applicable rules, regulations and orders.
The Vice Chancellor of Fiscal Affairs (VCFA) has primary responsibility for post-issuance compliance efforts. Specific tasks are delegated as listed below.
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Director of Accounting and Financial Services |
Administration of the investment files related to arbitrage calculations required by the IRS, and coordination with the external arbitrage firm |
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Director of Accounting and Financial Services |
Tracking of expenditures of all debt proceeds, including for cost of issuance and working capital |
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Director of Accounting and Financial Services, in coordination with Campus Deans of Administration |
Tracking and recording private use in the financed facilities |
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Director of Contract and Purchasing Services, in coordination with AVC Fiscal Initiatives and Capital Projects |
Monitoring and maintaining all contracts for bond-financed facilities |
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Vice Chancellor of Fiscal Affairs |
Review of private business use calculations and review of other tax implications pertaining to bond issuance and post-issuance compliance |
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Vice Chancellor of Fiscal Affairs, in coordination with Financial Advisor |
Coordinate annual filing of financial and operating data and event notices with the MSRB through EMMA |
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Vice Chancellor of Fiscal Affairs, in coordination with Financial Advisor |
Communicate with bond counsel and tax attorney |
TEBs are debt obligations, the proceeds of which are used by the College to finance construction of all or a portion of its facilities. The obligation to maintain the tax-exempt status of the TEBs remains throughout the life of the bonds.
Post-issuance tax compliance begins with the debt issuance process itself and provides for a continuing focus on investments of debt proceeds and use of debt-financed property. Post-issuance compliance responsibilities include:
- Tracking bond proceeds spending for qualified purposes
- Maintaining detailed records of the expenditure and investment of the proceeds of the TEBs
- Ensuring the project financing is used in a manner consistent with the federal income tax requirements
- Providing necessary disclosure information regarding financial and operating status
Definitions
Annual Filing: The annual financial information and operating data to be filed with the MSRB pursuant to Rule 15c2-12 and Disclosure Agreements
Arbitrage: The difference between the interest paid on tax-exempt bonds and the interest earned by investing the proceeds of the tax-exempt bonds in higher-yielding taxable securities
EMMA: The Electronic Municipal Market Access system maintained by the MSRB
Event Notice: The notice to be filed with the MSRB through EMMA upon the occurrence of events defined as reportable by the MSRB
Financial Advisor: Firm providing financial advisory services to the College
MSRB: The Municipal Securities Rulemaking Board
Private Business Use: The use of a facility financed with TEBs by any person or entity that is not a state or local government entity, or certain entities described in section 501(c)(3) of the IRS Code
Rule 15c2-12: SEC Rule 15c2-12, as amended, under the Exchange Act
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Date of SLT Approval |
November 26, 2018 |
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Effective Date |
January 29, 2019 |
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Associated Policy |
Policy III.3001.D, Debt Management |
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Primary Owner of Policy Associated with the Procedure |
Vice Chancellor, Fiscal Affairs |
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Secondary Owner of Policy Associated with the Procedure |
Director, Accounting and Financial Services |