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Continuing Disclosure Policy Copyright 2014 City of Dubuque Consent Items # 8. ITEM TITLE: Continuing Disclosure Policy SUMMARY: City Manager recommending adoption of the Continuing Disclosure Policy to comply with the Federal Securities Laws. SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Approve ATTACHMENTS: Description Type ❑ Continuing Disclosure Policy-MVM Memo City Manager Memo ❑ Continuing Disclosure Policy Staff Memo ❑ Continuing Disclosure Policy Supporting Documentation THE CITY OF Dubuque UBE I erica .i Masterpiece on the Mississippi 2007-2012-2013 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Continuing Disclosure Policy DATE: January 12, 2015 Finance Director Ken TeKippe is recommending City Council approval of the continuing disclosure policy to comply with the federal securities laws, both when new bonds are issued and when City provides on-going disclosure to bond investors through the EMMA system. I concur with the recommendation and respectfully request Mayor and City Council approval. Mic ael C. Van Milligen MCVM:sv Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager Teri Goodmann, Assistant City Manager Ken TeKippe, Finance Director Jennifer Larson, Budget Director THE CITY OF Dubuque All-America City DUB E r Masterpiece on the Mississippi 2007.2012.2013 TO: Michael C. Van Milligen, City Manager FROM: Ken TeKippe, Finance Director SUBJECT: Continuing Disclosure Policy DATE: January 12, 2015 The purpose of the attached continuing disclosure policy is to help the City comply with the federal securities laws, both when new bonds are issued and when City provides on-going disclosure to bond investors through the EMMA system. The policy establishes internal practices and procedures that are intended to ensure that the disclosure is appropriately prepared and reviewed, and timely filed. The enclosed policy has been prepared with assistance from Ahlers & Cooney, P.C. law firm. The policy has been provided for review to our financial advisor, Tionna Pooler, Independent Public Advisors, as well as Jenny Larson and other City staff. The recommended action is to have the City Council approve the policy at a future City Council meeting. Thank you. Enclosure cc: Jenny Larson, Budget Director City of Dubuque CONTINUING DISCLOSURE POLICY Article I General Overview Section 1.01 Pumose. This Continuing Disclosure Policy ("Policy") of the City of Dubuque ("City")is intended to ensure that the City efficiently carries out its continuing disclosure obligations with respect to securities it issues or guarantees pursuant to Rule 15c2-12, as amended(the "Rule"), promulgated under the Securities Exchange Act of 1934, as amended. Section 1.02. Background. The Rule prohibits underwriters from offering bonds unless the issuer provides an official statement and contractually promises to provide specified disclosures as required in the Rule. To facilitate compliance with the Rule, each issuer must enter into a continuing disclosure agreement with the purchaser or underwriter in connection with each new issuance of obligations which fall within the Rule, thereby creating a contractual promise on behalf of the issuer to provide the market with these disclosures. The City is responsible for ensuring that all disclosure documents contain accurate information. The SEC has asserted that, under Rule lOb-5, "disclosure documents used by municipal issuers, such as official statements, are subject to the prohibition against false or misleading statements of material facts, including the omission of material facts necessary to make the statements made, in light of the circumstances in which they were made, not misleading." Section 1.03. Obligations Subject to the Rule. Various offerings are fully or partially exempt from the continuing disclosure provisions under the Rule. Offerings with an aggregate original principal amount of less than $1 million("Small Offerings"), offerings sold prior to July 3, 1995 ("Old Offerings") and offerings sold by an issuer directly to investors without using a broker, dealer, or municipal securities dealer as an underwriter or placement agent("Direct Offerings") are fully exempt from all continuing disclosure provisions under the Rule, unless the City voluntarily agrees to provide continuing disclosures for an otherwise exempt Obligation. Section 1.04 Definitions. In addition to the terms defined above, the following capitalized terms shall have the following meanings: (A) "CAFR" means the Comprehensive Annual Financial Report of the City. (B) "City" means the City of Dubuque and those independent agencies,joint power authorities, special districts, component units, or other entities created by the City Council or by State law for which the City Council serves as the governing or legislative body. (C) "Disclosure Counsel" means legal counsel (which may be bond counsel for a series of Obligations)engaged for the purpose of assisting the City in meeting its primary and secondary market disclosure obligations. (D) "Financial Advisor" means a municipal advisor engaged for the purpose of assisting with the City's structuring and sale of Obligations. (E) "Fiscal Year" means the fiscal year of the City, beginning on July 1 and ending on the following June 30. (F) "EMMA" means the Electronic Municipal Market Access system of the MSRB. Information regarding submissions to EMMA is available at http://emma.msrb.org/. (G) "Employee" means any person who, as part of his or her employment with the City, has regular responsibility for the administration of matters related to Obligations. (IT) "Listed Event" means any of the events listed in Exhibit A of this Policy. (I) "MSRB" means the Municipal Securities Rulemaking Board or any other board or entity which succeeds to the functions currently delegated to the Municipal Securities Rulemaking Board by the Rule. (J) "Obligations" means any securities issued by, or whose payment is guaranteed by the City. (K) "SEC"means the United States Securities and Exchange Commission. Article II Key Participants and Responsibilities Section 2.01. Disclosure Coordinator. By adoption of this Policy, the City hereby appoints the Finance Director to act as the disclosure coordinator("Disclosure Coordinator") of the City. Section 2.02 Responsibilities. The Disclosure Coordinator is responsible for the following tasks: (A)reviewing and approving all preliminary and final official statements relating to the City's securities, together with any supplements, for which a continuing disclosure undertaking is required(each, an"Official Statement"), before such documents are released, in accordance with Article III below; (B) reviewing annually the City's status and compliance with its continuing disclosure undertakings, including filings of disclosure documents and compliance with this Policy, in accordance with Articles IV and V below; (C) serving as a"point person" for personnel to communicate issues or information that should be or may need to be included in any disclosure document; (D)recommending changes to this Policy to the City Council as necessary or appropriate; (E) communicating with third parties, including coordination with outside consultants assisting the City, in the preparation and dissemination of disclosure documents to make sure that assigned tasks have been completed on a timely basis and making sure that the filings are made on a timely basis and are accurate; (F) in anticipation of preparing disclosure documents, soliciting"material" information(as defined for purposes of federal securities law)from identified City Employees; (G)maintaining records documenting the City's compliance with this Policy; and (FI) ensuring compliance with training procedures as described below. The responsibilities of the Disclosure Coordinator to make certain filings with the MSRB under Articles N (Annual Report Filings) and V (Listed Event Filings)may be delegated by contract to a dissemination agent, under terms approved by the City Council. Article III Official Statements 3.01. Review and Approval of Official Statements. Whenever the City issues Obligations, a preliminary official statement and a final official statement may be prepared("Official Statements"). Each of these Official Statements contains information relating to the City's finances. The Disclosure Coordinator, along with any retained Disclosure Counsel and/or Financial Advisor, shall have primary responsibility for ensuring that all such information is accurate and not misleading in any material aspect. The Official Statement may also include a certification that the information contained in the Official Statement regarding the City, as of the date of each official statement, does not contain any untrue statement of material fact or omit to state any material fact necessary to make the information contained in the Official Statement, in light of the circumstances under which it was provided, not misleading. When undertaking review of a final or preliminary Official Statement, the Disclosure Coordinator shall: (A)review the Official Statement to ensure that there are no material misstatements or omissions of material information in any sections, that the information relating to the City that is included in the Official Statement is accurate, and that when necessary the information relating to the City has been reviewed by a knowledgeable Employee or other appropriate person; (B) draft, or cause to be drafted,for the Official Statement descriptions of(i) any material current, pending or threatened litigation, (ii)any material settlements or court orders and(iii) any other legal issues that are material information for purposes of the Official Statement; and (C) report any significant disclosure issues and concerns to Disclosure Counsel and/or Financial Advisor. Section 3.02. Submission of Official Statements to City Council for Approval. The Disclosure Coordinator shall submit all Official Statements to the City Council for review and approval. The approval of an Official Statement by the City Council shall be docketed as a new business matter and shall not be approved as a consent item. The City Council shall undertake such review as deemed necessary by the City Council,following consultation with the Disclosure Coordinator, to fulfill the City Council's responsibilities under applicable federal and state securities laws. Article IV Annual Report Filings Section 4.01. Overview. Under the continuing disclosure undertakings the City has entered into in connection with its debt offerings, the City is required each year to file annual reports with the MSRB's Electronic Municipal Market Access ("EMMA") system in accordance with such undertakings. Such annual reports ("Annual Reports") are generally required to include: (1)certain updated financial and operating information, and(2)the City's audited financial statements. The documents, reports and notices required to be submitted to the MSRB pursuant to this Policy 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. A description of the format and information presently prescribed to be filed with EMMA is included in Exhibit B. To facilitate the City's continuing disclosure undertakings the Disclosure Coordinator shall: (A)maintain a record of all continuing disclosure obligations of the City using a chart substantially in the form attached as Exhibit C, which shall identify and docket all continuing disclosure deadlines; (B) schedule email reminders on the EMMA website for each Obligation to help ensure timely filing of financial disclosures; (C) ensure that preparation of the City's Annual Reports commences as required under each specific continuing disclosure undertaking; and (D) comply with the City's obligation to file Annual Reports by submitting or causing the required(i) annual financial information and operating data and(ii) audited financial statements (all of which may be included in the City's CAFR)to be submitted to the MSRB through EMMA. If within a continuing disclosure agreement the City has agreed to furnish information that is outside the scope of the City's CAFR, the City shall file a supplement to the CAFR when filing with the MSRB through EMMA. a. If the event the City does not have audited financial statements available by the filing deadline imposed by the continuing disclosure agreement, the Disclosure Coordinator shall instead submit the City's unaudited financial statements, and shall file a"failure to file notice" in accordance with the Rule. The failure to file notice shall include information describing the nature and/or cause of the failure to meet the contractual deadline and, if available, an approximate timeframe for when the complete annual financial information is expected to be submitted. Audited financial statements shall be filed as soon as available. b. All documents submitted to the MSRB through EMMA that are identified by specific reference to documents already available to the public on the MSRB's Internet website or filed with the SEC shall be clearly identified by cross reference. Article V Listed Event Filings Section 5.01. Disclosure of Listed Events. Pursuant to Rule 15c2-12(b)(5)(i)(C), the City is obligated to disclose to the MSRB notice of certain specified events with respect to the City's securities (a "Listed Event"). All Employees shall be instructed to notify the Disclosure Coordinator if he or she becomes aware of any of the Listed Events listed in the City's continuing disclosure undertakings. The Disclosure Coordinator may consult with Disclosure Counsel, or the Financial Advisor, to discuss the event and to determine whether a filing is required or is otherwise desirable. If such a filing is deemed necessary, the Disclosure Coordinator shall cause a notice of the Listed Event(a"Listed Event Notice") that complies with the Rule to be prepared, and the Disclosure Coordinator shall file the Listed Event Notice as required by the Rule as follows: (A) The Disclosure Coordinator shall monitor and periodically review the Listed Events identified on Exhibit A, in connection with the Obligations identified on the chart in Exhibit C to determine whether any event has occurred that may require a filing with EMMA. (B) The Disclosure Coordinator shall file, in a timely manner, a notice of the occurrence of any Listed Event or Events with the MSRB via EMMA with respect to any Obligations to which the Listed Event or Events are applicable, in a timely manner not in excess of ten(10)business days after the occurrence of the Listed Event. (C) The Disclosure Coordinator shall subscribe to any available ratings agency alert service regarding the ratings of any Obligations. Article VI Miscellaneous Section 6.01. Documents to be Retained. The Disclosure Coordinator shall be responsible for retaining records demonstrating compliance with this Policy. The Disclosure Coordinator shall retain an electronic or paper file ("Transcript")for each continuing disclosure Annual Report that the City completes. Each Transcript shall include final versions of documents submitted to the MSRB through EMMA. The Transcript shall be maintained for a period of eleven(11)years from the later of the date the disclosure document is published, posted, or otherwise made publicly available, as applicable. Section 6.02. Education and Training. The City shall conduct periodic training to assist the Disclosure Coordinator, all Employees and the City Council in understanding and performing their responsibilities under this Policy. Such training sessions may include a review of this Policy, the City's disclosure obligations under applicable federal and state securities laws, including the Listed Events in Exhibit A, and the disclosure responsibilities and potential liabilities of members of City staff and members of the City Council. Such training sessions may include meetings with Disclosure Counsel, teleconferences, attendance at seminars or conferences where disclosure responsibilities are discussed, and/or recorded presentations. Section 6.03. Public Statements Regarding Financial Information. Whenever the City makes statements or releases information relating to its finances to the public that is reasonably expected to reach investors and the trading markets (including, without limitation, all Listed Event notices, statements in the CAFR, and other financial reports and statements of the City), the City is obligated to ensure that such statements and information are complete, true, and accurate in all material aspects. The Disclosure Coordinator shall assist the City Manager, Mayor and City Council in ensuring that such statements and information are accurate and not misleading in any material aspect. Investment information published on the City's website may include a cautionary statement at the request of the Disclosure Coordinator, substantially as follows: "The only information on this website that is posted with the intention of reaching the investing public, including bondholders, rating analysts, investment advisors, or any other members of the investment community, is located on the "investor information" web pages. Other than the specific information presented in the investor information web pages, no other information on the City's website is intended to be the basis of or should be relied upon in making an investment decision. Because each security issued by the City or its related entities may involve different sources of payment and security,you should refer for additional information to the official statement and continuing disclosure filings for the particular security. The information posted in the investor information web pages speaks only as of its date." EXHIBIT A LISTED EVENTS The Disclosure Coordinator should periodically review this list to determine whether any event has occurred that may require a filing with EMMA. For securities(subject to Rule 15c2-12)issued on or after December 1, 2010, orfor variable rate demand bonds that are converted from a mode currently exempted from rule I5c2-12 to a mode not so exempted on or after December 1, 2010, the following events automatically trigger a requirement to file on EMMA within ten (10)business days of their occurrence, without regards to the materiality of the event: 1. principal and interest payment delinquencies 2. unscheduled draws on debt service reserves reflecting financial difficulty 3. unscheduled draws on credit enhancements reflecting financial difficulty 4. substitution of credit or liquidity providers, or their failure to perform 5. adverse tax opinions or events affecting the tax-exempt status of the security 6. tender offers 7. defeasances 8. rating changes 9. bankruptcy, insolvency, receivership or similar event of the obligated person 10. failure to provide in a timely manner notice to provide required annual financial information by the date specified in any continuing disclosure undertaking The following events trigger a requirement to file notice of their occurrence on EMMA within a reasonable period of time after their occurrence, once they are determined to be material by the Disclosure Coordinator: 1. non-payment related defaults 2. modifications to the rights of security holders 3. bond calls 4. release, substitution or sale of property securing repayments of the securities 5. the consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, 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 6. appointment of a successor or additional trustee or the change of name of a trustee EXHIBIT B Suggested Practices in Submitting Annual Financial Information to EMMA* Annual Financial information is to be submitted to EMMA as follows: • through the EMMA Dataport; • in one or more electronic word-searchable portable document format files configured to permit documents to be saved,viewed, printed and retransmitted by electronic means ("properly formatted pdf file"); and • indexed by the submitter as "Annual Financial Information and Operating Data"—this EMMA indexing category should be used for all submissions consisting of one or both parts of an annual financial information submission. A submission should be indexed in EMMA by the submitter as "Annual Financial Information and Operating Data" if it consists of complete annual financial information(including audited financial statements and/or the CAFR). If the audited financial statements have not been prepared in time to meet the deadline: • file unaudited financial statements with a notice to the effect that the unaudited financial statements are being provided pending completion of audited financial statements and that the audited financial statements will be submitted to EMMA when they have been prepared. If annual financial information is provided by reference to other submitted documents file: • a notice that includes specific reference to a document available on the EMMA website or the SEC(such as, but not limited to, an official statement), to the extent that such document in fact includes the information required to be include in the annual financial information; and • the submitter should confirm that such document in fact is available from the EMMA website or the SEC and should include in such notice (A) a textual description of the document that includes the required information, with sufficient detail for a reasonable person to determine the precise document being referenced, and(B) an active hyperlink to the pdf file of such document as then posted on the EMMA website or to the SEC's EDGAR system; further, if such document includes audited financial statements, the submitter should also index such submission as "Audited Financial Statements or CAFR" in addition to (but not instead of) "Annual Financial Information and Operating Data" unless the submitter submits such audited financial statements separately to EMMA. Failure to file notices are to be submitted to EMMA as follows: • through the EMMA Dataport; • as an electronic word-searchable and properly formatted pdf file; and • indexed by the submitter as "Failure to Provide Annual Financial Information." * Procedures subject to change. EXHIBIT C DEBTINVENTORY Complete annually NAME OF DATE FINAL CUSIP DATE BY WHICH ANNUAL REPORTS SOURCE OF DATE ISSUE/PRINCIPAL OF MATURITY FOR FINAL ANNUAL INFORMATION TO INFORMATION INFORMATION AMOUNT ISSUE DATE MATURITY REPORTS MUST BE FILED WAS FILED BE FILED(OR "EXEMPTION" UNDERTHE RULE 01073652-1\10422-000