HomeMy Public PortalAbout2023-088 Resolution Adopting and Approving Tax Compliance Procedures Relating to Tax-Exempt BondsO
•
NN ERD4�
FST.19��
RESOLUTION 2023-088
Resolution Adopting and Approving Tax Compliance
Procedures Relating to Tax -Exempt Bonds
WHEREAS, pursuant to the laws of the State of Iowa and Section 103 of the Internal Revenue Code, the
City of Riverdale, Iowa (the "City"), acting by and through the authority of its City Council, has issued, and
likely will issue in the future, tax-exempt municipal bonds, notes, or other obligations (the "Tax -Exempt
Bonds"); and,
WHEREAS, the City deems it necessary and desirable to adopt certain procedures and practices to be
followed by the City in connection with the issuance of Tax -Exempt Bonds; and,
WHEREAS, proposed tax compliance procedures are attached hereto as Exhibit A (the "Compliance
Procedures").
NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Riverdale, Iowa, that:
Section 1: The Compliance Procedures attached here to Exhibit A are hereby adopted and shall be
dated as of the date hereof.
Section 2:
The City Clerk is hereby authorized and directed to periodically update the Compliance
Procedures in accordance with the Internal Revenue Code and supporting Internal
Revenue Service Rulings and Regulations, with advice from bond counsel.
Section 3: All resolutions or parts of resolutions in conflict herewith are hereby repealed to the extent
of such conflict.
Passed and approved this 26th day of September 2023.
APPROVED:
Anthony Heddlesten, Mayor
ATTEST:
Kelly Krell Clerk
City of Riverdale, Iowa
110 Manor Drive, Riverdale, Iowa 52722 1 (563) 355-2511 1 www.riverdaleia.org
City of Riverdale, Iowa
Tax Compliance Procedures
Relating to Tax -Exempt Bonds
Dated: September 26, 2023
Purpose:
To ensure that interest on tax-exempt bonds, notes or other obligations (the "Bonds") of the City of
Riverdale, Iowa (the "Issuer") remains excludable from gross income under Section 703 of the Internal
Revenue Code of 1986, as amended (the "Code`).
These written procedures shall be followed by the Issuer in connection with its issuance of Bonds:
[C. Expenditure/Use of Proceeds:
A. Expenditure of Bond proceeds will be maintained and/or coordinated with the City Clerk
(the "Compliance Officer") for consistency with the Bond documents, including any
applicable resolutions, loan agreements, tax/arbitrage/closing certificates or other operative
document (referred to collectively as "Bond Documents").
B. The Issuer has separately established procedures for preparation and review of requisitions
of Bond proceeds through the accounting system of the Issuer. To such end, the
Compliance Officer shall:
(1). account and record how the Bond proceeds are spent (including investment
earnings and including reimbursement of expenditures made before bond issuance) and
maintaining records identifying Bond -financed or refinanced assets (e.g., land, buildings,
improvements, facilities, furnishings or equipment) (the "Bond -Financed Property"),
including the average economic life of such Bond -Financed Property and allocation of such
Bond -Financed Property to private use or other non -qualifying use.
(H). create the required funds/accounts (and any necessary subaccounts)
required by the Bond Documents (i.e. sinking funds, debt service funds, debt service reserve
funds, project funds, etc.), and if such funds are not required by the applicable Bond
Documents, create such funds and accounts, into which proceeds of a Bond issue will be
deposited. For all construction projects, a project or construction fund shall be established
to track expenditures for the projects. (Referred to herein as the "Project Fund.") (In the
event the Bond Documents require a trustee, paying agent or other entity to create and
hold such funds and accounts, the Compliance Officer will monitor such funds and accounts
accordingly).
City of Riverdale, Iowa
110 Manor Drive, Riverdale, Iowa 52722 1 (563) 355-2511 1 www.riverdaleia.org
0.14 ERti
ZDI
•
iST. 19
(iii). review and monitor all requisitions, draw schedules, draw requests, invoices
and bills for payment from the Project Fund, and determine whether such payments are
appropriate and consistent with the Bond Documents and use of the Bond proceeds.
(iv). make and account for all payments from the Project Fund and any other
funds created (Le. sinking funds, debt service funds, debt service reserve funds, etc.).
C. None of the proceeds of Bonds will be used to reimburse the Issuer for costs of a capital
project paid prior to the date of issuance of the Bonds unless the Issuer shall have fully
complied with the provisions of Section 1.150-2 of the Treasury Regulations with respect to
such reimbursed amounts, and those provisions are summarized in Exhibit 1 hereto.
D. The Compliance Officer will make a "final allocation" of Bond proceeds to uses not later than
18 months after the in-service date of the Bond -Financed Property (and in any event not
later than 5 years and 60 days after the issuance of the Bonds or not later than 60 days after
earlier retirement of the Bonds) in a manner consistent with allocations made to determine
compliance with arbitrage yield restriction and rebate requirements.
E. Expenditure of proceeds of Bonds will be measured against the Issuer's expectation, as set
forth in the Bond Documents, to proceed with due diligence to complete the capital project
and fully spend the net sale and investment proceeds within three years.
F. If there are any Bond proceeds remaining other than in a reserve or debt service fund
established pursuant to the Bond Documents after completion of the projects, such
proceeds shall be applied in a manner consistent with the applicable Bond Documents or
pursuant to advice from Bond Counsel/Special Tax Counsel.
G. In the event that Bond proceeds are to be used to make a grant to an unrelated party, a
grant agreement will be reviewed prior to execution for compliance with the Code. Such
agreement will be approved by the Issuer's Attorney or Bond Counsel and the Compliance
Officer. The repayment of any portion of a grant by the grantee shall be treated as unspent
Bond proceeds.
III. Use of Bond -Financed Property:
A. Use of Bond -Financed Property when completed and placed in service will be reviewed and
continually monitored by the Compliance Officer.
B. The Compliance Officer shall monitor all private use or private payments with respect to
Bond -Financed Property by nongovernmental entities and the use thereof throughout the
term of the Bonds to ensure compliance with covenants and restrictions set forth in the
applicable Bond Documents relating to the Bonds. Private Use includes but is not limited
to leases, research contracts, and use of Bond -Financed Property by a non -employee, such
City of Riverdale, Iowa
110 Manor Drive, Riverdale, Iowa 52722 1 (563) 355-2511 I www.riverdaleia.org
O
as third -party contracts concerning use, management or services in the Bond -Financed
Property that do not meet the compensation, term and other requirements under Revenue
Procedures 17-13. Such agreements will be approved by the Issuer's Attorney and the
Compliance Officer, who will be responsible for determining whether the proposed
agreement (i) results in private business use of the Bond -Financed Property, and (ii) if
applicable, meets the compensation, term and other requirements under Revenue
Procedures 17-13, 2007-47, and 2016-44, as amended or superseded (i.e.
Management/Service Contract Rules); all upon advice of Bond Counsel, as necessary.
C. Appropriate department/facility managers shall be advised in writing concerning
restrictions on the use of the Bond proceeds and the Bond -Financed Property and instructed
to consult with the Compliance Officer and the Issuer's Attorney or Bond Counsel, as
appropriate, regarding private use.
D. Upon issuance of Bonds, there shall be no expectation that the Bond -Financed Property will
be sold or otherwise disposed of by the Issuer during the term of the Bonds; and no item
of Bond -Financed Property will be sold or transferred by the Issuer while the Bonds are
outstanding without approval of the Issuer's Attorney and the Compliance Officer upon
advice of Bond Counsel or advance arrangement of a "remedial action" under the applicable
Treasury Regulations.
E. To the extent that the Issuer discovers that any applicable tax restrictions regarding use of
Bond proceeds and Bond -Financed Property will or may be violated, the Issuer will consult
promptly with Issuer's Counsel/Bond Counsel/Special Tax Counsel to determine a course of
action to remediate all nonqualified bonds, if such counsel advises that a "remedial action"
is necessary.
F. The Issuer acknowledges that any sale, transfer, change in use, or change in users of the
Bond -Financed Property may require remedial action or resolution pursuant to the IRS
Voluntary Closing Agreement Program (or "VCAP") to assist in resolving violations of the
federal tax laws applicable to the Bonds.
IV. Investments:
A. The Compliance Officer shall manage and supervise the investment of Bond proceeds in
compliance with the arbitrage and rebate requirements of the Code and applicable Treasury
Regulations.
B. Guaranteed investment contracts ("GICs") may be purchased only in accordance with the
fair market value provisions of applicable Treasury Regulations, including bid requirements
and fee limitations. Certificates of deposit may be purchased only according to the fair
market value provisions of applicable Treasury Regulations. The Issuer's Counsel/Bond
Counsel/Special Tax Counsel will be consulted before purchasing any other, non -marketable
City of Riverdale, Iowa
110 Manor Drive, Riverdale, Iowa 52722 (563) 355-2511 1 www.riverdaleia.org
securities and before depositing gross proceeds in any other bank account not explicitly
authorized by the Bond Documents.
C. The Compliance Officer will:
(i) Maintain a procedure for the allocation of proceeds of the Bonds and investment
earnings to expenditures, including the reimbursement of pre -issuance
expenditures. (See Section I Expenditure/Use of Proceeds and Section II Use of
Financed Property, above).
)
Obtain a computation of the Bond yield for each issue of the Bonds from the Issuer's
financial advisor, underwriter or other relevant third party and maintain a system for
tracking investment earnings.
(iii) Coordinate with Issuer staff to monitor compliance by departments with the
applicable "temporary period" (as defined in the Code and Treasury Regulations)
exceptions for the expenditure of proceeds of the Bonds, and provide for yield
restriction on the investment of such proceeds if such exceptions are not satisfied.
(iv) Ensure that investments acquired with proceeds of the Bonds are purchased at fair
market value. In determining whether an investment is purchased at fair market
value, any applicable Treasury Regulation safe harbor may be used. (See Section IV.
B. above).
(v) Avoid formal or informal creation of funds reasonably expected to be used to pay
debt service on the Bonds without determining in advance whether such funds must
be invested at a restricted yield.
(vi) Consult with Bond Counsel/Special Tax Counsel prior to engaging in any post -
issuance credit enhancement transactions.
(vii) Monitor compliance of spending of Bond proceeds with six-month, 18 -month or 2 -
year spending exceptions to the rebate requirement, as applicable.
(viii) Prepare or cause to be prepared a spending exception report or an arbitrage rebate
computation (as applicable) for the Bonds upon final expenditure of the Bond
proceeds, other than a reserve fund or debt service fund (i.e. after the project is
completed and Bond proceeds allocated to the projects have been spent).
(ix) Cause rebate payments, if due, to be made with Form 8038-T no later than 60 days
after (i) each fifth anniversary of the date of issuance of the Bonds and (ii) the final
payment or prepayment of the Bonds. The Compliance Officer shall engage a rebate
specialist to assist with its rebate obligations.
City of Riverdale, Iowa
110 Manor Drive, Riverdale, Iowa 52722 1 (563) 355-2511 1 www.riverdaleia.org
(x) Arrange for timely computation and payment of "yield reduction payments" (as such
term is defined in the Code and Treasury Regulations), if applicable.
(xi) In the case of any issue of refunding Bonds, coordinate with the Issuer's financial
advisor and any escrow agent to arrange for the purchase of the refunding escrow
securities, obtain a computation of the yield on such escrow securities and monitor
compliance with applicable yield restrictions.
V. Continuing Disclosure:
The Compliance Officer shall be responsible for complying with any continuing disclosure
agreements/obligations related to any Bond issue, including making required annual filings, reporting
material events and coordinating with any dissemination agent.
VI. Financial & Other Non -Tax Covenants:
The Compliance Officer shall be responsible for monitoring and complying with financial and other
non -tax covenants and requirements in the Bond Documents, including but not limited to covenants and
requirements regarding liquidity, debt coverage, incurrence of additional indebtedness, financial reporting,
transfer of property, lien restrictions and loan -to -value ratios.
VII. Record Management and Retention:
A. Management and retention of records related to Bond issues will be supervised by the
Compliance Officer.
B. Records for Bonds will be retained for the life of the Bonds, plus any refunding Bonds, plus
eleven years (or such longer term as may be required by the state records administrator).
[Iowa Code section 372.13(5)(a)1 Such records may be in the form of documents or
electronic copies of documents, appropriately indexed to specific Bond issues and
compliance functions.
C. Records pertaining to Bond issuance shall include a transcript of documents executed in
connection with the issuance of the Bonds and any amendments, and copies of rebate
calculations and records of payments, including Forms 8038-T.
D. Records pertaining to expenditures of Bond proceeds and final allocation of Bond proceeds
will include requests for Bond proceeds, construction contracts, purchase orders, invoices,
payment records, and trustee/paying agent reports. Such documents will include
documents relating to costs reimbursed with Bond proceeds.
E. Records pertaining to use of Bond -Financed Property shall include all third -party contracts
concerning use of the Bond -Financed Property, including (without limitation) leases, use,
management or service contracts, and research contracts.
City of Riverdale, lowa
110 Manor Drive, Riverdale, Iowa 52722 (563) 355-2511 1 www.riverdaleia.org
F. Records pertaining to investments shall include records of purchase and sale of GICs,
certificates of deposit and other investments, and records of investment activity sufficient
to permit calculation of arbitrage rebate or demonstration that no rebate is due.
G. Records shall include all documents pertaining to IRS communications regarding the Bonds,
including audits and compliance questionnaires.
VIII. Overall Responsibility:
A. Overall administration and coordination of these procedures is the responsibility of the
Compliance Officer.
B. The Compliance Officer shall review compliance with these procedures not less than
annually.
C. The Issuer understands that failure to comply with these policies and procedures could
result in the retroactive loss of the exclusion of interest on Bonds from federal gross taxable
income.
D. Any violations or potential violations of federal tax requirements shall promptly be reported
to the Compliance Officer, and the Issuer will engage qualified consultants and Bond
Counsel to further investigate potential violations or recommend appropriate remedial
actions, if necessary.
City of Riverdale, Iowa
110 Manor Drive, Riverdale, Iowa 52722 1 (563) 355-2511 1 www.riverdaleia.org
CONDUIT BOND POST ISSUANCE PROCEDURES
It is the policy of the Issuer that for any conduit bonds (the "Conduit Bonds") issued on behalf of a
conduit borrower (the "Borrower") the Borrower shall be responsible for and shall establish written
procedures in the applicable bond documents for the issuance of such Conduit Bonds (the "Conduit Bond
Documents") to address ongoing compliance with applicable financial and tax requirements,
arbitrage/rebate requirements, remedial actions and other applicable post -issuance requirements of
federal tax law throughout the term of the Conduit Bonds (collectively, the "Borrower's Post Issuance
Compliance Procedures").
It is the Issuer's policy that the Borrower shall be responsible for compliance with all of the
following:
A. Arbitrage Rebate and Yield Requirements
(i) determining the likelihood of complying with an arbitrage rebate exemption;
(ii) if necessary, engaging the services of a rebate service provider;
(iii) assuring payment of required rebate amounts, if any, no later than 60 days after
each 5 year anniversary of the issue date of the Conduit Bonds, and no later than 60
days after the last Conduit Bond of each issue is paid or redeemed; and
(iv) during the construction period of each capital project financed in whole or in part
by Conduit Bonds, monitoring the investment and expenditure of Conduit Bond
proceeds and consulting with the rebate service provider to determine compliance
with any applicable exceptions from the arbitrage rebate requirements during each
6 -month, 18 months or 2 year spending period, as applicable, following the issue
date of the Conduit Bonds.
B. Use of Bond Proceeds and Bond -Financed or Refinanced Assets
(i) monitoring the use of Conduit Bond proceeds (including investment earnings and
including reimbursement of expenditures made before bond issuance) and the use
of Bond -financed or refinanced assets (e.g., facilities, furnishings or equipment) (the
"Conduit Bond -Financed Property") throughout the term of the Conduit Bonds to
ensure compliance with covenants and restrictions set forth in the Conduit Bond
Documents;
(ii) maintaining records identifying the Conduit Bond -Financed Property with proceeds
of each issue of Conduit Bonds (including investment earnings and including
reimbursement of expenditures made before bond issuance), including a final
allocation of Conduit Bond proceeds as described below under "Record Keeping
Requirements";
City of Riverdale, Iowa
110 Manor Drive, Riverdale, Iowa 52722 1 (563) 355-2511 1 www.riverdaleia.org
(iii) consulting with bond counsel and other legal counsel and advisers in the review of
any change in use of Conduit Bond -Financed Property to ensure compliance with all
covenants and restrictions set forth in the Conduit Bond Documents; and
(iv) to the extent that the Borrower discovers that any applicable tax restrictions
regarding use of Conduit Bond proceeds and Conduit Bond -Financed Property will
or may be violated, consulting promptly with bond counsel and other legal counsel
and advisers to determine a course of action to remediate all nonqualified bonds, if
such counsel advises that a remedial action is necessary.
C. Record Keeping Requirement
(i) retaining copies of the Conduit Bond closing transcript(s) and other relevant
documentation delivered to the Borrower at or in connection with closing of the
issue of Conduit Bonds;
(ii) retaining copies of all material documents relating to capital expenditures financed
or refinanced by Conduit Bond proceeds, including (without limitation) construction
contracts, purchase orders, invoices, trustee requisitions and payment records, as
well as documents relating to costs reimbursed with Conduit Bond proceeds and
records identifying the Conduit Bond -Financed Property, including a final allocation
of Conduit Bond proceeds and the Final Completion Report filed pursuant to the
Conduit Bond Documents;
(iii) retaining copies of all records of investments, investment agreements, arbitrage
reports and underlying documents, including trustee statements, in connection with
any investment agreements, and copies of all bidding documents, if any; and
(iv) ensuring the required 8038 forms (including 8038-T forms) are filed on a timely
basis.
City of Riverdale, Iowa
110 Manor Drive, Riverdale, Iowa 52722 1 (563) 355-2511 1 www.riverdaleia.org
EXHIBIT 1
REIMBURSEMENT RULES SUMMARY
Following is a general summary of the requirements relating to Bonds (or a portion thereof) that
are issued to reimburse expenditures that were paid prior to the date of issuance of such Bonds.
Subject to certain exceptions set forth below, the Bond proceeds cannot be used to reimburse
expenditures paid more than 60 days prior to the adoption of the declaration of official
intent/reimbursement resolution by the Issuer, which must contain:
• a general functional description of the property to which the reimbursement relates or an
identification of the fund or account from which the expenditure is to be paid and a general
functional description of the purposes of such fund or account; and
• the maximum principal amount of tax-exempt bonds to be issued.
Reimbursement allocations must be made in writing and not later than 18 months after the later of
(1) the date on which the original expenditure is paid, or (11) the date on which the property for which the
original expenditure was made is placed in service or abandoned, but in any case not more than three
years after the date on which the original expenditure is paid.
There are exceptions to the general 60 -day rule described above for "de minimis" amounts (not in
excess of the lesser of $100,000 or 5% of proceeds of the Bonds) and for "preliminary expenditures" (such
as architectural, engineering, surveying, soil testing and similar costs and costs of issuance that are incurred
prior to acquisition, construction or rehabilitation but not including land acquisition and site preparation),
so long as such preliminary expenditures do not exceed 20% of the aggregate issue price.
NOTE: This is only a summary of current law as of the Date of this Policy, and special rules may also
apply. Additionally, the requirements may be amended or revised from time to time. The Issuer
should consult with Bond Counsel/Special Tax Counsel, as necessary.
City of Riverdale, Iowa
110 Manor Drive, Riverdale, Iowa 52722 I (563) 355-2511 I www,riverdaleia.org
MINUTES FOR ADOPTION OF COMPLIANCE PROCEDURES
Riverdale, Iowa
September 26, 2023
The City Council of the City of Riverdale, Iowa, met on September 26, 2023, at 7:00 p.m., at the PV
Administration Center, 525 Belmont Road, Riverdale, Iowa.
The Mayor presided and the roll was called showing the following members of the City Council present
and absent:
Present: Paul DCamp, Beth Halsey, Vincent Jurgena, Doug Littrel
Absent: Justin Galbraith
Council Member Littrel introduced the resolution hereinafter next set out and moved its adoption,
seconded by Council Member Jurgena, and after due consideration thereof by the City Council, the
Mayor put the question upon the adoption of the said resolution and the roll being called, the following
named Council Members voted:
Ayes:
Nays:
Paul DCamp, Beth Halsey, Vincent Jurgena, Doug Littrel
None
Whereupon, the Mayor declared the resolution duly adopted as hereinafter set out.
At the conclusion of the meeting and upon motion and vote, the City Council adjourned.
FOR THE CITY OF RIVERDALE:
Anthony Heddlesten, Mayor
ATTESTED BY:
City of Riverdale, Iowa
110 Manor Drive, Riverdale, Iowa 52722 (563) 355-2511 www.riverdaleia.org
ATTESTATION CERTIFICATE
STATE OF IOWA
SCOTT COUNTY
CITY OF RIVERDALE
5S:
I, the undersigned, City Clerk of the City of Riverdale, do hereby certify that attached hereto is a true and
correct copy of the proceedings of the City Council relating to the adoption of compliance procedures
with regard to the issuance of tax-exempt bonds, as referred to therein.
WITNESS MY HAND this 27th day of September, 2023.
Kelly A. ity Clerk
City of Riverdale, Iowa
110 Manor Drive, Riverdale, Iowa 52722 1 (563) 355-2511 1 www.riverdaleia.org