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HomeMy WebLinkAbout[04d] Policies Council Agenda Item 4d crry(w S-r,josbb"Ipt► MEETING DATE: July 18, 2016 AGENDA ITEM: Policies SUBMITTED BY: Finance BOARD/COMMISSION/COMMITTEE RECOMMENDATION: N/A PREVIOUS COUNCIL ACTION: The Council adopted a Debt Management Policy on August 18, 2011.. BACKGROUND INFORMATION: Based on new laws and improved financial management practices, Staff is proposing the following financial policies. Conduit Debt Issuance: The City of St. Joseph has issued conduit debt to nonprofit organizations twice in the past couple decades. A couple years ago, Opportunity Matters decided to consolidate their debts into one with the construction of a new site in Sartell. St. Joseph was one if the cities Opportunity Matters inquired of to hold the conduit debt; however, the organization chose a different city. Staff identified the need to establish a policy to issue conduit debt. This debt provides the City's tax exempt backing on the debt for lower interest rates. The City does not hold the obligation to pay the debt. The City is obligated to disclose the debt balance in the footnotes of the financial statements. If adopted, organizations will have a clear understanding of the City's requirements. The policy will also assist bond companies establish the debt issuance. Fees for conduit debt are already included in the City's fee schedule. Post-Issuance Debt Compliance Policy: Staff recommends establishing this policy and procedures as a formal adoption of what the City is already doing. The formal policy will help rating agencies and bonding companies understand the compliance procedures used. When the Council established the Debt Management Policy, the City's bond rating was increased. One of the bond rating measurements the rating agencies use is the adoption of formal financial management policies. The policy and procedures to follow are included in the Council packet to review. Policy for Donation of Surplus Equipment to a Nonprofit Organization: Minnesota Legislators and the Governor passed a new law in 2016 that allows municipalities to donate surplus equipment to nonprofit organizations. To do so, the City must establish a policy to determine how and when such a donation can take place. The League of Minnesota Cities created a sample policy cities could modify to meet the Statute requirements. Staff recommends establishing the policy for disposing outdated surplus equipment that cannot be disposed of by other means. One example is old fire turnout gear. The gear does not meet regulations for fire safety. Staff has tried to auction and find buyers the old bunker pants and boots (over 20 years old) a few times.No interest in the gear has been found. The donation option provides another means to dispose of surplus equipment. The new law goes into effect on August 1, 2016. If Council chooses to establish this policy, the effective date will be no earlier than August Is` BUDGET/FISCAL IMPACT: No direct impact until applications received or when debt issued ATTACHMENTS: Request for Council Action—Policies Draft Conduit Debt Policy Draft Post-Issuance Debt Compliance Policy Draft Policy for Donation of Surplus Equipment to a Nonprofit Organization REQUESTED COUNCIL ACTION: Adopt the polices as presented effective upon adoption. CONDUIT DEBT ISSUANCE Purpose Municipalities may be asked by not-for-profit agencies or other entities to issue pass-through, conduit debt. The issues are not projects of the governmental unit but of a separate corporation. The Council is aware that such financing for certain private activities may be of benefit to the city and will consider requests for tax exempt financing subject to these Guidelines. The Council considers tax exempt financing to be a privilege, not a right. Under the Minnesota Municipal Industrial Development Act, Minnesota Statutes §469.152 to §469-1651 (the "Industrial Development Act"),the City of St.Joseph has authority to issue industrial, commercial, and health care revenue bonds or notes to attract or promote economically sound industry and commerce to the region. Under Minnesota Statutes, Chapter 462C (the "Housing Act")the City is authorized to issue housing revenue bonds to finance multi-family residential housing projects for low and moderate income persons and elderly persons. Projects must be consistent with the City's Housing Plan and must be embodied in a Housing Program as these terms are defined in the Housing Act. Provisions It is the judgment of the Council that tax exempt financing is to be used on a selective basis to encourage certain development that offers a benefit to the City as a whole, including significant employment and housing opportunities. It is the applicant's responsibility to demonstrate the benefit to the City, both in writing and at the required public hearing. The applicant should understand that although approval may have been granted by the City for the issuance of financing for a similar project or a similar debt structure that is not a basis upon which approval will be granted. Each application will be judged on the merits of the project as it relates to the public purposes of the Housing Act or the Industrial Development Act and the benefit to the City at the time the request for financing is being considered. The Council will consider requests for projects located outside the city limits for projects that benefit the St. Cloud regional area. Projects of regional significance should demonstrate the benefit of employment, housing or health care to the area. Citizens of St.Joseph should be considered in discussions of regional significance. In order to expedite the assistance that City of St.Joseph can offer and to avoid a resource drain on the City,the City of Joseph requires the following: The corporation wishing assistance must first request the Administrator and Finance Director of the City of St.Joseph review their proposal and provide the information and a non-refundable $3,000 application fee. After the City reviews the proposal the applicant may then request the City Council review their proposal and grant permission to move forward to the public hearing stage. The applicant must provide the City written documentation about the entity requesting the assistance,the project, and the proposed financing method. The City also requires the applicant assume all of the costs incurred by the City examining the legal and fiscal aspects of the project as well as ongoing monitoring and reporting of outstanding bonds once issued. The applicant 1 must make a deposit of$3,000 to be applied against the costs incurred by the City for staff time, its consultants, and any other expenses caused by the proposal. If the application is denied,the deposit amount will not be returned. If the application is approved,the full deposit will be retained to additionally cover costs of issuance and future monitoring. In the event the City's actual costs exceed the deposit amount, the applicant will be required to reimburse these additional amounts within 30 days of receipt of the City's invoice. The City shall be held harmless for or from any out-of-pocket expenses related to the tax exempt financing. In addition,the applicant agrees to reimburse the City for any costs incurred related to the City's bonds having to be designated as non-bank qualified bonds as a result of the applicants borrowing. The applicant must select a qualified financial adviser or underwriter to assist the applicant in preparing all necessary application documents and materials. The financial adviser will submit a letter that establishes the financial feasibility of the project. Applications may,in the alternative, include a signed letter from a responsible financial institution indicating that the project is economically feasible and viable and stating that bonds can be successfully sold for the project or that an individual or institution intends to purchase all of the bonds. The applicant must receive approval from the appropriate state agencies,secure financing and commence construction within one year of the date of the resolution giving preliminary approval to the project or the housing program. Upon application,the Council may approve an extension of the preliminary approval. The City will appoint bond counsel for the bond issue,which will normally be the City's regularly retained bond counsel. Pursuant to the Industrial Development Act and the Housing Act,consideration of an application for tax exempt financing must be done at a public hearing held by the Council. Modifications to the project after the public hearing and preliminary approval must be consistent with the scope of the project as proposed at the time of preliminary approval. The Council may, in its sole discretion,withdraw its preliminary approval of a project at any time if in its judgment the purposes of the Act will not be served by going forward with the project and it's financing. Processing Provisions If permission is granted by the City,the bond attorney for the issue must: Provide the Council written statement indicating the documents have been appropriately prepared, all concerns of the City and points covered by this document have been addressed, and it is acceptable for the Council to adopt the needed resolutions. No documents will be adopted by the Council or signed by Council members or staff without the attorney's statement. Prepare a contract obligating the agency requesting the debt(obligor)to repay the City any interest margin for bank qualified bonds that the agency uses and the City later needed on debt it issues for its own purposes. (1111 2 VIII Assure the Official Statement prominently displays in large, bold type that the City of St.Joseph does not have any obligation to repay the debt and what the rating of the bond issue is. At closing and delivery of the bonds for the project,the applicant must pay a one-time administrative fee payable to the City of St.Joseph in the amount of 0.5%of the original principal amount of the bonds not to exceed $50,000. When the issue is complete and closed, provide two copies of the transcript and amortization schedules of the issue to the Finance Director on a timely basis. Miscellaneous Matters Refundings. The Council will normally approve the refunding of a tax-exempt issue but only upon a showing by the applicant of(i) substantial debt service savings, (ii)the removal of bond covenants significantly impairing the financial feasibility of the project, and/or(iii) consolidation of project debts to one main project. An administrative fee of 0.5%of the principal amount of the refunded bonds not to exceed $50,000 is due and payable at the time of closing. City Contact. Initial contacts about tax-exempt financing are made by contacting the City of St.Joseph Administrator. The debt instrument issued must not place the City at risk in any way,financially or legally, in appearance or in fact. The Federal Government has also placed the burden of weighing the balance of "public purpose versus private benefit" upon the City Council for these conduit debt issues. The Council will consider risk,the public versus private benefit balance, and the recommendation of its staff. Because of the subjective nature of the issues it must weigh,the Council retains the right to refuse to authorize any issue at its sole discretion and without need to give cause. The obligor must indemnify the City against all future costs including but not limited to law suits,findings that the issue was not tax- exempt, or penalties of any kind. The documents must clearly reflect the indemnification of the City. The City will not be responsible for any continuing disclosure or arbitrage calculations or rebate and the documents must clearly reflect that the obligor is responsible for these matters. The agency requesting the conduit debt and their advisors must arrange for the logistics of all document movement,timing, signature, publication, etc. It is very important to assure the necessary individuals will be available for signatures on documents well in advance of needing the signatures. Signatures will be supplied at the convenience of the City. The Administrator places items on the Council agenda and obtains signed documents from the Council. It is the responsibility of the applicant to: Inquire as to when Council meetings are scheduled (and to check again as necessary because meeting dates change without notice). Inquire as to when documents must be delivered in order to be accepted for the agenda. Arrange for copies which need to be signed and to provide the necessary envelopes and postage or other arrangements to move the documents when signed. 3 The documents are signed after the meeting at a time convenient to the Mayor, typically within a week after the meeting. Arrange to move any notices requiring publication to the appropriate newspaper, pay for the publication, and obtain any signed affidavits necessary. The City's official newspaper is the St. Joseph Newsleader or the St. Cloud Times. Attend all necessary council meetings to answer questions the Council may have about the issue while the documents are being considered. Arrange to have any other necessary documents delivered for signature by other City officials such as the City Attorney and the Finance Director and after signature have appropriate self- addressed and stamped envelopes available for return. The officials should be notified in advance by telephone that documents are being sent for signature. Arrange for all IRS and Federal or State filings and/or fees. Arrange to have all necessary professional fees paid directly to the professionals who did the work either out of bond proceeds or make other acceptable arrangement with the professionals doing the work. Application Requirements 1. Applicant: a. Business Name b. Business Address c. Business Form (corporation, partnership, sole proprietorship, etc.) d. Authorized Representative e. Principal contact person and telephone number f. Applicants legal counsel and telephone number 2. Purpose of Requested Financing: a. New Facility(describe—including location) b. Expansion (describe—including location) c. Refunding (attach explanatory letter) 3. Give Brief description of nature of business, principal products, etc. 4 4. Estimated Project Costs: (not required for refunding) a. Land $ b. Building c. Equipment d. Architectural, Engineering e. Costs of Issuance f. Capitalized Interest, Including discount g. Other Total Project Costs $ 5. Amount of Financing Requested: $ (_%of project costs) 6. Type of Financing Proposed: Bonds Tax Exempt Mortgage Expected Term of Financing Years Security: Mortgage Letter of Credit Guaranty(third party) Guaranty(personal) Unsecured Other(specify) 7. Business Profile: (not required for refunding) A brief description of the organizational structure of Applicant, including parent subsidiary and affiliate organizations (if applicant is other than an individual). Statement of Applicant's business history, including any multi-family rental projects. a. Is the business located in the City of St.Joseph now? b. Number of employees in City: i. Before this project ii. After this project c. Approximate annual sales. d. Length of time in business. e. Length of time in business in City(if applicable). f. Do you have operations/plants in other locations? If so,where? 8. Names of: a. Underwriter(name and contact person) b. Corporate Counsel c. Underwriters Counsel 9. What is your target date for: a. Construction Start b. Construction Completion 5 INDEMNIFICATION AGREEMENT Applicant agrees as follows: 1. Applicant agrees to pay or reimburse the City for any and all costs and expenses which the City may incur in connection with its consideration of the project and the granting of tax exempt revenue bond financing therefore, whether or not the project is preliminarily approved by the City, whether or not the project is approved by the State of Minnesota, whether or not revenue bond financing is finally approved by the City, whether or not the bonds are issued and sold, and whether or not the project is carried to completion. 2. Applicant agrees to indemnify and hold the City, its officers, employees and agents harmless against any and all losses, claims, damages, expenses or liabilities, including attorney's fees incurred in their defense, to which the City, its officers, employees and agents may become subject in connection with the City's consideration, issuance or sale of the bonds for Applicant's project and the carrying out of the transactions contemplated by this agreement and any resolutions adopted,or agreements executed by the City in connection with the issuance of its bonds for this project. 3. Applicant hereby releases the City, its officers, agents and employees from any claims, causes of action, losses, damages, or liabilities which it may have against the City, its officers, agents, and employees or which it may incur in connection with: the City's consideration of the application for industrial development revenue bond financing for Applicant's project; the failure of the City, in its discretion, to issue tax-exempt revenue bonds for Applicant's project; the issuance and sale of the bonds;the construction of the project;or any other matter or thing of any type or nature whatsoever which may arise in connection with the foregoing. 4. Applicant is aware of the City's application and administrative fee structure for tax exempt financing and agrees and covenants that all such fees will be paid in the amount and at the times required. I certify that the information provided above contains no misrepresentations, omissions or concealments of material facts and that the information given is true and complete to the best of my knowledge. I have been furnished a copy of the Application Requirements to the City of St.Joseph for Private Activity Revenue Bond Financing and am aware of its content and agree to be bound by its terms and the terms of the indemnification letter. Signature Print Name Date Title Its Attachments: Initial application fee-$3,000 6 Post-Issuance Debt Compliance Policy The City Council (the "Council") of the City of St. Joseph, 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. 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 these obligations to adopt and implement a post-issuance debt compliance policy and procedures to safeguard against post-issuance violations. Post-Issuance Debt Compliance Policy Objective The City desires to monitor these obligations to ensure compliance with the Code and Treasury Regulations. 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 the obligations mentioned above, 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 Finance Director of the City is designated as the City's agent who is responsible for post-issuance compliance of these obligations. The Finance Director 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. Proper and timely use of obligation proceeds and obligation-financed property; 3. Arbitrage yield restriction and rebate; 4. Timely filings and other general requirements; 5. Additional undertakings or activities that support points 1 through 4 above; 6. Maintenance of proper records related to the obligations and the investment of proceeds of obligations; 7. Other requirements that become necessary in the future. The Finance Director shall apply the Post-Issuance Debt Compliance Procedures to each qualifying obligation and maintain a record of the results. Further, the Finance Director 1 will ensure that the Post-Issuance Debt Compliance Policy and Procedures are updated on a regular and as needed basis. The Finance Director or any other individuals responsible for assisting the Finance Director 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 Finance Director 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 Finance Director 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 Finance Director 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 Finance Director is concerned about the compliance ability of a private party, the Finance Director may require that a trustee or other independent third party be retained to assist 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 Finance Director is additionally authorized to seek the advice, as necessary, of bond counsel and/or its financial advisor to ensure the City is in compliance with this Post- Issuance Debt Compliance Policy. Adopted this day of 2016, by the City Council of the City of St. Joseph, Minnesota. 2 City of St. Joseph, Minnesota Post-Issuance Debt Compliance Procedures The City Council (the "Council") of the City of St. Joseph, Minnesota(the "City") has adopted the attached Post-Issuance Debt Compliance Policy dated , 2016. 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 Finance Director 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 put in place 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 for post-issuance compliance have been approved and obtained. c. The Finance Director understands that there are options for voluntarily correcting failures to comply with post-issuance compliance requirements (such 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 (or if such obligation is refunded, the final payment of the refunding bond) unless otherwise directed by the City's bond counsel. b. Retain paper or electronic 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 (referred to as the project) 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 IRS. iv. Audited financial statements. v. Bond transcripts, official statements and other offering documents of the obligation. vi. Minutes and resolutions authorizing the issuance of the obligation. vii. Certifications of the issue price of the obligation. 1 viii. Any formal elections for the obligation (i.e. election to employ an accounting methodology other than the specific tracing method). ix. Appraisals, demand surveys, or feasibility studies for property financed by the obligation. x. Documents related to governmental grants, associated with construction, renovation or purchase of property financed with the obligation. xi. Reports of any prior IRS examinations of the City or the City's obligation. 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 obligation. This includes an accounting of all monies deposited to the Debt Service Account to make debt service payments on the obligation, regardless of the source derived. Accounting for expenditures and assets is described in further detail in Section 4. ii. Statements prepared by Trustee or Investment Provider. iii. Documentation of at least quarterly allocations of investments and investment earnings to each obligation (i.e. uncommingling analysis). iv. Documentation for investments made with obligation proceeds such as: 1. Investment contracts (i.e. guaranteed investment contracts). 2. Credit enhancement transactions (i.e. bond insurance contracts). 3. Financial derivatives (swaps, caps, etc). 4. Bidding of financial products. • Investments acquired with obligation proceeds are purchased at fair market value (i.e. three bids 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" • 6 Month Spending Exception • 18 Month Spending Exception • 24 Month Spending Exception 3. Qualifying for the "Bona Fide Debt Service Fund Exception" 2 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 obligation to the IRS at each five year anniversary date of the obligation, and the date in which the obligation is 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. 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 (for example: reinvestment in zero coupon SLGS). 4. Expenditure and Asset Documentation to be Assembled and Retained a. Documentation of allocations of obligation proceeds to expenditures (i.e. 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- eighteen £eighteen (18) months after the later of the date the expenditure is paid, or the date the project, if any, that is financed by the tax-exempt bond issue is placed in service; or the date sixty (60) days after the earlier of the fifth anniversary of the issue date of the tax-exempt bond issue, or the date sixty (60) days after the retirement of the tax-exempt bond issue. 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 bonds for facilities 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 obligation. 3 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 is 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 project, while the obligation is outstanding, will avoid IRS private activity concerns. i. The Finance Director shall monitor the use of all obligation-financed facilities in order to: 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 sale of the facilities (including sale of capacity rights, leases and subleases of facilities (including easements or use arrangements for areas outside the four walls, e.g., hosting of cell phone towers), leasehold improvement contracts, licenses, management contracts (in which the City authorizes a third party to operate a facility, e.g. cafeteria), research contracts,preference arrangements (in which the City permits a third party preference, such as parking in a public parking lot),joint ventures, limited liability companies or partnership arrangements, output contracts or other contracts for use of utility facilities (including contracts with large utility users), development agreements which provide for guaranteed payments or property values from a developer, grants or loans made to private entities (including special assessment agreements), naming rights agreements, or other arrangements that provide special legal entitlements to nongovernmental persons; and 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. ii. The Finance Director 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. b. The Finance Director 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; and 4 ii. an annual physical inspection of the facilities financed with the proceeds of such obligations, conducted by the Finance Director with the assistance of any City staff who have the primary responsibility for the operation, maintenance, or inspection of such obligation-financed facilities. c. 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 Finance Director will notify the City's bond counsel, 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 Finance Director will consult with the City's bond counsel, financial advisor and arbitrage provider before engaging in post-issuance credit enhancement transactions (i.e. bond insurance, letter of credit, or hedging transactions (i.e. interest rate swap, cap). C. The Finance Director will monitor all "qualified tax-exempt debt obligations"within the first calendar year to determine if the limit is exceeded, and if exceeded, will address accordingly. For tax-exempt debt obligations issued during years 2009 and 2010, the limit is $30,000,000 (The limit was $10,000,000 prior to 2009. In 2011 and thereafter it will remain at $10,000,000 unless changed by Congress). During this period, the limit also applies to pooled financings of the governing body and provides a separate $30,000,000 for each 501 (c)(3) conduit borrower. d. Comply with Continuing Disclosure Requirements. i. If applicable, the timely filing of annual information agreed to in the Continuing Disclosure Certificate. ii. Give notice of any Material Event. e. Identify any post-issuance change to terms of bonds which could be treated as a current refunding of"old" bonds by "new"bonds, often referred to as a "reissuance". f The Finance Director 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. 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 5 redemption of non-qualified bonds and alternative uses of proceeds or the facility (i.e. use for a qualified purpose instead). g. The Finance Director will ensure that the appropriate tax form for federal subsidy payments is prepared and filed in a timely fashion for applicable obligations (i.e. Build America Bonds). 7. 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 the applicable state and federal regulations. Adopted this day of 2016, by the City Council of the City of St. Joseph, Minnesota. 6 Policy for Donation of Surplus Equipment to a Nonprofit Organization The City Council (the "Council") of the City of St. Joseph, Minnesota(the "City") has chosen, by policy, to establish procedures to donate surplus City equipment to a Nonprofit Organization in compliance with Minnesota Statutes. Background Information In 2016, the Minnesota Legislature passed a new law authorizing a "local government," including statutory and home rule charter cities, to donate "surplus equipment"to a"nonprofit organization." See Ch. 87, H.F. No. 1003 (2016), to be codified in part as Minnesota Statutes, Section 471.3459 (2016). Section 471.3459 defines "surplus equipment" as "equipment used by a local government public works department, and cellular phones and emergency medical and firefighting equipment that is no longer needed by the local government because it does not meet industry standards for emergency medical services, police, or fire departments, or has minimal or no resale value." A "nonprofit organization" is defined as "an organization formed under section 501(c)(3) of the Internal Revenue Code." Before surplus equipment can be donated, the City "must adopt a policy on how it will determine what equipment is surplus eligible for donation and how it will determine which nonprofit organizations may receive donations." In addition, the policy "must address the obligations of the local government to disclose to the nonprofit that the surplus equipment may be defective and cannot be relied upon for safety purposes." The new law also adds a new municipal tort immunity to Minnesota Statues, Section 466.03. Municipalities, including all cities, are immune from liability for any tort claim "resulting from the use of surplus equipment donated by the municipality to a nonprofit organization under section 471.3459."Immunity does not apply if"the claim is a direct result of fraud or intentional misrepresentation." Minnesota Statutes, Section 466.03, subd. 25 (2016). Purpose The purpose of this Policy is to establish procedures for the donation of surplus equipment by the City to a Nonprofit Organization as required by Minnesota Statue § 471.3459 (2016). Sco e This policy applies to all City departments that generate surplus equipment and governs the actions of all City employees and officials. Definitions "City" means the City of St. Joseph, Minnesota. "City Council" means the governing body of the City. 1 "Donation" means to contribute, donate or give surplus equipment at no cost to a Nonprofit Organization that serves a public purpose and benefits its community as a whole. "Eligible Organization" means a Nonprofit Organization serving one or more of the following functions: cultural, historical, educational, safety, social services, environmental or economic. "Fair Market Value" means the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of all relevant facts. "Nonprofit Organization" means an organization formed under Section 501(c)(3) of the Internal Revenue Code. "Policy" means this Policy adopted by the City Council. "Surplus Equipment" means equipment used by the City's public works department, and cellular phones and emergency medical and firefighting equipment that is no longer needed by the City because it does not meet industry standards for emergency medical services, police, or fire departments or has minimal or no resale value. "Surplus Equipment Form" means the form attached as Exhibit A to this Policy that must be filled out by a Nonprofit Organization requesting a donation of surplus equipment. Procedures The City shall determine all surplus equipment and may offer it for donation in conformance with the following guidelines: 1. Identify Surplus Equipment. Department supervisors are responsible for monitoring their equipment and shall identify and report all surplus equipment to the Council. 2. Determine the Fair Market Value of Surplus equipment. City staff to determine the Fair Market Value of the surplus equipment. 3. City Council Declaration. Department Heads will forward a list of the surplus equipment with each item's Fair Market Value to the Council who shall approve or deny the surplus equipment as eligible for donation. The City has no obligation to make a donation of surplus equipment. Surplus equipment may be sold, recycled or discarded in the discretion of the department head. 4. Donation. After the Council has determined the surplus equipment is eligible for donation, the department head is responsible for coordinating the donation of the surplus equipment in accordance with the terms of this Policy. 5. Transfer between Departments. All surplus equipment must first be considered for transfer between departments for the benefit of the City. 2 6. Advertisement. Surplus equipment shall be posted as eligible for sonation on the City's website. The City may also use other reasonable means to notify Eligible Organizations about the availability of surplus equipment. The City shall wait at least 30 days after advertising surplus equipment before approving any donation. 7. Surplus Equipment Form. Eligible Organizations interested in surplus equipment shall fill out a Surplus Equipment Form and submit the form to city hall. 8. Approval of Donation. If the surplus equipment has a Fair Market Value less than $100, the Administrator shall approve the donation to an Eligible Organization, subject to review by the Council. If the Surplus equipment has a Fair Market Value greater than $100, the Council must approve the donation by a majority vote of the Council. 9. Prioritization of Donations. If more than one Eligible Organizations requests a donation for the same surplus equipment, the City shall consider factors it deems relevant including how the surplus equipment will be used, the benefit to the Eligible Organization, the impact on the City, how the donation will accomplish goals of the Council, and any previous donation to the Eligible Organization. 10. Conflict of Interest. All City employees and officials are prohibited from taking possession of any surplus equipment on behalf of an Eligible Organization. 11. As Is. A donation of surplus equipment is made "as is"with no warranty, guarantee or representation of any kind, express or implied, as to the condition, utility, or usability of the surplus equipment offered. The surplus equipment may be defective and cannot be relied up for safety purposes. 12. Title. The Administrator shall cause any title or other ownership documents to be transferred to the Eligible Organization at the time of transfer. Any fees required to transfer the surplus equipment are the responsibility of the Eligible Organization. 13. Transportation. In the Surplus Equipment Form, the Eligible Organization must provide a detailed plan for transporting the surplus equipment from the City to the Eligible Organization. The Eligible Organization must pay all expenses associated with the transportation of the surplus equipment. 14. Dele ag tion. The Administrator or Council may delegate specific responsibilities for implementing this Policy. 15. Documentation. The Finance Director shall document the donation of all surplus equipment and shall keep such records in accordance with the City's Records Retention Schedule. 16. Review of Policy. The Administrator is responsible for maintaining and reviewing this Policy. Any changes to this Policy must be approved by the Council. 3 Adopted this day of , 2016, by the City Council of the City of St. Joseph, Minnesota. Implementation of this Policy will go into effect no earlier than August 1, 2016 and may be amended, as necessary, in the future. 4 Exhibit A Surplus Equipment Form Organization Name: Organization Address: Organization Website: (Attach proof of status as a nonprofit corporation under Section 501(c)(3) of the Internal Revenue Code.) Organization Purpose: Point of Contact Name: Address: Email: Phone: City Surplus Equipment of Interest: How will the requested Surplus Equipment benefit your organization? How do you plan to transport the surplus property from the City to your location? 5 DISCLAIMER OF WARRANTIES. The City makes no agreement, warranty or representation, either express or implied, as to the value, design, condition, merchantability or fitness for any particular purpose or use of the surplus equipment by the recipient or any other user. The recipient acknowledges the surplus equipment may be defective and that it cannot be relied upon for safety purposes. The recipient has a duty to inspect the surplus equipment before it is used for any purpose. The recipient acknowledges that the City is not a manufacturer of the surplus equipment or a dealer therein; that the surplus equipment is being provided "as-is" and "with all faults," it being agreed and understood that all of the aforementioned risks are to be borne by the recipient or user of the surplus equipment. In no event shall the City be liable for any damages in connection with or arising out of the recipient's or any other person's or entity's use of the surplus equipment. I acknowledge that the donation of any surplus equipment to my organization is subject to the City's Policy for Donation of Surplus Equipment to a Nonprofit Organization. I have authority to request a donation from the City and to bind my organization to the terms of this form. Signature of Applicant Date