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HomeMy WebLinkAboutCRA-R-14-0051 Exhibit CSOUTHEAST OVERTOWN /PARK WEST COMMUNITY REDEVELOPMENT AGENCY, FLORIDA POST -ISSUANCE COMPLIANCE PROCEDURES FOR TAX -ADVANTAGED BONDS Date Established: July 3o, 2014 4834-2539-9324.3 POST -ISSUANCE COMPLIANCE PROCEDURES FOR TAX -ADVANTAGED BONDS Table of Contents 1. Purpose 1 2. Identification of Bond Issues for Federal Tax Purposes 1 3. Responsibility 1 4. Record Retention 2 5. Rebate and Yield Restriction 3 6. Investment of Bond Proceeds 3 7. Monitoring Private Payments and Security and Private Loans 4 8. Monitoring Possible Private Business Use. 5 9. Deliberate Actions that Could Cause Noncompliance and Remedial Actions 6 10. Review Upon Completion of Financed Projects. 7 11. Revision of These Procedures 7 4834-2539-9324.3 POST -ISSUANCE COMPLIANCE PROCEDURES FOR TAX -ADVANTAGED BONDS 1. Purpose These procedures concern borrowing obligations of the Southeast Overtown/Park West Community Redevelopment Agency, Miami, Florida (the "Issuer"), which are referred to herein as "bonds", whether the obligations are actually called bonds, promissory notes, a loan, or some other name. Interest on most bonds is exempt from federal income tax, subject to compliance with Internal Revenue Code requirements, including restrictions on investment of bond proceeds, restrictions on payments with respect to bond proceeds and requirements relating to use of bond proceeds. This document sets forth procedures to monitor compliance with the applicable federal tax requirements. These procedures do not apply to bonds of the Issuer that are "conduit bonds", the proceeds of which are loaned to a nongovernmental person or entity. 2. Identification of Bond Issues for Federal Tax Purposes The Issuer acknowledges that the federal tax rules apply separately to each bond issue for federal tax purposes. Sometimes, for federal tax purposes, two or more separately named borrowings may be treated as a single bond issue, or a single named borrowing may be treated as being composed of two bond issues. The Responsible Officer will review the Issuer's tax certificates, and consult with bond counsel as necessary, to identify and maintain a list of each outstanding bond issue, as treated for federal tax purposes. 3. Responsibility The Executive Director will have overall responsibility for ensuring that the ongoing requirements described in these procedures are met with respect to the Issuer's bonds (the "Responsible Officer"). The Responsible Officer shall, from time to time, identify any additional persons who will be responsible for each section of these procedures, notify the current holder of that office of the responsibilities, and provide that person a copy of these procedures. The Responsible Officer has assigned the person holding each of the following positions with the compliance responsibilities set forth below: 1 of 7 4834-2539-9324.3 Responsibility Designated Person Overall compliance Executive Director Maintaining list of bond issues Requirements relating to investment of bond proceeds, including obtaining rebate determinations and making required rebate payments on a timely basis Requirements relating to private payments and security and private loans, including taxes of general application and grants Requirements relating to use of bond - financed property, including monitoring the amount of any private business use Retention of records Review upon completion of financed projects 4. Record Retention For each bond issue, the Responsible Officer will arrange for records to be kept of the investment and application of proceeds and the use of financed property. For each bond issue, the records will be kept until at least 4 years after the bond issue is completely retired. The records do not need to be kept at a single location, and they may be kept in physical or electronic form. 2 of 7 4834-2539-9324.3 5. Rebate and Yield Restriction For each bond issue, the Responsible Officer will comply with the requirements in the authorizing bond documents, which generally include obtaining rebate determinations or a determination that rebate is not required. Unless the Issuer determines that rebate is not required, the Issuer needs to establish the initial rebate determination date: it should be not later than the 5th anniversary of the bond issue. Additional rebate determination dates occur every 5 years thereafter and on the date the bond issue is completely retired. Any rebate payment must be paid to the United States Treasury within 60 days after the rebate determination date. As a general policy, the Responsible Officer should have a rebate determination for the bond issue started by 6o days prior to each rebate determination date and completed by 14 days before a rebate payment would be due, and should arrange for any required rebate payment to be made to the United States Treasury by the due date. The Responsible Officer will identify all funds and accounts that are treated as containing gross proceeds of the bond issue and take actions needed to comply with any yield -restriction requirements, as further detailed in the tax certificate for the bond issue. For example, if proceeds in the borrowed money fund (for general obligations) or comparable fund (for a revenue bond issue) are not spent within the 3-year "temporary period", the Responsible Officer will obtain yield - restriction computations for the applicable fund and, if needed, make yield - reduction payments to the United States Treasury. 6. Investment of Bond Proceeds The Responsible Officer will direct the investment of all bond proceeds in arm's- length, fair -market -value purchases and sales and will not permit the linking of the purchase or sale of investments to the provision of other services to the Issuer, such as underwriting services. Federal tax law safe harbors apply to the following types of investments: • Certificates of deposit • Guaranteed investment contracts Yield -restricted defeasance escrow investments 3 of 7 4834-2539-9324.3 If a federal tax law safe harbor applies to the type of investment, then as a general policy the Responsible Officer will arrange for the investment to meet all the requirements of the safe harbor to the extent reasonably practicable. Certificates of Deposit: The purchase price of a certificate of deposit is treated as its fair market value if the yield on the certificate is not less than the yield on reasonably comparable direct obligations of the United States and the highest yield that is published or posted by the provider to be currently available from the provider on reasonably comparable certificates of deposit offered to the public. Guaranteed Investment Contracts: As a general policy, for each purchase of a guaranteed investment contract, the Responsible Officer will retain a bidding agent to conduct a bona fide competitive bidding process and require the bidding agent and provider to provide certifications substantially in the form approved by bond counsel. The Responsible Officer will maintain a record of the amounts paid for brokerage commissions, bidding agent fees, and other similar administrative costs. Yield -Restricted Defeasance Escrow Investments: As a general policy, amounts in yield -restricted defeasance escrows will be invested in United States Treasury securities (State and Local Government Series) unless those securities are not available for purchase or the Responsible Officer determines, after consultation with an independent financial advisor, that there are bona fide financial reasons for the purchase of other types of investments. In those cases, the Responsible Officer will retain a bidding agent to conduct a bona fide competitive bidding process and require the bidding agent and provider to provide certifications substantially in the form approved by bond counsel. The Responsible Officer will maintain a record of the amounts paid for brokerage commissions, bidding agent fees, and other similar administrative costs. 7. Monitoring Private Payments and Security and Private Loans. The Issuer acknowledges that most of its bond issues are currently expected to be tax increment financings, the proceeds of which will be used to make grants to persons other than a State or local government or for other private purposes, and that special tax considerations apply to this type of bond issue. The compliance of this type of bond issue generally depends in particular on strictly limiting the amount of any "private payments" with respect to bond -financed property and any private security, and also on strictly limiting the amount treated as loans to any person other than a State or local government (a "non -governmental person"). 4 of 7 4834-2539-9324.3 The Issuer specifically acknowledges that property taxes will be treated as private payments (and may also be treated as private loans) unless the property taxes are treated as "generally applicable taxes." Property taxes will not be treated as generally applicable taxes if the Issuer (or the City of Miami or Miami -Dade County) enters into an "impermissible agreement" with respect to the property tax. .An impermissible agreement that would cause a tax to fail to be treated as a tax of general application includes, but is not limited to, an agreement to be personally liable on a tax that does not generally impose personal liability, to provide additional credit support such as a third -party guarantee, or pay unanticipated shortfalls; and agreement regarding the minimum market value of property subject to property tax; and an agreement not to challenge or seek deferral of tax. The Responsible Officer will review any contractual arrangement, including development agreements, that may result in property taxes not being treated as taxes of general application. The Issuer acknowledges that payments made, directly or indirectly, to the Issuer, the City of Miami or Miami -Dade County by grantees in exchange for receiving grants financed with proceeds of a bond issue may be treated as private payments with respect to financed property or may cause grants to be treated as impermissible loans. The Responsible Officer will review each grant agreement with any recipient of a grant funded with a bond issue to confirm that the grant does not involve any private payments or security before the grant agreement becomes effective. 8. Monitoring Possible Private Business Use. The following procedures for monitoring private business use only apply in unusual circumstances where it is not clear on the date of issuance that a bond issue exceeds the private business use limit and bond counsel informs the Issuer that not exceeding the private business use limit is required for tax-exempt bond compliance. The Responsible Officer will try to review any contractual arrangement that may result in private business use of financed property before the arrangement becomes effective. Arrangements that give rise to private business use generally include contracts that provide special legal entitlements to persons other than a State or local government or the general public. Sales and leases of bond - financed property always give rise to private business use. Arrangements that 5 of 4834-2539-9324.3 may give rise to private business use, depending on the terms of the contract, include service contracts. If the Responsible Officer determines that an arrangement provides for use by a non -governmental person of any property financed with proceeds of an outstanding borrowing, then the Responsible Officer will consult with bond counsel to determine whether, and the extent to which, the arrangement gives rise to private business use and obtain any recommendations about any further or subsequent review. 9. Deliberate Actions that Could Cause Noncompliance and Remedial Actions As a general policy, the Responsible Officer will consult with bond counsel in connection with each bond issue regarding the specific private payment or security, private loan and private business use limit that applies to that bond issue. The Responsible Officer will track and record any private payments or security with respect to each bond issue and, if the private business use limit is not clearly exceeded, also track the private business use of financed property. The Issuer acknowledges that, in the case of most tax increment bond issues that finance grants, the limit on private payments or security will be 5% and that the private loan limit is the lesser of 5% or $5 million of the proceeds of the issue. If the Responsible Officer determines any transaction has caused, or may potentially cause, the private security or payment limit of a bond issue to be exceeded, or cause the private loan limit to be exceeded, the Responsible Officer will consult with bond counsel to determine whether a remedial action is required or otherwise advisable. If possible, the Responsible Officer will do so before the transaction is final, so that remedial action requirements and options may be taken into account. The general policy of the Issuer is that each remedial action should be approved by an opinion of bond counsel, even in cases where the legal documents for the bond issue do not expressly require such an opinion. In the event that the Responsible Officer determines that the Issuer may have taken a deliberate action that results in noncompliance of a bond issue with restrictions on private payments or security, or private loans, and it is no longer timely to take a remedial action, the Responsible Officer will consult with bond counsel to determine whether it is necessary or appropriate to submit a request for a voluntary closing agreement to the Internal Revenue Service. 6 of 7 4834-2539.9324.3 10. Review Upon Completion of Financed Projects The Issuer adopts, as a prudent practice, the policy of undertaking a review upon completion of all projects financed by the bond issue, to determine whether the expenditure of bond proceeds falls within applicable "spend -down" exceptions to arbitrage rebate and that the private business use limit has not been exceeded. Certain determinations about how bond proceeds are treated as spent are allowed only if taken before the 5th anniversary of the date of bond issuance, so a prompt review may give the Issuer a greater ability to address any compliance problem that may be discovered. 11. Revision of These Procedures These procedures may be revised from time to time to reflect changes of law and ideas for improvement, and they may be expanded to address other tax compliance actions. They are solely for guidance of Issuer personnel. There are no third -party beneficiaries of these procedures. The Responsible Officer will periodically confer with bond counsel on the need or advisability to revise these procedures, taking into account experience in applying these procedures, changes in the law, and the requirements of new bond issues. Date: July 3o, 2014 Clarence E. Woods III Executive Director 4834-2539-9324.3 7 of