RESO 24-017 – Post Issuance Debt Compliance Policy and Procedures
RESOLUTION NO. 24-017
RESOLUTION ADOPTING A POST ISSUANCE DEBT COMPLIANCE
POLICY AND PROCEDURES
WHEREAS, the Internal Revenue Service (“IRS”) is responsible for enforcing
compliance with the Internal Revenue Code and regulations promulgated thereunder
governing certain obligations; and
WHEREAS, the IRS encourages issuers and beneficiaries of such obligations to
adopt and implement a post issuance debt compliance policy and procedures to safeguard
against post-issuance violations; and
WHEREAS, adopting a post issuance debt compliance policy and procedures will
help ensure that all obligations of the City will be in compliance with all applicable federal
regulations.
NOW THEREFORE BE IT RESOLVED, that the City Council for the City of Golden
Valley adopts a Post Issuance Debt Compliance Policy and Procedures attached hereto as
Exhibits A and B.
Adopted by the City Council of Golden Valley, Minnesota this 20th day of February, 2024.
_____________________________
Roslyn Harmon, Mayor
ATTEST:
_____________________________
Theresa Schyma, City Clerk
DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93D0-8886E58E08DB
Prepared by:
Ehlers
3060 Centre Pointe Drive
Roseville, Minnesota 55113
February 20, 2024 – Resolution No. 24-017 Exhibit A
POST-ISSUANCE COMPLIANCE POLICY FOR:
The City of Golden Valley, Minnesota
BUILDING COMMUNITIES. IT’S WHAT WE DO.
DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93D0-8886E58E08DB
The City of Golden Valley, Minnesota
Post-Issuance Debt Compliance Policy
The City Council (the “Council”) of the City of Golden Valley, Minnesota (the “City”) has chosen, by policy, to take steps
to help ensure that all obligations will be in compliance with all applicable federal regulations. This policy may be amended,
as necessary, in the future.
IRS Background
The Internal Revenue Service (“IRS”) is responsible for enforcing compliance with the Internal Revenue Code (the “Code”)
and regulations promulgated thereunder (“Treasury Regulations”) governing certain obligations (for example: tax-exempt
obligations, Build America Bonds, Recovery Zone Development Bonds and various “Tax Credit” Bonds). The IRS encourages
issuers and beneficiaries of such obligations to adopt and implement a post-issuance debt compliance policy and
procedures to safeguard against post-issuance violations.
SEC Background
The Securities and Exchange Commission (“SEC”) is responsible for enforcing compliance with its Rule 15c2-12 (the
“Rule”) of the securities act. Issuers and borrowers of municipal securities (referred to as “obligated persons”)
generally have a requirement to meet specific continuing disclosure standards set forth in continuing disclosure
agreements (“CDA”). Unless the issuer, obligated person, or a specific obligation is exempt from compliance with
CDAs, these agreements are entered into at the time of issuance to enable underwriter(s) to comply with the Rule.
The Rule sets forth certain obligations of (i) underwriters to receive, review and disseminate official statements of
most primary offerings of municipal securities, (ii) underwriters to obtain CDAs from issuers and other obligated
persons to provide material event disclosures and annual financial information on a continuing basis, and (iii)
broker-dealers to have access to such continuing disclosures in order to make recommendations of municipal
securities transactions in the secondary market. The SEC encourages issuers and obligated persons adopt and
implement a post-issuance debt compliance policy and procedures to safeguard against Rule violations.
When obligations are issued, the CDA commits the issuer or obligated person to provide certain financial and
statistical information and material event notices to the public. Issuers and other obligated persons may also choose
to provide periodic, voluntary financial information and filings to investors in addition to fulfilling the specific
responsibilities delineated in CDAs. It is important to note that issuers and other obligated persons should not give
any one investor certain information that is not readily available to all market participants by disseminating
information to the marketplace, at large. Issuers and other obligated persons should be aware that any disclosure
activities determined to be “communicating to the market” can be subject to regulatory scrutiny.
Post-Issuance Debt Compliance Policy Objective
The City desires to monitor these obligations to ensure compliance with the IRS Code, Treasury Regulations and the SEC
Rule. To help ensure compliance, the City has developed the following policy (the “Post-Issuance Debt Compliance
Policy”). The Post-Issuance Debt Compliance Policy shall apply to all obligations, including bonds, notes, loans, lease
purchase contracts, lines of credit, commercial paper or any other form of debt that is subject to compliance.
Post-Issuance Debt Compliance Policy
The Acting City Manager of the City is designated as the City’s agent who is responsible for post-issuance compliance
obligations.
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The Acting City Manager shall assemble all relevant documentation, records and activities required to ensure post-
issuance debt compliance as further detailed in corresponding procedures (the “Post-Issuance Debt Compliance
Procedures”). At a minimum, the Post-Issuance Debt Compliance Procedures for each qualifying obligation will address
the following:
1. General Post-Issuance Compliance
2. General Recordkeeping
3. Arbitrage Yield Restriction and Rebate Recordkeeping
4. Expenditure and Asset Documentation to be Assembled and Retained
5. Miscellaneous Documentation to be Assembled and Retained
6. Additional Undertakings and Activities that Support Sections 1 through 5 above
7. Continuing Disclosure Obligations
8. Compliance with Future Requirements
The Acting City Manager shall apply the Post-Issuance Debt Compliance Procedures to each qualifying obligation and
maintain a record of the results. Further, the Acting City Manager will ensure that the Post-Issuance Debt Compliance
Policy and Procedures are updated on a regular and as needed basis.
The Acting City Manager or any other individuals responsible for assisting the Acting City Manager in maintaining records
needed to ensure post-issuance debt compliance, are authorized to expend funds as needed to attend training or secure
use of other educational resources for ensuring compliance such as consulting, publications, and compliance assistance.
Most of the provisions of this Post-Issuance Debt Compliance Policy are not applicable to taxable governmental obligations
unless there is a reasonable possibility that the City may refund their taxable governmental obligation, in whole or in part,
with the proceeds of a tax-exempt governmental obligation. If this refunding possibility exists, then the City shall treat
the taxable governmental obligation as if such issue were an issue of tax-exempt governmental obligations and comply
with the requirements of this Post-Issuance Debt Compliance Policy.
Private Activity Bonds
The City may issue tax-exempt obligations that are “private activity” bonds because either (1) the bonds finance a facility
that is owned by the City but used by one or more qualified 501(c)(3) organizations, or (2) the bonds are so-called “conduit
bonds”, where the proceeds are loaned to a qualified 501(c)(3) organization or another private entity that finances
activities eligible for tax-exempt financing under federal law (such as certain manufacturing projects and certain affordable
housing projects). Prior to the issuance of either of these types of bonds, the Acting City Manager shall take steps
necessary to ensure that such obligations will remain in compliance with the requirements of this Post-Issuance Debt
Compliance Policy.
In a case where compliance activities are reasonably within the control of a private party (i.e., a 501(c)(3) organization or
conduit borrower), the Acting City Manager may determine that all or some portion of compliance responsibilities
described in this Post-Issuance Debt Compliance Policy shall be assigned to the relevant party. In the case of conduit
bonds, the conduit borrower will be assigned all compliance responsibilities other than those required to be undertaken
by the City under federal law. In a case where the Acting City Manager is concerned about the compliance ability of a
private party, the Acting City Manager may require that a trustee or other independent third party be retained to assist
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with record keeping for the obligation and/or that the trustee or such third party be responsible for all or some portion of
the compliance responsibilities.
The Acting City Manager is additionally authorized to seek the advice, as necessary, of bond counsel, disclosure counsel,
and/or its financial advisor to ensure the City is in compliance with this Post-Issuance Debt Compliance Policy.
Adopted this date February 20, 2024 by the City of Golden Valley, Minnesota
DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93D0-8886E58E08DB
Prepared by:
Ehlers
3060 Centre Pointe Drive
Roseville, Minnesota 55113
February 20, 2024 – Resolution No. 24-017 Exhibit B
POST-ISSUANCE DEBT PROCEDURES FOR:
The City of Golden Valley, Minnesota
BUILDING COMMUNITIES. IT’S WHAT WE DO.
DocuSign Envelope ID: 90AFFD3E-CD68-49BB-93D0-8886E58E08DB
The City of Golden Valley, Minnesota
Post-Issuance Debt Compliance Procedures
The City Council (the “Council”) of the City of Golden Valley, Minnesota (the “City”) has adopted the attached Post-
Issuance Debt Compliance Policy dated February 20, 2024. The Post-Issuance Debt Compliance Policy applies to qualifying
debt obligations issued by the City. As directed by the adoption of the Post-Issuance Debt Compliance Policy, the Acting
City Manager of the City will perform the following Post-Issuance Debt Compliance Procedures for all of the City’s
outstanding debt.
1. General Post-Issuance Compliance
a. Ensure written procedures and/or guidelines have been established for individuals to follow when more
than one person is responsible for ensuring compliance with Post-Issuance Debt Compliance Procedures.
b. Ensure training and/or educational resources related to post-issuance compliance have been approved
and obtained.
c. The Acting City Manager understands that there are options for voluntarily correcting failures to comply
with post-issuance compliance requirements (e.g. as remedial actions under Section 1.141-12 of the
Treasury Regulations and the ability to enter into a closing agreement under the Tax-Exempt Bonds
Voluntary Closing Agreement Program described in Notice 2008-31 (the “VCAP Program”)).
2. General Recordkeeping
a. Retain records and documents for the obligation and all obligations issued to refund the obligation for a
period of at least seven years following the final payment of the obligation. If an obligation is refunded,
then the final payment of the refunding obligation becomes the beginning of the period unless otherwise
directed by the City’s bond counsel.
b. Retain electronic (preferred) and/or paper versions of records and documents for the obligation.
c. General records and documentation to be assembled and retained:
i. Description of the purpose of the obligation (i.e. the project or projects) and the state statute
authorizing the project.
ii. Record of tax-exempt status or revocation of tax-exempt status, if applicable.
iii. Any correspondence between the City and the Internal Revenue Service (“IRS”) and SEC.
iv. Audited financial statements.
v. All accounting audits of property financed by the obligation.
vi. Obligation transcripts, official statements, and other offering documents of the obligation.
vii. Minutes and resolutions authorizing the issuance of the obligation.
viii. Certifications of the issue price of the obligation.
ix. Any formal elections for the obligation (i.e. an election to employ an accounting methodology
other than the specific tracing method).
x. Appraisals, demand surveys, or feasibility studies for property financed by the obligation.
xi. All information reports filed for the obligations.
xii. All management contracts and other service agreements, research contracts, and naming rights
contracts.
xiii. Documents related to governmental grants associated with construction, renovation or purchase
of property financed by the obligations.
xiv. Reports of any prior IRS examinations of the City or the City’s obligations.
xv. All correspondence related to the above (faxes, emails, or letters).
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3. Arbitrage Yield Restriction and Rebate Recordkeeping
a. Investment and arbitrage documentation to be assembled and retained:
i. An accounting of all deposits, expenditures, interest income and asset balances associated with
each fund established in connection with the obligations. This includes an accounting of all monies
deposited to the debt service fund to make debt service payments on the obligations, regardless
of the source derived. Accounting for expenditures and assets is described in further detail in
Section 4.
ii. Statements prepared by Trustee and/or Investment Provider.
iii. Documentation of at least quarterly allocations of investments and investment earnings to each
obligation.
iv. Documentation for investments made with obligation proceeds such as:
1. investment contracts (i.e. guaranteed investment contracts),
2. credit enhancement transactions (i.e. obligation insurance contracts),
3. financial derivatives (e.g. swaps, caps, and collars), and
4. bidding of financial products:
a. Investments acquired with obligation proceeds are purchased at fair market value
(e.g. three bid safe harbor rule for open market securities needed in advance
refunding escrows).
b. Computations of the arbitrage yield.
c. Computations of yield restriction and rebate amounts including but not limited to:
i. Compliance in meeting the “Temporary Period from Yield Restriction Exception” and limiting the
investment of funds after the temporary period expires.
ii. Compliance in meeting the “Rebate Exception.”
1. qualifying for the “Small Issuer Exception,”
2. qualifying for a “Spending Exception,”
a. 6-Month Spending Exception
b. 18-Month Spending Exception
c. 24-Month Spending Exception
3. qualifying for the “Bona Fide Debt Service Fund Exception,” and
4. quantifying arbitrage on all funds established in connection with the obligation in lieu of
satisfying arbitrage exceptions including reserve funds and debt service funds.
d. Computations of yield restriction and rebate payments.
e. Timely Tax Form 8038-T filing, if applicable.
i. Remit any arbitrage liability associated with the obligations to the IRS at each five-year anniversary
date of the obligations, and the date in which the obligations are no longer outstanding
(redemption or maturity date), whichever comes sooner, within 60 days of said date.
f. Timely Tax Form 8038-R filing, if applicable.
i. Remit the form after the date in which the obligations are no longer outstanding (redemption or
maturity date), whichever comes sooner, within 2 years of said date.
g. Procedures or guidelines for monitoring instances where compliance with applicable yield restriction
requirements depends on subsequent reinvestment of obligation proceeds in lower yielding investments
(e.g. reinvestment in zero coupon SLGS).
4. Expenditure and Asset Documentation to be Assembled and Retained
a. Documentation of allocations of obligation proceeds to expenditures (e.g. allocation of proceeds to
expenditures for the construction, renovation or purchase of facilities owned and used in the performance
of exempt purposes).
i. Such allocation will be done not later than the earlier of:
1. eighteen (18) months after the later of the date the expenditures are paid, or the date the
projects, if any, that are financed by the obligations are placed in service; or
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2. the date sixty (60) days after the earlier of the fifth anniversary of the issue date of the
obligations, or the date sixty (60) days after the retirement of the obligations.
b. Documentation of allocations of obligation proceeds to issuance costs.
c. Copies of requisitions, draw schedules, draw requests, invoices, bills, and cancelled checks related to
obligation proceed expenditures during the construction period.
d. Copies of all contracts entered into for the construction, renovation or purchase of facilities financed with
obligation proceeds.
e. Records of expenditure reimbursements incurred prior to issuing obligations for projects financed with
obligation proceeds (declaration of official intent/reimbursement resolutions including all modifications).
f. List of all facilities and equipment financed with obligation proceeds.
g. Depreciation schedules for depreciable property financed with obligation proceeds.
h. Documentation that tracks the purchase and sale of assets financed with obligation proceeds.
i. Documentation of timely payment of principal and interest payments on the obligations.
j. Tracking of all issue proceeds and the transfer of proceeds into the debt service fund as appropriate.
k. Documentation that excess earnings from a Reserve Fund are transferred to the Debt Service Fund on an
annual basis. Excess earnings are balances in a Reserve Fund that exceed the Reserve Fund requirement.
5. Miscellaneous Documentation to be Assembled and Retained
a. Ensure that the projects, while the obligations are outstanding, will avoid IRS private activity concerns.
b. The Acting City Manager shall monitor the use of all obligation-financed facilities in order to:
i. Determine whether private business uses of obligation-financed facilities have exceeded the de
minimus limits set forth in Section 141(b) of the Code as a result of:
1. sale of the facilities;
2. sale of City capacity rights;
3. leases and subleases of facilities including easements or use arrangements for areas
outside the four walls (e.g. hosting of cell phone towers);
4. leasehold improvement contracts, licenses, management contracts in which the City
authorizes a third party to operate a facility (e.g. cafeteria);
5. research contracts;
6. preference arrangements in which the City permits a third-party preference (e.g. parking
in a public parking lot, joint ventures, limited liability companies or partnership
arrangements);
7. output contracts or other contracts for use of utility facilities including contracts with large
utility users;
8. development agreements which provide for guaranteed payments or property values
from a developer;
9. grants or loans made to private entities including special assessment agreements;
10. naming rights agreements; and
11. any other arrangements that provide special legal entitlements to nongovernmental
persons.
ii. Determine whether private security or payments that exceed the de minimus limits set forth in
Section 141(b) of the Code have been provided by nongovernmental persons with respect to such
obligation-financed facilities.
c. The Acting City Manager shall provide training and educational resources to any City staff that have the
primary responsibility for the operation, maintenance, or inspection of obligation-financed facilities with
regard to the limitations on the private business use of obligation-financed facilities and as to the
limitations on the private security or payments with respect to obligation-financed facilities.
d. The City shall undertake the following with respect to the obligations:
i. An annual review of the books and records maintained by the City with respect to such obligations.
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ii. An annual physical inspection of the facilities financed with the proceeds of such obligations,
conducted by the Acting City Manager with the assistance of any City staff who have the primary
responsibility for the operation, maintenance, or inspection of such obligation-financed facilities.
e. Changes in the project that impact the terms or commitments of the obligation are properly documented
and necessary certificates or opinions are on file.
6. Additional Undertakings and Activities that Support Sections 1 through 5 above:
a. The Acting City Manager will notify the City’s bond counsel, trustee, financial advisor and arbitrage
provider of any survey or inquiry by the IRS immediately upon receipt. Usually responses to IRS inquiries
are due within 21 days of receipt. Such IRS responses require the review of the above-mentioned data and
must be in writing. As much time as possible is helpful in preparing the response.
b. The Acting City Manager will consult with the City’s bond counsel, financial advisor and arbitrage provider
before engaging in post-issuance credit enhancement transactions (e.g. obligation insurance, letter of
credit, or hedging transaction).
c. The Acting City Manager will monitor all “qualified tax-exempt debt obligations” (often referred to as
“bank qualified” obligations) within the first calendar year to determine if the limit is exceeded, and if
exceeded, will address accordingly. For obligations issued during years 2009 and 2010 the limit was
$30,000,000. During this period, the limit also applied to pooled financings of the governing body and
provides a separate $30,000,000 for each 501 (c)(3) conduit borrower. In 2011 and thereafter it is
$10,000,000 unless changed by Congress.
d. Identify any post-issuance change to terms of obligations which could be treated as a current refunding of
“old” obligations by “new” obligations, often referred to as a “reissuance.”
e. The Acting City Manager will consult with the City’s bond counsel prior to any sale, transfer, change in use
or change in users of obligation-financed property which may require “remedial action” under applicable
Treasury Regulations or resolution pursuant to the VCAP Program.
i. A remedial action has the effect of curing a deliberate action taken by the City which results in
satisfaction of the private business test or private loan test. Remedial actions under Section 1.141-
12(d)(e) and (f) include the redemption of non-qualified obligations and/or the alternative uses of
proceeds or the facility (i.e. to be used for another qualified purpose).
f. The Acting City Manager will ensure that the appropriate tax form for federal subsidy payments is prepared
and filed in a timely fashion for applicable obligations (e.g. direct pay or other tax credit bonds).
7. Continuing Disclosure Obligations
a. Identify personnel at the City to be responsible for compliance with continuing disclosure obligations as
defined by the Rule, and any covenants of outstanding obligations, and any policies of the City.
b. The personnel responsible for compliance may have the ability to assign responsibilities, delegate where
appropriate or engage a dissemination agent or third-party service providers to perform all or some of the
duties described in this section. The City cannot delegate its compliance responsibilities.
c. The City should specify how providers or delegated authorities will be monitored and supervised.
d. The City should identify the documents that set forth the respective requirements being monitored at the
time of closing of each obligation.
e. The City should catalog all outstanding Continuing Disclosure Agreements and other reporting
requirements and establish consolidated filing requirements.
f. The City should identify the frequency of the actions to be undertaken to ensure compliance, establish a
system or filing alerts or reminders to administer the filing and reporting requirements.
g. The Acting City Manager for compliance must be made aware of any new outstanding debt, changes to
obligation or loan covenants, events of acceleration or default that would materially affect investors.
h. The City should review a compliance checklist to verify compliance with CDA and other reporting
requirements, at least annually, although it may be advisable to provide more frequent reviews in
connection to specific material events.
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i. The City should monitor for mandatory material events specifically identified in accordance with the Rule
and file required notices within 10 days of occurrence.
i. Principal and interest payment delinquencies.
ii. Non-payment related defaults, if material.
iii. Unscheduled draws on debt service reserves reflecting financial difficulties.
iv. Unscheduled draws on credit enhancements reflecting financial difficulties.
v. Substitution of credit or liquidity providers or their failure to perform.
vi. Adverse tax opinion, IRS notices or material events affecting the tax status of the obligation.
vii. Modifications to rights of security holders, if material.
viii. Obligation calls, if material.
ix. Defeasances.
x. Release, substitution or sale of property securing repayment of the obligations, if material.
xi. Rating Changes.
xii. Bankruptcy, insolvency, receivership, or similar event of the obligated person(s).
xiii. Merger, consolidation, or acquisition of the obligated person, if material.
xiv. Appointment of a successor or additional trustee, or change of name of a trustee, if material.
xv. Incurrence of financial obligation of the City, if material, or agreement to covenants, events of
default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of
which affect security holders, if material.
xvi. Default, event of acceleration, termination event, modification of terms, or other similar events
under the terms of the financial obligation of the City, any of which reflect financial difficulties.
j. In addition to the mandatory material events, the City should review and file any additional or voluntary
event notices.
k. The City should maintain a catalog of all outstanding obligations whether publicly offered or privately
placed, and the terms and conditions that govern default or acceleration provisions, if any.
l. Any missed filing requirement should be remedied with a failure to file notice as soon as possible once the
late filing is identified and the required information is available to file.
m. Sensitive information such as bank accounts and wire information should be redacted from documents
prior to posting on EMMA.
n. The City needs to monitor for changes in law and regulations that effect continuing disclosure obligations
and review disclosure policies and procedures periodically to ensure compliance and consistency with
regulations and market expectations.
8. Compliance with Future Requirements
a. Take measures to comply with any future requirements issued beyond the date of these Post-Issuance
Debt Compliance Procedures which are essential to ensuring compliance with applicable state and federal
regulations.
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