HomeMy WebLinkAbout2019-06-17-Resolutions 19-240_Bond Disclosure PolicyTHE CITY OF WAUKEE, IOWA
RESOLUTION 19-240
APPROVING BOND DISCLOSURE POLICY
IN THE NAME AND BY THE A UTHORITY OF THE CITY OF WA UKEE, IOWA
WHEREAS, the City of Waukee, Iowa is a political subdivision, organized and existing
under and by virtue of the constitution and laws of the State of Iowa who routinely sells
municipal securities to underwriters; AND,
WHEREAS, Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as
amended (the "Rule"), imposes requirements upon the City's municipal securities
offerings including providing an official statement and a continuing disclosure agreement
with the purchaser or underwriter in connection with each new issuance of obligations
which fall within the Rule; AND,
WHEREAS, to provide a protocol for future compliance with the Rule, the City has
prepared a Bond Disclosure Policy outlining procedures related to the preparation of its
primary and secondary disclosures for existing and future municipal securities issued by
the City.
NOW THEREFORE BE IT RESOLVED that the City Council of Waukee, Iowa, in
session this 17th day of June 2019, does hereby approve and adopt the Bond Disclosure
Policy attached hereto as Exhibit A; and identifies the Finance Director as the Disclosure
Coordinator therein is hereby approved and shall take any and all action necessary to
properly implement the Policy.
4iarn F. eard, Wyor
Attest:
Lm)t" .h 04�4
Rebecca D. Schuett, City Clerk
RESULTS OF VOTE: AYE
Anna Bergman X
R. Charles Bottenberg X
Courtney Clarke X
Shelly Hughes
Larry R. Lyon X
NAY ABSENT
ABSTAIN
BOND DISCLOSURE POLICY
Waukee, Iowa
Approved: June 17, 2019
Article I
General Overview
Section 1.01. Purpose. This Bond Disclosure Policy ("Policy") of Waukee, Iowa
(the "City") is intended to ensure that the City efficiently carries out its primary
(offering) and secondary (continuing) disclosure obligations with respect to Securities it
issues or guarantees pursuant to Rule 15c2-12, as amended (the "Rule"), promulgated
under the Securities Exchange Act of 1934, as amended.
Section 1.02. Background. The Rule prohibits underwriters from purchasing
bonds, notes or other obligations for resale to private investors unless the issuer
provides an official statement and contractually promises to provide specified
disclosures as required in the Rule. To facilitate compliance with the Rule, each issuer
must enter into a continuing disclosure agreement ("Disclosure Agreement(s)") with the
purchaser or underwriter in connection with each new issuance of Securities, thereby
creating a contractual promise on behalf of the issuer to provide the market with these
disclosures. The City is responsible for ensuring that all disclosure documents contain
accurate information. The SEC has asserted that, under Rule 10b-5, "disclosure
documents used by municipal issuers, such as official statements, are subject to the
prohibition against false or misleading statements of material facts, including the
omission of material facts necessary to make the statements made, in light of the
circumstances in which they were made, not misleading."
Section 1.03. Securities Subject to the Rule. Various offerings of Securities are
fully or partially exempt from the continuing disclosure provisions under the Rule.
Offerings with an aggregate original principal amount of less than $1 million ("Small
Offerings"), offerings sold prior to July 3, 1995 ("Old Offerings") and offerings sold by an
issuer directly to investors without using a broker, dealer, or municipal securities dealer
as an underwriter or placement agent ("Direct Offerings") are entitled to certain
exemptions from all continuing disclosure provisions under the Rule, unless the City
voluntarily agrees to provide continuing disclosures for an otherwise exempt offering.
Such exempt offerings may constitute a reportable "Financial Obligation" under a
Disclosure Agreement entered into after February 27, 2019.
Section 1.04. Definitions. In addition to the terms defined above, the following
capitalized terms shall have the following meanings:
(A) "Annual Reports" shall have the meaning set forth in Section 4.01 of this
Policy.
(B) "Disclosure Coordinator" means the individual designated in Section 2.01
of this Policy.
(C) "Disclosure Counsel" means legal counsel (which may be bond counsel
retained under separate engagement for a series of Securities) engaged for the
purpose of assisting the City in meeting its primary and secondary market
disclosure obligations.
(D) "EMMA" means the Electronic Municipal Market Access system of the
MSRB. Information regarding submissions to EMMA is currently available at
http://emma.msrb.org/.
(E) "Employee" means any person who, as part of his or her employment, has
regular responsibility for the administration of matters related to Securities and
Financial Obligations.
(F) "Financial Advisor" means a municipal advisor engaged for the purpose of
assisting with the City's structuring and sale of Securities and incurrence of
Financial Obligations.
(G) "Financial Obligation" means a (i) debt obligation'; (ii) derivative
instrument entered in connection with, or pledged as security or a source of
payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii).
By way of further explanation of the definition:
a. The term Financial Obligation is intended to distinguish debt, debt -like,
and debt -related obligations (which could impact the City's liquidity,
SEC guidance as of the date of the policy indicates the term "debt obligation" includes, but is not limited
to: (1) any short-term or long-term debt obligation of the County under the terms of an indenture, loan
agreement or similar contract; (2) a direct purchase of municipal securities of the County by an investor;
(3) a direct loan to the County by a bank; and (4) generally, lease arrangements entered into by the
County that operate as a vehicle to borrow money. The County should analyze each "Financial
Obligation" upon the facts and circumstances in accordance with the Rule, and any subsequent guidance
thereunder by the SEC.
overall creditworthiness, or an existing Securities -holder's rights) from
ordinary financial and operating obligations incurred in the normal
course of City operations.
b. The term Financial Obligation shall not include Securities as to which an
official statement has been provided to the MSRB consistent with the
Rule.
c. The term Financial Obligation includes lease arrangements entered into
by the City that operate as vehicles to borrow money, e.g. create an
obligation to repay borrowed money over time under the terms of a
lease equivalent to a similar obligation incurred under the terms of an
indenture, loan agreement or similar contract, but does not include
lease arrangements that are not vehicles to borrow money (e.g.
operating leases) which do not represent competing debt of the City.
d. A "derivative instrument" includes a swap, security -based swap,
futures contract, forward contract, option, any combination of the
foregoing, or any similar instrument to which the City is a counterparty,
designed to hedge against the risks of a related debt obligation, as
opposed to such vehicles designed to mitigate investment risk.
(H) "Fiscal Year" means the fiscal year of the City, beginning on July 1 and
ending on the following June 30.
(1) "Listed Event" means any of the events listed in Exhibit A of this Policy.
(J) "MSRB" means the Municipal Securities Rulemaking Board or any other
Municipal Securities Rulemaking Board by the Rule.
(K) "Official Statement" shall have the meaning set forth in Section 3.01 of
this Policy,
(L) "SEC" means the United States Securities and Exchange Commission.
(M) "Securities" means any securities issued by, or whose payment is
guaranteed by the City, that are subject to the Rule.
Article II
Key Participants and Responsibilities
Section 2.01. Disclosure Coordinator. By adoption of this Policy, the City hereby
appoints the Finance Director to act as the Disclosure Coordinator hereunder.
Section 2.02. Responsibilities. The Disclosure Coordinator is responsible for the
following tasks:
(A) reviewing and approving all preliminary and final official statements
relating to the City's Securities, together with any supplements, for which
a Disclosure Agreement is required (each, an "Official Statement"), before
such documents are released, in accordance with Article III below;
(B) moderating City Council (or departmental, if delegated) approval of all
Financial Obligations triggering a Listed Event Notice under any new
Disclosure Agreement entered into after February 27, 2019;
(C) reviewing the City's status and compliance with Disclosure Agreements,
including filings of disclosure documents thereunder and in compliance
with this Policy, in accordance with Articles IV and V below;
(D) serving as a "point person" for personnel to communicate issues or
information that should be or may need to be included in any disclosure
document;
(E) recommending changes to this Policy to the City Council as necessary or
appropriate;
(F) communicating with third parties, including coordination with outside
consultants assisting the City, in the preparation and dissemination of
disclosure documents to make sure that assigned tasks have been
completed on a timely basis and make sure that the filings are made on a
timely basis and are accurate;
(G) in anticipation of preparing disclosure documents, soliciting "material"
information (as defined for purposes of federal securities law) from
Employees identified as having knowledge of or likely to have information
of Listed Events under Article IV or relevant to Disclosure Agreements;
(H) maintaining records documenting the City's compliance with this Policy;
and
(1) ensuring compliance with training procedures as described below.
The responsibilities of the Disclosure Coordinator to make certain filings with the MSRB
under Articles IV (Annual Report Filings) and V (Listed Event Filings) may be delegated by
contract to a dissemination agent, under terms approved by the City Council.
Article III
Official Statements
Section 3.01. Review and Approval of Official Statements. Whenever the City
issues Securities, an Official Statement may be prepared. Each of these Official
Statements contains information relating to the City's finances. The Disclosure
Coordinator (with advice from Bond Counsel, Disclosure Counsel, and/or Financial
Advisor) shall have primary responsibility for ensuring that all such information is
accurate and not misleading in any material aspect. The Official Statement may also
include a certification that the information contained in the Official Statement regarding
the City, as of the date of each Official Statement, does not contain any untrue
statement of material fact or omit to state any material fact necessary to make the
information contained in the Official Statement, in light of the circumstances under
which it was provided, not misleading. When undertaking review of a final or
preliminary Official Statement, the Disclosure Coordinator shall:
(A) review the Official Statement to ensure: (i) that there are no material
misstatements or omissions of material information in any sections, (ii)
that the information relating to the City that is included in the Official
Statement is accurate, and (iii) that when necessary the information
relating to the City has been reviewed by a knowledgeable Employee or
other appropriate person;
(B) draft, or cause to be drafted, for the Official Statement descriptions of (i)
any material current, pending or threatened litigation, (ii) any material
settlements or court orders and (iii) any other legal issues that are
material information for purposes of the Official Statement; and
(C) report any significant disclosure issues and concerns to the City Council
(with advice, as necessary, from Bond Counsel, Disclosure Counsel, and/or
Financial Advisor).
Section 3.02. Submission of Official Statements to City Council for Approval. The
Disclosure Coordinator shall submit all Official Statements to the City Council for review
and approval. The City Council shall undertake such review it deems necessary. This
may include consultation with the Disclosure Coordinator, Bond Counsel, Disclosure
Counsel, and/or the Financial Advisor to fulfill the City's responsibilities under applicable
federal and state securities laws.
Article IV
Annual Report Filings
Section 4.01. Overview. Under the Disclosure Agreements the City has entered
into in connection with certain of its Securities, the City is required each year to file
Annual Reports with the EMMA system. Such Annual Reports are generally required to
include: (1) certain updated financial and operating information as outlined in each
Disclosure Agreement, and (2) the City's audited financial statements. The documents,
reports and notices required to be submitted to the MSRB pursuant to this Policy shall
be submitted through EMMA in an electronic format (searchable PDF), and shall be
accompanied by identifying information, in the manner prescribed by the MSRB, or in
such other manner as is consistent with the Rule. A description of the format and
information presently prescribed to be filed with EMMA is included in Exhibit B. To
facilitate the City's Disclosure Agreements the Disclosure Coordinator shall:
(A) maintain a record of all Disclosure Agreements of the City using a chart
substantially in the form attached as Exhibit C, which shall identify and
docket all deadlines;
(B) schedule email reminders on the EMMA website for each issue of
Securities to help ensure timely filing of financial disclosures;
(C) ensure that preparation of the Annual Reports commences as required
under each specific Disclosure Agreement; and
(D) comply with the City's obligation to file Annual Reports by submitting or
causing the required (i) annual financial information and operating data
and (ii) audited financial statements to be submitted to the MSRB through
EMMA.
(i) In the event audited financial statements are not available by
the filing deadline imposed by the Disclosure Agreement, the
Disclosure Coordinator shall instead timely submit or cause
to be submitted unaudited financial statements, with a
notice to the effect that the unaudited financial statements
are being provided pending the completion of audited
financial statements and that the audited financial
statements will be submitted to EMMA when they have been
prepared. In the event neither audited nor unaudited
financial statements are timely posted, the City shall cause to
be filed a "failure to file notice" in accordance with the Rule.
The failure to file notice for audited financial statements
shall include information describing the nature and/or cause
of the failure to meet the contractual deadline and, if
available, an approximate timeframe for when the
completed audited financial statement is expected to be
submitted. Audited financial statements shall be filed as
soon as available. If updated financial and operating
information is not posted by the filing deadline, the
Disclosure Coordinator shall cause a "failure to file notice" to
be posted to EMMA in accordance with the Rule,
(ii) All documents submitted to the MSRB through EMMA that
are identified by specific reference to documents already
available to the public on the MSRB's Internet website or
filed with the SEC shall be clearly identified by cross
reference.
Article V
Listed Event Filings
Section 5.01. Disclosure of Listed Events. Pursuant to Rule 15c2-12(b)(5)(i)(C),
the City is obligated to disclose to the MSRB notice of certain specified events with
respect to the Securities (a "Listed Event"). Employees shall be instructed to notify the
Disclosure Coordinator upon becoming aware of any of the Listed Events in the City's
Disclosure Agreements. The Disclosure Coordinator may consult with Bond Counsel,
Disclosure Counsel, or the Financial Advisor, to determine if an occurrence is a Listed
Event, and whether a filing is required or is otherwise desirable. If such a filing is
deemed necessary, the Disclosure Coordinator shall cause a notice of the Listed Event (a
"Listed Event Notice") that complies with the Rule to be prepared, and the Disclosure
Coordinator shall cause to be filed the Listed Event Notice as required by the Rule as
follows:
(A) Prior to issuance of new Securities after February 27, 2019, a complete list
of current Financial Obligations shall be compiled in accordance with
Exhibit D hereof, and submitted to the Disclosure Coordinator for
continuous monitoring with regard to compliance with all Disclosure
Agreements entered into on or after February 27, 2019.
(B) The Disclosure Coordinator shall monitor and periodically review the
Listed Events identified on Exhibit A, in connection with the Disclosure
Agreements identified on the chart in Exhibit C to determine whether any
event has occurred that may require a filing with EMMA. To the extent
Disclosure Coordinator determines notice for an event is not required
based on the event not achieving a level of materiality, Disclosure
Coordinator shall document the basis for the determination.
(C) For Securities to which the Listed Event or Events are applicable, the Listed
Event Notice shall be filed in a timely manner not in excess of ten (10)
business days after the occurrence of the Listed Event.
(D) The Disclosure Coordinator shall monitor Securities data on EMMA
regarding rating agency reports for rated Securities, and may subscribe to
any available ratings agency alert service regarding the ratings of any
Securities
Article VI
Miscellaneous
Section 6.01. Documents to be Retained. The Disclosure Coordinator shall be
responsible for retaining records demonstrating compliance with this Policy. The
Disclosure Coordinator shall retain an electronic or paper file ("Transcript") for each
Annual Report the City completes. Each Transcript shall include final versions of
documents submitted to the MSRB through EMMA, and any documentation related to
determinations of materiality (or immateriality) of Listed Events. The Transcript shall be
maintained for the period that the applicable Securities are outstanding, and for a
minimum of five [5) years after the date the final Annual Report for an issue of
Securities is posted on EMMA.
Section 6.02. Education and Training. The City shall conduct periodic training to
assist the Disclosure Coordinator, Employees and the Supervisors, as necessary and
appropriate, in understanding and performing their responsibilities under this Policy.
Such training sessions may include a review of this Policy, the disclosure obligations
under the Disclosure Agreement(s), applicable federal and state securities laws,
including the Listed Events in Exhibit A, and the disclosure responsibilities and potential
liabilities of members of City staff and members of the City Council. Training sessions
may include meetings with Bond Counsel, Disclosure Counsel, Dissemination Agent, if
any, or Financial Advisor, and teleconferences, attendance at seminars or conferences
where disclosure responsibilities are discussed, and/or recorded presentations.
Disclosure Coordinator shall maintain a record of training activities in furtherance of this
Policy.
Section 6.03. Public Statements Regarding Financial Information. Whenever the
City makes statements or releases information relating to its finances to the public that
is reasonably expected to reach investors and the trading markets (including, without
limitation, all Listed Event Notices, statements in the annual financial reports, and other
financial reports and statements of the City), the City is obligated to ensure that such
statements and information are accurate and complete in all material aspects. The
Disclosure Coordinator shall assist the City Council, City Clerk's Office, City
Administrator's Office, and City Attorney's Office in ensuring that such statements and
information are accurate and not misleading in any material aspect. Investment
information published on the City's website shall include a cautionary statement
referring investors to EMMA as the official repository for the City's Securities -related
data.
EXHIBIT A
LISTED EVENTS
The following events automatically trigger a requirement to file on EMMA within ten
(10) business days of their occurrence (listed events are subject to change by the SEC):
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults, if material;
(3) Unscheduled draws on debt service reserves reflecting financial difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial difficulties;
(5) Substitution of credit or liquidity providers, or their failure to perform;
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue (IRS
Form 5701-TEB) or other material notices or determinations with respect to the
tax status of the security, or other material events affecting the tax status of the
security;
(7) Modifications to rights of security holders, if material;
(8) Bond calls, if material, and tender offers;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the
securities, if material;
(11) Rating changes;
(12) Bankruptcy, insolvency, receivership or similar event of the obligated
person 2;
2 The term "obligated person" for purposes of the Rule shall mean the party, if other than the County, responsible
for the Securities, e.g. in a conduit issue sold through the County, the conduit party would be the "obligated
person" under the Disclosure Agreement.
A-
Note to paragraph (b)(5)(i)(C)(12):
For the purposes of the event identified in paragraph (b)(5)(i)(C)(12) of this
section, the event is considered to occur when any of the following occur:
The appointment of a receiver, fiscal agent or similar officer for an
obligated person in a proceeding under the U.S. Bankruptcy Code or in any
other proceeding under state or federal law in which a court or
governmental authority has assumed jurisdiction over substantially all of
the assets or business of the obligated person, or if such jurisdiction has
been assumed by leaving the existing governing body and officials or
officers in possession but subject to the supervision and orders of a court
or governmental authority, or the entry of an order confirming a plan of
reorganization, arrangement or liquidation by a court or governmental
authority having supervision or jurisdiction over substantially all of the
assets or business of the obligated person.
(13) The consummation of a merger, consolidation, or acquisition involving an
obligated person or the sale of all or substantially all of the assets of the
obligated person, other than in the ordinary course of business, the entry into a
definitive agreement to undertake such an action or the termination of a
definitive agreement relating to any such actions, other than pursuant to its
terms, if material;
(14) Appointment of a successor or additional trustee or the change of name of a
trustee, if material;
Additionally, the following events apply to Disclosure Agreements entered into by the
City on or a ter February 27, 2019:
(15) Incurrence of a Financial Obligation of the obligated person, if material', or
agreement to covenants, events of default, remedies, priority rights, or other
similar terms of a Financial Obligation of the obligated person, any of which
affect security holders, if material*; and
3 Materiality is determined upon the incurrence of each distinct Financial Obligation, taking into account all
relevant facts and circumstances. A Financial Obligation is considered to be incurred when it is enforceable against
the City. Listed Event Notices for Financial Obligations (e.g. under 15 and 16 above) should generally include a
description of the material terms of the Financial Obligation, including: (i) date of the incurrence, (ii) principal
amount, (iii) maturity and amortization; (iv) interest rate(s), if fixed, or method of computation, if variable, (v)
other appropriate terms, based on the circumstances. In addition to a summary of material terms, the City may
alternatively, or in addition, submit related materials, such as transaction documents (which may require some
redaction), terms sheets prepared in connection with the Financial Obligation, or continuing covenant agreements
or financial covenant reports.
A-2
(16) Default, event of acceleration, termination event, modification of terms, or
other similar events under the terms of a Financial Obligation of the obligated
person, any of which reflect financial difficulties.
n-?
Wen IItBA N.
Suggested Practices in Submitting Annual Financial Information to EMMA*
Annual Financial Information is to be submitted to EMMA as follows:
through the EMMA Dataport;
in one or more electronic word -searchable portable document format files
configured to permit documents to be saved, viewed, printed and
retransmitted by electronic means ("properly formatted pdf file"); and
indexed by the submitter as "Annual Financial Information and Operating
Data" — this EMMA indexing category should be used for all submissions
consisting of one or both parts of an annual financial information
submission. A submission should be indexed in EMMA by the submitter as
"Annual Financial Information and Operating Data" if it consists of
complete annual financial information (including audited financial
statements and/or the CAFR).
the audited financial statements have not been prepared in time to meet the
deadline:
file unaudited financial statements with a notice to the effect that the
unaudited financial statements are being provided pending completion of
audited financial statements and that the audited financial statements will
be submitted to EMMA when they have been prepared.
If annual financial information is provided by reference to other submitted documents
ile:
• a notice that includes specific reference to a document available on the
EMMA website or the SEC (such as, but not limited to, an official
statement), to the extent that such document in fact includes the
information required to be included in the annual financial information;
and
the submitter should confirm that such document in fact is available from
the EMMA website or the SEC and should include in such notice (A) a
textual description of the document that includes the required
B-1
information, with sufficient detail for a reasonable person to determine
the precise document being referenced, and (B) an active hyperlink to the
pdf file of such document as then posted on the EMMA website or to the
SEC's EDGAR system; further, if such document includes audited financial
statements, the submitter should also index such submission as "Audited
Financial Statements or CAFR" in addition to (but not instead of) "Annual
Financial Information and Operating Data" unless the submitter submits
such audited financial statements separately to EMMA.
Failure to file notices are to be submitted to EMMA as follows:
through the EMMA Dataport;
as an electronic word -searchable and properly formatted pdf file; and
indexed by the submitter as "Failure to Provide Annual Financial
Information."
* Procedures subject to change
B-2
Z
O
a o
w
C LL
o
z 3
W
H
Q
Z
O O
F
W
CCQ
C G
Z) cr
O O
w
N Z
11
J
LL
~ W
C
m
a O
w F-
C Z
O_
j
Z Q
Z 2
a o
Z
z
f-1
O w
Q S
Z W rt
Z ' w
LL
S m 7 w
V
3 o
a
W
C W
a w
C
a
z �
O
F-
a_
ccQ
N C
V
Z � 4
� a o
O w
w �
a
0
a
a
O Z Z
w 7
� O
Q
Z Q
z
O
a
O
o
cc
O
2
LL
LZ
Z
_
n W
a
3
a
0
z
0
u
r
d
O
O
N
O
z
w
0
0
a
z
cW
G
}
d
d
�
W
W
r
W
�
W
C
J
W
0
a
F-
w
a
o
a
Q
r
z
W
�
}
Q
a
W
r
d
�
a
z_
LL
W
r
a
o
W
cc
cc
�
z
r
z
LL
0
O
}Q d
}
r
a
- d
a
N
z
u
W
W Z
O
I