9.28 Post-Issuance Compliance Policies for Tax Exempt Obligations


This policy outlines the requirements to ensure Post-Issuance Compliance for Tax-Exempt Obligations.

Policy Statement

In accordance with Board of Regents, State of Iowa (the “Regents”) policy, each university shall be responsible for adopting specific policies and procedures (copies of which shall be filed with the Regents) with respect to other matters involving debt issuance; proper use of tax exempt proceeds and bond financed assets; arbitrage and rebate compliance; record retention; matters regarding advance refundings; and matters regarding continuing disclosure obligations. To that end, the University of Northern Iowa (the “University”) has adopted the following:

            1. Compliance Coordinator

a) The Senior Vice President for Finance and Operations, or their designee, is the coordinator of these post-issuance compliance policies (the "Coordinator") and shall be responsible for monitoring post-issuance compliance and continuing disclosure  for the  University.  

b) The Coordinator will maintain a copy of the transcript of proceedings received from bond counsel in connection with the issuance of any tax-exempt obligations.  Coordinator will obtain such records as are necessary to meet the requirements of this policy.

c) The Coordinator will consult with the Regents’ bond counsel, rebate consultant, financial advisor, IRS publications and other necessary resources to understand and meet the requirements of this policy.

d) With the assistance of bond counsel, training and education of the Coordinator and other staff of the University will be sought and implemented upon the occurrence of new developments.

e) The Coordinator will review the Official Statement and confirm that there are no misstatements or omissions of material information in any sections and that the Official Statement accurately states all material information relating to the University.

f) The Coordinator will draft descriptions for the Official Statement of any material current, pending or threatened litigation; any material settlements or court orders; and any other legal issues that are material information for purposes of the Official Statement.

g) The Coordinator will report any significant disclosure issues and concerns to the University’s bond counsel and/or municipal advisor.

            2.  Financing Transcripts.  The Coordinator shall confirm the proper filing of an 8038 Series return and maintain a transcript of proceedings for all tax-exempt obligations issued by the Regents on behalf of the University; including, but not limited to, all tax-exempt bonds, notes and lease-purchase contracts.  Each transcript shall be maintained until eleven (11) years after the tax-exempt obligation it documents has been retired.

            3.  Proper Use of Proceeds.  The Coordinator shall review the resolution authorizing issuance for each tax-exempt obligation issued by the Regents, and shall:

a) Obtain a computation of the yield on such issue from the Regents’ financial advisor; 

b) Create a separate Project Fund (with as many sub-funds as are necessary to allocate proceeds among the projects being funded by the issue) into which the proceeds of issue shall be deposited;

c) Review all requisitions, draw schedules, draw requests, invoices and bills requesting payment from the Project Fund;

d) Determine whether payment from the Project Fund is appropriate, and if so, make payment from the Project Fund (and appropriate sub-fund if applicable);

e) Maintain records of the payment requests and corresponding records showing payment;

f) Maintain records showing the earnings on, and investment of, the Project Fund;

g) Ensure that investments acquired with proceeds are purchased at fair market value;

h) Identify bond proceeds or applicable debt service allocations that must be invested with a yield-restriction and monitor the investments of any yield-restricted funds to ensure that the yield on such investments does not exceed the yield to which such investments are restricted;

i) Maintain records related to the following, to the extent applicable: investment contracts, credit enhancement transactions, financial derivatives and the bidding of financial products;

j) Maintain copies of the following: (i) Form 8038s; (ii) audited financial statements; (iii) bond transcripts; (iv) minutes and resolutions; (v) certifications of issue price from the underwriter; (vi) formal elections required by the IRS; (vii) trustee statements; (viii) records of refunded bonds; (ix) correspondence relating to bond financings; and (x) reports of any IRS examinations for bond financings.   

            4.  Timely Expenditure and Arbitrage/Rebate Compliance.  The Coordinator shall review the Tax-Exemption Certificate (or equivalent) for each tax-exempt obligation issued by the Regents and the expenditure records provided in Section 2 of this policy, above, and shall:

a) Monitor and ensure that proceeds of each issue are spent:

i) within the temporary period and

ii) in accordance with one or more of the applicable exceptions to rebate as laid out in the certificate;

b) Confer with Regents’ bond counsel and rebate consultant if the University will fail to meet the applicable temporary period or rebate exception expenditure requirements as laid out in the certificate; and

c) If the University fails to meet a temporary period or rebate exception:

i)  procure a timely computation of any rebate liability and, if rebate is due, file a Form 8038-T and arrange for payment of such rebate liability and

ii)  arrange for timely computation and payment of “yield reduction payments” (as defined in the Internal Revenue Code and Treasury Regulations), if applicable.

            5.  Proper Use of Bond Financed Assets.  The Coordinator shall:

a) Maintain appropriate records and a list of all bond financed assets.  Such records are to include the actual amount of proceeds (including investment earnings) spent on each of the bond financed assets;

b) Monitor and confer with bond counsel for each bond financed asset with respect to all proposed:

             i) management contracts,

             ii) service agreements,

            iii) research contracts,

            iv) naming rights contracts,

             v) leases or sub-leases,

            vi) joint venture, limited liability or partnership arrangements,

            vii) sale of property; or

            viii) any other change in use of such asset;

c) Maintain a copy of the proposed agreement, contract, lease or arrangement, together with the response by bond counsel for each proposal for at least three (3) years after retirement of all tax-exempt obligations issued to fund all or any portion of bond financed assets; and

d) Contact bond counsel and ensure timely remedial action under IRS Regulation Sections 1.141-12. if the University takes an action regarding a bond financed asset, which causes the private business tests or private loan financing test to be met.

            6.  General Project Records.  For each project financed with tax-exempt obligations, the Coordinator shall maintain, until three (3) years after retirement of the tax-exempt obligations or obligations issued to refund those obligations, the following:

            a) appraisals, demand surveys or feasibility studies,

            b) applications, approvals and other documentation of grants,

            c)  depreciation schedules, and

            d) contracts respecting the project.

            7.  Advance Refundings. The Coordinator shall be responsible for the current, post issuance and record retention procedures with respect to advance refunding bonds as follows:

a) Identify and select bonds to be advance refunded with advice from internal financial personnel, the Regent’s financial advisor and bond counsel;

b) Identify with advice from the Regents’ financial advisor and bond counsel, any possible federal tax compliance issues prior to structuring any advance refunding;

c) Review the structure, with the input of the Regents’ financial advisor and bond counsel, of advance refunding issues prior to the issuance to ensure that the proposed issuance (i) is permitted under applicable federal tax requirements if there has been a prior refunding of the original bond issue; (ii) complies with federal income tax requirements which might impose restrictions on the redemption date of the refunded bonds; (iii) complies with federal income tax requirements which allow for the proceeds and replacement proceeds of an issue to be invested temporarily in higher yielding investments without causing the advance refunding bonds to become “arbitrage bonds”; and (iv) will not result in the issuer’s exploitation of the difference between tax exempt and taxable interest rates to obtain a financial advantage nor overburden the tax exempt market in a way that might be considered an abusive transaction for federal tax purposes.

d) Collect and review data related to arbitrage yield restriction and rebate requirements for advance refunding bonds. To ensure such compliance, the Coordinator shall engage the Regents’ rebate consultant to prepare a verification report in connection with an advance refunding issuance.

e) Purchase, whenever possible, Treasury Securities-State and Local Government Series (SLGS) to size each advance refunding escrow. The Regents financial advisor and rebate consultant shall be included in the process of subscribing SLGS. To the extent SLGS are not available for purchase, the Coordinator shall, in consultation with bond counsel, comply with IRS regulations.

f) Ensure, after input from bond counsel, compliance with any bidding requirements set forth by the IRS regulations should the Regents purchase a guaranteed investment contract.

g) Rely on the issue price certification by the purchasing underwriter at closing to determine the issue price for any advance refunding issuance.

h) Ensure timely identification of violations of any federal tax requirements after the issuance of an advance refunding issue and engage bond counsel in attempt to remediate  these violations consistent with IRS regulations.

8.  Annual Reports. Under the continuing disclosure undertakings the University has entered into in connection with its debt offerings, the University is required each year to file or cause to be filed annual reports with the Municipal Securities Rulemaking Board (MSRB)’s EMMA system. Such annual reports are generally required to include: (1) certain updated financial and operating information, and (2) the University’s audited financial statements.  The documents, reports and notices required to be submitted to the MSRB shall be submitted through EMMA in an electronic format, 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.  If the event the University does not have audited financial statements available by the filing deadline imposed by the continuing disclosure agreement, the Compliance Coordinator shall instead submit the University’s unaudited financial statements.  Audited financial statements shall be filed as soon as available.

            9.  Continuing Disclosure. The Coordinator shall, in consultation with the Regents’ dissemination agent, assure compliance with each continuing disclosure certificate and annually, per the continuing disclosure agreements (agreement), file audited annual financial statements and other information required by each agreement.  The Coordinator will monitor material events as described in each agreement and assure compliance with material event disclosure.  Events to be reported shall be reported promptly, but in no event later than ten (10) business days after the day of the occurrence of the event, and shall include, but are not be limited to:

            a) Principal and interest payment delinquencies;

            b) Non-payment related defaults, if material;

            c) Unscheduled draws on debt service reserves reflecting financial difficulties;

            d) Unscheduled draws on credit enhancements relating to the bonds reflecting financial difficulties;

            e) Substitution of credit or liquidity providers, or their failure to perform;

            f) 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-exempt status of the bonds, or material events affecting the tax-exempt status of the bonds;

            g) Modifications to rights of Holders of the Bonds, if material;

            h) Bond calls (excluding sinking fund mandatory redemptions), if material, and tender offers;

            i) Defeasances of the bonds;

            j) Release, substitution, or sale of property securing repayment of the bonds, if material;

            k) Rating changes on the bonds;

            l) Bankruptcy, insolvency, receivership or similar event of the Issuer;

            m) The consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or substantially all of the assets of the Issuer, 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; and

            n) Appointment of a successor or additional trustee or the change of name of a trustee, if material.

Senior Vice President for Finance and Operations, approved August 22, 2018
University Council, approved November 12, 2018
President and Executive Management Team, approved December 10, 2018