|Policy Name:||Tax-Exempt Financing Compliance Policy|
|Review Next:||August 2014|
The Texas Woman's University
Tax-Exempt Financing Compliance Policy
Capitalized words and terms used in this Compliance Policy have the following meanings:
Annual Compliance Checklist means a questionnaire and/or checklist that is completed each year for the Tax-Exempt Bonds (see ‘Ongoing Monitoring Procedures’ in Compliance Policy below).
Annual Report means the Issuer’s audited financial statements (or unaudited financial statements as permitted by the Continuing Disclosure Undertaking for the Tax-Exempt Bonds) and certain other financial information and operating data required to be filed annually with the MSRB for the Tax-Exempt Bonds.
Bond Compliance Officer means TWU’s Associate Vice President – Finance, Controller & Treasury, or if that position is vacant, the person filling the responsibilities of the Associate Vice President – Finance, Controller & Treasury.
Bond Counsel means a law firm selected by the Issuer to provide a legal opinion regarding the tax status of interest on the Tax-Exempt Bonds as of the issue date or the law firm selected to advise the Issuer on matters referenced in this Compliance Policy.
Bond Restricted Funds means the funds, accounts, and investments that are subject to arbitrage rebate and/or yield restriction rules that have been identified in the Tax Compliance Agreement for the Tax-Exempt Bonds.
Bond Transcript means the “transcript of proceedings” or other similarly titled set of transaction documents assembled by Bond Counsel following the issuance of the Tax-Exempt Bonds.
Code means the Internal Revenue Code of 1986, as amended.
Compliance Policy means this Tax-Exempt Financing Compliance Policy.
Continuing Disclosure Undertaking means the Continuing Disclosure Agreement(s), Continuing Disclosure Undertaking(s), Continuing Disclosure Instructions or other written certification(s) and agreements of the Issuer setting out covenants for satisfying the Issuer’s requirements for providing information to the MSRB pursuant to SEC Rule 15c2-12 on an ongoing basis for one or more Tax-Exempt Bond issues.
Cost or Costs means all costs and expenses paid for the acquisition, design, construction, equipping or improvement of a Project Facility or costs of issuing Tax-Exempt Bonds for a Project Facility.
EMMA means the Electronic Municipal Market Access system for municipal securities disclosures established and maintained by the MSRB, which can be accessed at www.emma.msrb.org.
Final Written Allocation means the Final Written Allocation of Tax-Exempt Bond proceeds prepared as described in ‘Final Allocation of Bond Proceeds’ in Compliance Policy below.
Financed Assets means that part of a Project Facility treated as financed with Tax-Exempt Bond proceeds as reflected in a Final Written Allocation or, if no Final Written Allocation was prepared, the accounting records of the Issuer and the Tax Compliance Agreement for Tax-Exempt Bonds.
Governing Body means the Board of Regents of the Issuer.
Intent Resolution means a resolution of the Issuer stating (1) the intent of the Issuer to finance all or a portion of the Project Facility, (2) the expected maximum size of the financing and (3) the intent of the Issuer to reimburse Costs of the Project Facility paid by the Issuer from proceeds of the Tax-Exempt Bonds.
IRS means the Internal Revenue Service.
Issuer means Texas Woman's University (TWU).
MSRB means the Municipal Securities Rulemaking Board, or any successor repository designated as such by the Securities and Exchange Commission in accordance with Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
Placed In Service means that date (as determined by the Bond Compliance Officer) when the Project Facility is substantially complete and in operation at substantially its design level.
Project Facility means all tangible or intangible property financed in whole or in part with Tax-Exempt Bonds that are (1) functionally related or integrated in use, (2) located on the same physical site or proximate sites, and (3) expected to be Placed In Service within a one-year period of each other.
Rebate Analyst means the rebate analyst for the Tax-Exempt Bonds selected pursuant to the Tax-Compliance Agreement.
Regulations means all regulations issued by the U.S. Treasury Department to implement the provisions of Code § 103 and 141 through 150 and applicable to tax-exempt obligations.
Tax Compliance Agreement means the Federal Tax Certificate, Tax Compliance Agreement, Arbitrage Agreement, or other written certification or agreement of the Issuer setting out representations and covenants for satisfying the post-issuance tax compliance requirements for the Tax-Exempt Bonds.
Tax-Exempt Bonds means any bond, note, installment sale agreement, lease or certificate intended to be a debt obligation of the Issuer or another political subdivision or government instrumentality, the proceeds of which are to be loaned or otherwise made available to the Issuer, and the interest on which is excludable from gross income for federal income tax purposes. A list of all Tax-Exempt Bond Issues outstanding and subject to this Compliance Policy as of August, 2012, is listed at end of this Policy.
Tax-Exempt Bond File means documents and records which may consist of paper and electronic medium, maintained for the Tax-Exempt Bonds. Each Tax-Exempt Bond File will include the following information if applicable:
- Intent Resolutions
- Bond Transcript
- Final Written Allocation and/or all available accounting records related to the Project Facility showing expenditures allocated to the proceeds of the Tax-Exempt Bonds and expenditures (if any) allocated to other sources of funds.
- All rebate and yield reduction payment calculations performed by the Rebate Analyst and all investment records provided to the Rebate Analyst for purposes of preparing the calculations.
- Forms 8038-T together with proof of filing and payment of rebate.
- Investment agreement bid documents (unless included in the Bond Transcript) including:
- bid solicitation, bid responses, certificate of broker;
- written summary of reasons for deviations from the terms of the solicitation that are incorporated into the investment agreement; and
- copies of the investment agreement and any amendments.
- Any item required to be maintained by the terms of the Tax Compliance Agreement involving the use of the Project Facility or expenditures related to tax compliance for the Tax-Exempt Bonds.
- Any opinion of Bond Counsel regarding the Tax-Exempt Bonds not included in the Bond Transcript.
- Amendments, modifications or substitute or substitute agreements to any agreement contained in the Bond Transcript.
- Any correspondence with the IRS relating to the Tax-Exempt Bonds including all correspondence relating to an audit by the IRS of the Tax-Exempt Bonds or any proceedings under VCAP.
“VCAP” means Tax-Exempt Bonds Voluntary Closing Agreement Program
- Any available questionnaires or correspondence substantiating the use of the Project Facility in accordance with the terms of the Tax Compliance Agreement for the Tax-Exempt Bonds.
- For refunding bond issues, the Tax-Exempt Bond File for the refunded Tax-Exempt Bonds.
PURPOSE AND SCOPE
Purpose of Compliance Policy
- Issuer’s Use of Tax-Exempt Bonds. The Issuer uses Tax-Exempt Bonds to fund Costs of a Project Facility. The Issuer understands that in exchange for the right to issue Tax-Exempt Bonds at favorable interest rates and terms, the Code and Regulations impose ongoing requirements related to the proceeds of the Tax-Exempt Bonds and the Project Facility financed by the Tax-Exempt Bonds. These requirements focus on the investments, use and expenditure of proceeds of the Tax-Exempt Bonds and related funds as well as restrictions on the use of the Project Facility.
- IRS Recommendations Separate Written Procedures. The Issuer recognizes that the IRS has stated that all issuers of Tax-Exempt Bonds should have separate written procedures regarding ongoing compliance with the federal tax requirements for Tax-Exempt Bonds.
- Continuing Disclosure Undertaking: Issuer Commitment. The Issuer is required under the Continuing Disclosure Undertaking to provide disclosures of certain financial information and operating data and to file notices of certain material events to the marketplace to facilitate informed secondary market trading in Tax-Exempt Bonds issued by the Issuer. The Issuer is committed to full compliance with the federal tax [and securities] law requirements for all of its outstanding and future tax-exempt financings. This Compliance Policy is adopted by the Governing Body to comply with the IRS [and Securities and Exchange Commission] directives and to improve tax [and securities] law compliance and documentation.
Scope of Compliance Policy: Conflicts
This Compliance Policy applies to all Tax-Exempt Bonds currently outstanding and all Tax-Exempt Bonds issued in the future. If the provisions of this Compliance Policy conflict with a Tax Compliance Agreement, the Continuing Disclosure Undertaking or any other specific written instructions of Bond Counsel, the terms of the Tax Compliance Agreement, Continuing Disclosure Undertaking or specific written instructions of Bond Counsel will supersede and govern in lieu of this Compliance Policy. Any exception to this Compliance Policy required by Bond Counsel as part of a future issue of Tax-Exempt Bonds will be incorporated in the Tax Compliance Agreement for the future issue. Any requirements imposed on the Issuer in the Tax Compliance Agreement, will be noted by the Bond Compliance Officer and incorporated into the Annual Compliance Checklist. The Issuer acknowledges that the Continuing Disclosure Undertaking may also apply to one or more issues of taxable securities issued by the Issuer.
Amendments and Publications of Compliance Policy
This Compliance Policy may be amended from time-to-time by the Governing Body. Copies of this Compliance Policy and any amendments will be included in the permanent records of the Issuer.
BOND COMPLIANCE OFFICER
Bond Compliance Officer Duties
The Bond Compliance Officer is responsible for implementing this Compliance Policy. The Bond Compliance Officer will work with other employees that use the Project Facility to assist in implementing this Compliance Policy. The Bond Compliance Officer will consult with Bond Counsel, legal counsel to the Issuer, accountants, tax return preparers and other outside experts to the extent necessary to carry out the purpose of this Compliance Policy. The Bond Compliance Officer will report to the Governing Body as necessary, and at least annually, regarding implementation of this Compliance Policy and any recommended changes or amendments to this Compliance Policy.
Bond Compliance Officer Training
When appropriate, the Bond Compliance Officer and/or other employees of the Issuer under the direction of the Bond Compliance Officer will attend training programs offered by the IRS or other industry professionals regarding tax-exempt financing that are relevant to the Issuer. At the time the individual acting as the Bond Compliance Officer passes the responsibilities for carrying out the provisions of this Compliance Policy to another individual, the outgoing Bond Compliance Officer is responsible for training the incoming individual acting as Bond Compliance Officer to ensure the Issuer’s continued compliance with the provisions of this Compliance Policy and all Tax Compliance Agreements for any outstanding Tax-Exempt Bonds.
TAX-EXEMPT BONDS CURRENTLY OUTSTANDING
Tax-Exempt Bonds Covered by Article IV Procedures
This applies to all Tax-Exempt Bonds issued prior to the date of this Compliance Policy that are currently outstanding. These Tax-Exempt Bonds are listed at end of Compliance Policy.
Tax-Exempt Bond File
As soon as practical, the Bond Compliance Officer will attempt to assemble as much of the Tax-Exempt Bond File as is available for the Tax-Exempt Bonds listed at end of Compliance Policy.
Annual Compliance Checklists
As soon as practical following the adoption of this Compliance Policy, the Bond Compliance Officer will work with Bond Counsel and/or legal counsel to the Issuer and cause Annual Compliance Checklists to be completed for all outstanding Tax-Exempt Bonds and will follow the procedures to complete the Annual Compliance Checklists and thereafter include each completed Annual Compliance Checklist in the Tax-Exempt Bond File (described in ‘Ongoing Monitoring Procedures’ in this Policy).
Correcting Prior Deficiencies in Compliance
In the event the Bond Compliance Officer determines any deficiency in compliance with a Tax Compliance Agreement for an outstanding Tax-Exempt Bond listed at end of this Compliance Policy, the Bond Compliance Officer will follow the procedures described in the Regulations or the VCAP to remediate the noncompliance. If remediation of the noncompliance requires the Issuer to submit a request under VCAP, the Bond Compliance Officer will undertake this step only after reporting the violation to the Governing Body and obtaining its approval.
COMPLIANCE POLICY FOR NEW TAX-EXEMPT BOND ISSUES
This applies to Tax-Exempt Bonds issued on or after the date of this Compliance Policy.
Prior to Issuance of Tax-Exempt Bonds
- Intent Resolution The Governing Body will authorize and approve the issuance of Tax-Exempt Bonds. Prior to or as a part of the authorizing resolution or ordinance, the Governing Body may adopt an Intent Resolution.
- Directions to Bond Counsel The Bond Compliance Officer will provide a copy of this Compliance Policy to Bond Counsel with directions for Bond Counsel to structure the documentation and procedural steps taken prior to issuing the Tax-Exempt Bonds so that they conform to the requirements of this Compliance Policy, except to the extent Bond Counsel determines that different procedures are required. The Bond Compliance Officer will consult with Bond Counsel so that appropriate provisions are made to fund or reimburse the Issuer’s costs and expenses incurred to implement this Compliance Policy.
- Tax Compliance Agreement For each issuance of Tax-Exempt Bonds, a Tax Compliance Agreement will be signed by the Bond Compliance Officer. The Tax Compliance Agreement will (1) describe the Project Facility and the anticipated Finance Assets, (2) identify all Bond Restricted Funds and provide for arbitrage and rebate compliance, (3) for new money financings, require a Final Written Allocation, and (4) contain a form of the Annual Compliance Checklist for the Tax-Exempt Bonds. The Bond Compliance Officer will confer with Bond Counsel and the Issuer’s counsel regarding the meaning and scope of each representation and covenant contained in the Tax Compliance Agreement.
- Preliminary Cost Allocations For each issuance of Tax-Exempt Bonds, the Bond Compliance Officer in consultation with Bond Counsel, will prepare a preliminary cost allocation plan for the Project Facility. The preliminary cost allocation plan will identify the assets and expected Costs for the Project Facility, and when necessary, will break-out the portions of costs that are expected to be financed with proceeds of the Tax-Exempt Bonds (the “Financed Assets”) and the portions, if any, expected to be financed from other sources.
- Tax Review with Bond Counsel Prior to the sale of Tax-Exempt Bonds, the Bond Compliance Officer and Bond Counsel will review this Compliance Policy together with the draft Tax Compliance Agreement to ensure that any tax compliance issues in the new financing are adequately addressed by the Compliance Policy and/or the Tax Compliance Agreement. If Bond Counsel determines that this Compliance Policy conflicts with the Tax Compliance Agreement, or must be supplemented to account for special issues or requirements for the Tax-Exempt Bonds, the Bond Compliance Officer will ask Bond Counsel to include the written modifications or additions in the final Tax Compliance Agreement. The Bond Compliance Officer will request Bond Counsel to prepare a form of Annual Compliance Checklist for use in monitoring the ongoing compliance requirements for the Tax-Exempt Bonds.
Accounting and Recordkeeping
- Accounting for New Money Projects The Bond Compliance Officer will be responsible for accounting for the investment and allocation of proceeds of the Tax-Exempt Bonds. The Bond Compliance Officer will establish separate accounts or subaccounts to record expenditures for Costs of the Project Facility. Where appropriate, the Bond Compliance Officer may use accounts established as part of the Issuer’s financial records for this purpose. In recording Cost for the Project Facility, the Bond Compliance Officer will ensure that the accounting system will include the following information: (1) identity of person or business paid, along with any other available narrative description of the purpose for the payment, (2) date of payment, (3) amount paid, and (4) invoice number or other identifying reference.
- Accounting for Refunded Bonds and Related Refunded Bond Accounts For Tax-Exempt Bonds that are issued to refund prior Tax-Exempt Bonds, the Tax Compliance Agreement will set out special accounting and allocation procedures for the proceeds of the financing, and if necessary proceeds of the refinanced Tax-Exempt Bonds.
- Tax-Exempt Bond File The Bond Compliance Officer will be responsible for assembling and maintaining the Tax-Exempt Bond File. The Annual Reports, other reports and notices of certain material events filed by the Issuer with the MSRB in accordance with its Continuing Disclosure Undertaking will be publicly available on EMMA and need be separately maintained in the Tax-Exempt File.
Final Allocation of Bond Proceeds
- Preparation of Final Written Allocation: Timing The Bond Compliance Officer is responsible for making a written allocation of proceeds of Tax-Exempt Bonds to expenditures and identifying the Financed Assts. This process will be memorialized in the Final Written Allocation. For a new money financing, the Bond Compliance Officer will commence this process as of the earliest of (1) the requisition of all Tax-Exempt Bond proceeds from any segregated Tax-Exempt Bond funded account, (2) the date the Project Facility has been substantially completed or (3) four and one/half years following the issue date of the Tax-Exempt Bonds. For Tax-Exempt Bonds issued only to refund a prior issue of Tax-Exempt Bonds, the Bond Compliance Officer will work with Bond Counsel to prepare and/or document the Final Written Allocation for the Project Facility financed by the refunded Tax-Exempt Bonds and include it in the Tax Compliance Agreement.
- Contents and Procedure The Bond Compliance Officer will consult the Tax Compliance Agreement and, if necessary, contact the Bond Counsel to seek advice regarding any special allocation of Tax-Exempt Bond proceeds and other money of the Issuer to the Costs of the Project Facility. If no special allocation is required or recommended, the Bond Compliance Officer will allocate Costs of the Project Facility to the proceeds of the Tax-Exempt Bonds in accordance with the Issuer’s accounting records. Each Final Written Allocation will contain the following: (1) a reconciliation of the actual sources and uses to Costs of the Project Facility, (2) the percentage of the cost of the Project Facility financed with proceeds of the Tax-Exempt Bonds (sale proceeds plus any investment earnings on those sale proceeds), (3) the Project Facility’s Placed in Service date, (4) the estimated economic useful life of the Project Facility, and (5) any special procedures to be followed in completing the Annual Compliance Checklist (e.g., limiting the Annual Compliance Checklist to specific areas of the Project Facility that the Final Written Allocation or the Tax Compliance Agreement treats as having been financed by Tax-Exempt Bonds).
- Finalize Annual Compliance Checklist As part of the preparation of the Final Written Allocation, the Bond Compliance Officer will update the draft Annual Compliance Checklist contained in the relevant Tax Compliance Agreement. The Bond Compliance Officer will include reminders for all subsequent arbitrage rebate computations required for the Tax-Exempt Bonds in the Annual Compliance Checklist.
- Review of Final Written Allocation and Annual Compliance Checklist Each Final Written Allocation and Annual Compliance Checklist will be reviewed by legal counsel to the Issuer or Bond Counsel for sufficiency and compliance with the Tax Compliance Agreement and this Compliance Policy. Following the completion of the review, the Bond Compliance Officer will execute the Final Written Allocation.
ONGOING MONITORING PROCEDURES
Annual Compliance Checklist
An Annual Compliance Checklist will be completed by the Bond Compliance Officer each year following completion of the Final Written Allocation. Each Annual Compliance Checklist will be designed and completed for the purpose of identifying potential noncompliance with the terms of the Tax Compliance Agreement or this Compliance Policy and obtaining documents (such as investment records, arbitrage calculations, or other documentation for the Project Facility) that are required to be incorporated in the Tax-Exempt Bond File. The Bond Compliance Officer will refer any responses indicating a violation of the terms of the Tax Compliance Agreement to legal counsel to the Issuer or Bond Counsel and, if recommended by counsel, will follow the procedure described in ‘Correcting Prior Deficiencies in Compliance’ to remediate the non-compliance.
Arbitrage and Rebate Compliance
The Bond Compliance Officer will monitor the investment of Bond Restricted Funds and provide investment records to the Rebate Analyst on a timely basis. The Bond Compliance Officer will follow the directions of the Rebate Analyst with respect to the preparation of and the timing of rebate or yield reduction computations.
Annual Disclosure Filing
For each issuance of Tax-Exempt Bonds, the Bond Compliance Officer will review the Continuing Disclosure Undertaking to determine the financial information and operating data required to be included in the Annual Report to be filed by the Issuer with the MSRB on EMMA. The Bond Compliance Officer will cause the Annual Report to be filed with the MSRB on EMMA within the time limits provided in the Continuing Disclosure Undertaking for the Tax-Exempt Bonds.
Event Disclosure Filings
For each outstanding issue of Tax-Exempt Bonds, the Bond Compliance Officer will review the Continuing Disclosure Undertaking to determine the events that require prompt notice to be filed with the MSRB, consistent with the Bond Transcript.
After obtaining actual knowledge of the occurrence of any event that the Bond Compliance Officer believes may constitute an event requiring disclosure, the Bond Compliance Officer will contact Bond Counsel and the issue’s Financial Advisor to determine if notice of the event is required to be given to the MSRB under the Continuing Disclosure Undertaking. If it is determined that notice should be provided to the MSRB or is required to be provided to the MSRB by the Continuing Disclosure Undertaking, the Bond Compliance Officer will cause the appropriate notice to be filed with the MSRB on EMMA within 10 business days after the occurrence of the event or as otherwise directed by Bond Counsel.
List of Tax-Exempt Bonds Covered by This Compliance Policy
Combined Fee Revenue Bonds, Series 1999 (Defeased)
Combined Fee Revenue Bonds, Series 2002 (Defeased)
Revenue Financing System Bonds, Series 2004 (Defeased)
Revenue Financing System Refunding and Improvement Bonds, Series 2004A
Revenue Financing System Bonds, Series 2008
Revenue Financing System Bonds, Series 2009
Revenue Financing System Bonds, Series 2009A
Revenue Financing System Refunding Bonds, Series 2012
page last updated 8/25/2014 4:19 PM