Loading...
HomeMy WebLinkAbout2016-051 - Adoption of Municipal Securities Disclosure Policy and Proceduresjmf 6/13/16 RESOLUTION NO. 2016-051 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA APPROVING THE ADOPTION OF MUNICIPAL SECURITIES DISCLOSURE POLICY AND PROCEDURES BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS FOLLOWS: Section 1. The City Council of the City of Santa Ana hereby finds, determines and declares as follows: A. The City of Santa Ana and its related entities issue municipal bonds, notes, and other obligations ("Obligations") from time to time that are offered to the investing public. B. Publicly offered debt obligations and securities, such as bonds or certificates of participation, are offered pursuant to an Official Statement or other type of offering document that must comply with the "anti -fraud rules" of federal securities laws. ("Anti -fraud rules" refers to Section 17 of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934, and regulations adopted by the Securities and Exchange Commission under those Acts, particularly "Rule 10b-5" under the 1934 Act.) C. The City of Santa Ana has determined that it would be proper in the management of its financial affairs to establish policies of the City and its related entities with respect to the preparation of disclosure documents and the continuing disclosure requirements related to the public offering of Obligations. D. City staff is directed and has prepared a Municipal Securities Disclosure Policy and Procedures, a copy of which is attached as Exhibit A. Section 2. The City Council of the City of Santa Ana hereby approves and adopts the Municipal Securities Disclosure Policy and Procedures, a copy of which is attached as Exhibit A and will be on file at the offices of the Finance and Management Services Agency of the City for public inspection. Resolution No. 2016-051 Page 1 of 7 Section 3. This Resolution shall take effect immediately upon its adoption by the City Council, and the Clerk of the Council shall attest to and certify the vote adopting this Resolution. ADOPTED this 21 sr day of June, 2016. APPROVED AS TO FORM: Sonia R. Carvalho City Attorney By: U. -f4' J6fin M. Funk Assistant City Attorney AYES: Councilmembers NOES: Councilmembers Amezcua, Benavides Martinez, Pulido, Reyna, Sarmiento, Tinalero (7) None (0) ABSTAIN: Councilmembers: None (0) NOT PRESENT: Councilmembers: None (0) CERTIFICATE OF ATTESTATION AND ORIGINALITY I, MARIA D. HUIZAR, Clerk of the Council, do hereby attest to and certify the attached Resolution No. 2016-051 to be the original resolution adopted by the City Council of the City of Santa Ana on June 21, 2016. Date: Clerk of the Council City of Santa Ana Resolution No. 2016-051 Page 2 of 7 City of Santa Ana A..1✓ Administrative Policies and Procedures Subject Municipal Securities Disclosure Policy & Procedures City Manager's Authorization Date June 21, 2016 PURPOSE The purpose of this Municipal Securities Disclosure Policy ("Policy") is to memorialize and communicate the policies and procedures in connection with both the initial and annual continuing disclosure undertakings for municipal securities issued by the City of Santa Ana, California (the "City'), the Santa Ana Public Financing Authority, the Successor Agency to the Santa Ana Redevelopment Agency and certain community facility districts and assessment districts (collectively, the "Santa Ana Issuers"). Adherence to the Policy will ensure compliance with federal securities laws, promote best practices, and enhance the City's internal controls and control environment. In addition, the Policy will also establish a Continuing Disclosure Committee which will have general oversight of the disclosure process. This Policy is subject to recommendations for improvements during the annual disclosure process. As such, the Executive Director of Finance & Management Services Agency ("Finance") is authorized and has the responsibility to update, modify, and/or make recommended changes when appropriate. BACKGROUND The Santa Ana Issuers have issued and expect that they will in the future issue bonds, certificates of participation, notes or other obligations (collectively, "Obligations") which are offered to the investing public. Issuers of publicly offered municipal securities are required under most circumstances to provide certain financial and operating information on an annual basis to the Municipal Securities Rulemaking Board (MSRB) utilizing the database Electronic Municipal Market Access system (EMMA) to assist the underwriter of such municipal securities in complying with Rule 15c2 -12(b)(5) promulgated under the Securities and Exchange Act of 1934 (the "Rule"). The Santa Ana Issuers have covenanted or will covenant to assist such underwriters in complying with the Rule through the execution and delivery of continuing disclosure agreements or certificates (each, a "Continuing Disclosure Undertaking") applicable to each issue of Obligations. The Santa Ana Issuers must comply with any required filings in a timely manner in accordance with its respective offering documents for the Obligations. This Policy and the associated procedures are intended to ensure that all filings required under the Rule are made timely and all requirements set forth in the Continuing Disclosure Undertakings are met. The Rule requires that an underwriter, prior to purchasing or selling an issue of municipal securities in connection with a covered offering, determine that the issuer, and any other Resolution No. 2016-051 Page 3 of 7 "Obligated Person" (as defined in the Rule) for whom financial or operating data is presented in the official statement, has undertaken in writing to provide the following information to the MSRB using EMMA: • By a specified date, annual financial and operating information for each Obligated Person for whom financial information or operating data is presented in the official statement (an "Annual Information Filing"); • By a specified date, if available, audited annual financial statements for each Obligated Person ("Audited Financial Statements" and together with the Annual Information Filing, the "Annual Report") and, if not available by the date required, unaudited financial statements with Audited Financial Statements; • In a timely manner within 10 business days of occurrence, notice of the occurrence of one or more of the listed events described in the Rule (a "Rule 15c2-12 Event Notice"); and • In a timely manner, notice of a failure of any Obligated Person required to make the Annual Information Filing and/or file the Audited Financial Statements on or before the date(s) specified in the Continuing Disclosure Undertaking ("Notice of Failure"). DISCLOSURE COMMITTEE The Disclosure Committee ("Committee") shall be responsible for the general oversight of the disclosure process, which includes: A. Initial Offering Disclosure • Participating in due diligence activities • Reviewing each disclosure document • Identifying subject matter reviewers ("Subject Matter Reviewers") s Approving draft preliminary official statement before it is submitted to the City Council or such other legislative body of the respective Santa Ana Issuer B. Continuing Disclosure • Periodically reviewing the Policy • Periodically reviewing compliance difficulties and recommending changes • Waiving procedures when appropriate The composition of the Committee shall include, but not limited to the following: Resolution No. 2016-051 Page 4 of 7 • Executive Director of Finance • Assistant Director of Finance • Supervising Accountant • Disclosure Coordinator • Representative from the City Attorney's Office (CAO) The Disclosure Coordinator shall be appointed by the Executive Director of Finance. The duties of the Disclosure Coordinator include: • Prepare, file and document the annual filings required by the Continuing Disclosure Undertakings • Oversee the drafting of the annual filings and other event notices required by the Continuing Disclosure Undertakings • Coordinate the process of preparing the initial offering documents • Ensure compliance with the Policy • Maintain a compliance file; and • Develop a training process. GENERAL PRINCIPLES In accordance with this Policy, any member of the Committee may raise potential disclosure concerns or issues at any time during the disclosure process (the "Process"). The Process is designed to facilitate the review of all disclosure and offering documents, including but not limited to, Continuing Disclosure Undertakings, Annual Information Filings, Audited Financial Statements, Rule 15c2-12 Event Notices, Notices of Failure, official statements, preliminary official statements, fiscal agent agreements, trust agreements, and bond indentures for revisions, clarifications and/or improvements. Any other disclosure or offering documents that are not specifically listed shall be reviewed and verified during the Process. PREPARATION OF OFFERING DOCUMENTS The Committee and/or the Disclosure Coordinator shall manage the process of reviewing and commenting on the preliminary official statement (the "Preliminary Official Statement") and will send comments to the assigned disclosure counsel for each particular transaction. The drafts of the Preliminary Official Statement shall be reviewed by the Committee, Subject Matter Reviewers, financial advisor, bond counsel, disclosure counsel and other assigned parties. The final draft of the Preliminary Official Statement shall be reviewed by the Executive Director of Finance and/or his/her designee and/or the Assistant Director of Finance and/or his/her Resolution No. 2016-051 Page 5 of 7 designee prior to approval by the City Council, or such other legislative body of the respective Santa Ana Issuer. The Preliminary Official Statement and financing documents must be approved as discussion items on the agenda and may not be placed on the consent calendar. The Preliminary Official Statement and the final official statement will not be finalized nor posted until all of the parties have signed -off. PREPARATION & DOCUMENTATION OF ANNUAL REPORTS The Disclosure Coordinator shall establish a disclosure calendar outlining the annual submission dates for the Annual Report required pursuant to each Continuing Disclosure Undertaking. Approximately 90 days before the submission date for each required filing established under such Continuing Disclosure Undertaking, the Disclosure Coordinator shall initiate the process of preparing the financial and operating information required to be submitted thereunder and shall assemble the information available at that time and determine the scope of additional information to be required. The Disclosure Coordinator shall also contact the third -party, engaged to complete the required filing, to establish a schedule for completion and submission of the Annual Report. Not less than 30 days before the submission date, the Disclosure Coordinator, in coordination with the Subject Matter Reviewers, shall prepare a draft submission of financial and operating information required to be included in the Annual Information Filing, highlighting any information still unavailable. Additionally, the draft of the Annual Information Filing and Audited Financial Statements shall be submitted to CAO for review. ANNUAL REPORT FILING PROCESS The Disclosure Coordinator along with the Subject Matter Reviewers shall evaluate all the components of the Annual Reports and make the appropriate updates. Following the updating of the Annual Reports, the Committee shall review the drafts of the Annual Reports. The Disclosure Coordinator shall make any changes recommended by the Committee and resubmit the Annual Reports to the Committee. Subsequent to the final approval by the Committee, the Disclosure Coordinator along with the Santa Ana Issuers' Dissemination Agent shall finalize the Annual Reports. The Disclosure Coordinator shall maintain and update the compliance files for each Continuing Disclosure Undertaking. On or before the submission date established under each Continuing Disclosure Undertaking, the Disclosure Coordinator or the dissemination agent, if applicable, shall file the Annual Report. If the Audited Financial Statements are not available, unaudited financial information shall be filed with the MSRB using EMMA and the Audited Financial Statements shall be filed within 10 business days of their receipt and acceptance. LISTED EVENTS Resolution No. 2016-051 Page 6 of 7 The Rule also requires filing of a Rule 15c2-12 Event Notice upon the occurrence of certain listed events described in the Continuing Disclosure Undertakings including rating changes. The Committee shall provide a Rule 15c2-12 Event Notice to the MSRB using EMMA within 10 business days of occurrence of any such listed event. The listed events most likely to occur on a regular basis relate to bond redemptions or defeasances of outstanding issues and rating changes. The Disclosure Coordinator shall, on a periodic basis, monitor all of the Santa Ana Issuers transactions which are rated or insured. REPORTING REQUIREMENTS The Committee shall identify any incidents of non-compliance and prepare a report for the City Manager, Executive Director of Finance and the CAO. Such report shall include recommendations to resolve any non-compliance with the respective Continuing Disclosure Undertaking. AUDITED FINANCIAL STATEMENTS (COMPREHENSIVE ANNUAL FINANCIAL REPORT) The Committee shall review and provide feedback in the preparation of the Management Discussion & Analysis (MD&A) and the debt -related footnotes to the Audited Financial Statements. Additionally, the Committee along with the disclosure counsel shall compare the MD&A and related footnote sections to the Annual Information Filing and any Preliminary Official Statement being prepared at the time to ensure consistency. RECORDS RETENTION The Disclosure Coordinator shall maintain records with respect to the filings with the MSRB using EMMA, including, but not limited to, EMMA posting receipts showing dates and nature of contents of all filings for each issue of Obligations outstanding. TRAINING To ensure adequate resources to comply with the Continuing Disclosure Undertakings, the Disclosure Coordinator shall develop a training process aimed at providing additional assistance in preparing required information. The training process shall be conducted at least every other calendar year and shall encompass a review of the EMMA submission process and an understanding of the timing requirements necessary for full compliance with the Continuing Disclosure Undertakings. Resolution No. 2016-051 Page 7 of 7