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HomeMy WebLinkAboutMINUTES - 03312015 - C.146RECOMMENDATION(S): ADOPT Resolution No. 2015/113 amending Appendix 2 of the County's Debt Management Policy to reflect updated post-issuance compliance requirements for private placements/direct loans. FISCAL IMPACT: No specific fiscal impact. BACKGROUND: On December 7, 2006 the Finance Committee reviewed and discussed a report regarding establishing a County Debt Management Policy. The Committee directed staff to report to the full Board on December 19, 2006 the recommendation to adopt a formal County Debt Management Policy. A formal policy was adopted on December 19, 2006 (Resolution 2006/773). The Board of Supervisors has worked exceptionally hard to address the County’s financial issues and has set very ambitious and necessary goals for lowering cost growth, balancing the budget, and increasing reserves. These solutions are aimed at addressing both short and long term needs and improving the County’s future ability to APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 03/31/2015 APPROVED AS RECOMMENDED OTHER Clerks Notes: VOTE OF SUPERVISORS AYE:Candace Andersen, District II Supervisor Mary N. Piepho, District III Supervisor Karen Mitchoff, District IV Supervisor ABSENT:John Gioia, District I Supervisor Federal D. Glover, District V Supervisor Contact: Lisa Driscoll, County Finance Director (925) 335-1023 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: March 31, 2015 David Twa, County Administrator and Clerk of the Board of Supervisors By: June McHuen, Deputy cc: Robert Campbell, County Auditor-Controller, Russell Watts, County Treasurer-Tax Collector, John Kopchik, Department of Conservation and Development Director C.146 To:Board of Supervisors From:David Twa, County Administrator Date:March 31, 2015 Contra Costa County Subject:Resolution No. 2015/113 Revising County Debt Management Policy, which Replaces Resolution 2014/77 BACKGROUND: (CONT'D) > maintain public services. There are four major financial areas the County Administrator’s office identified which benefited from formal policies: Budget Policy (established November 2006) General Fund Reserve Policy (established December 2005) Facilities Maintenance (included in Budget Policy) Debt Management Policy (established December 2006) Debt affordability standards help the County to evaluate when, why, and how much debt should be issued. In addition to debt affordability standards, the County also adopted a formal Debt Management Policy. The Debt Management Policy: Establishes parameters for issuing and managing debt Provides guidance to decision makers so as not to exceed the debt affordability standards Directs staff on objectives to be achieved both pre- and post-issuance Promotes objectivity in decision-making and limits the role of political influence Facilitates the process by considering and making important policy decisions in advance of an actual financing Periodically, policies should be revised to keep current with best practices or changes in laws. The Debt Affordability Advisory Committee reviews the existing Debt Policy on an annual basis and makes recommendations for revisions to the Board of Supervisions. The following revisions have been made since original adoption: On December 11, 2012, the Board of Supervisors adopted the Debt Affordability Advisory Committee's recommendations and added two additional appendix to the Debt Management Policy (Appendices 2 and 3) and amended two existing sections. The purpose of the Post-Issuance Tax Compliance Procedures for Tax-Exempt and Build America Bonds appendix (Appendix 2) was to establish policies and procedures in connection with tax-exempt bonds and "Build America Bonds" issued by the County of Contra Costa and the County of Contra Costa Public Financing Authority so as to ensure that the County complies with all applicable post-issuance requirements of federal income tax law needed to preserve the tax-exempt or Build America bonds status of bonds. In recognition of the importance of the County meeting its disclosure obligations pursuant to S.E.C. Rule 15c(2)-12, the Committee directed the Finance Director to annually update the Disclosure Requirements Listing that appears in Appendix 3 as well as cause timely filing by the Dissemination Agent of the requisite Annual Reports required under the respective Continuing Disclosure Certificates. Section I of the Policy was amended to require the Debt Affordability Advisory Committee’s review of the debt performance of the Community Facilities Districts (Appendix 4), Multifamily Mortgage Revenue Bond Program (Appendix 5), and the Successor Agency to the former Contra Costa County Redevelopment Agency (Appendix 6) to assure that prudent debt management practices extend to these important debt issuers. Section IV.B of the Policy was updated to require the County to issue Requests for Qualifications (RFQs) for financial advisor, bond counsel, disclosure counsel and tax counsel every three years. On March 25, 2014, the Board of Supervisors adopted the Debt Affordability Advisory Committee's recommendations and updated Section II of the Policy to reflect the County's upgraded rating tier from Standard and Poor's of "AAA", and Appendix 3 to reflect the current annual disclosure requirement listing. The Debt Affordability Advisory Committee met on March 25, 2015, and reviewed new law that went into effect January 1 that requires all issuers to report private placements/direct loans to the California Debt and Investment Advisory Commission (CDIAC) within 21 days of their occurrence (AB-2274, Chapter 181, Statutes of 2014). The County Administrator's Office will be mindful of this connection with any private placements we do going forward. In an abundance of caution, it is recommended that Appendix 2 be updated to reflect new post-issuance compliance requirements. The updated policy is attached as Resolution 2015/113 as well as a red-lined version for reference. CONSEQUENCE OF NEGATIVE ACTION: Policy will not reflect updated disclosure requirements. CHILDREN'S IMPACT STATEMENT: None. ATTACHMENTS Resolution No. 2015/113 CCC Debt Management Policy Appendix 2 - Redlined Version Contra Costa County, California Debt Management Policy County Administration 651 Pine Street, 10th Floor Martinez, California 94553 925-335-1023 lisa.driscoll@cao.cccounty.us Resolution No. 2015/113 Resolution No. 2014/77 Resolution No. 2012/333 Resolution No. 2006/773 DEBT MANAGEMENT POLICY TABLE OF CONTENTS I. Purpose 1 II. Debt Affordability Advisory Committee 1 III. Comprehensive Capital Planning 2 IV. Planning and Structure of County Indebtedness 2 V. Method of Sale 4 VI. Refinancing of Outstanding Debt 5 VII. Credit Ratings 5 VIII. Management Practices 5 Government Finance Officers Association: Checklist of Debt Policy Considerations Appendix 1 Post-Issuance Compliance Procedures Appendix 2 Annual Disclosure Requirement Listing Appendix 3 Community Facilities Districts Appendix 4 Multifamily Mortgage Revenue Bond Program Appendix 5 Successor Agency to the former Contra Costa County Redevelopment Agency Appendix 6 - i - 1 | P a g e Contra Costa County, California Debt Management Policy I. PURPOSE: The County recognizes the foundation of any well-managed debt program is a comprehensive debt policy. A debt policy sets forth the parameters for issuing debt and managing outstanding debt and provides guidance to decision makers regarding the timing and purposes for which debt may be issued, types and amounts of permissible debt, method of sale that may be used and structural features that may be incorporated. The debt policy should recognize a binding commitment to full and timely repayment of all debt as an intrinsic requirement for entry into the capital markets. Adherence to a debt policy helps to ensure that a government maintains a sound debt position and that credit quality is protected. Advantages of a debt policy are as follows: • enhances the quality of decisions by imposing order and discipline, and promoting consistency and continuity in decision making, • provides rationality in the decision-making process, • identifies objectives for staff to implement, • demonstrates a commitment to long-term financial planning objectives, and • is regarded positively by the rating agencies in reviewing credit quality. II. DEBT AFFORDABILITY ADVISORY COMMITTEE A. Purpose. By adoption of this Debt Policy, the Debt Affordability Advisory Committee is established. Its purpose is to annually review and evaluate existing and proposed new County debt and other findings and/or issues the committee considers appropriate. It is the task of this committee to assess the County’s ability to generate and repay debt. The committee will issue an annual report to the County Administrator defining debt capacity of the County. This review will be an important element of the budget process and will include recommendations made by the committee regarding how much new debt can be authorized by the County without overburdening itself with debt service payments. B. Members. The committee shall be composed of the Auditor-Controller, Treasurer-Tax Collector, Director/Conservation and Development Department, and County Finance Director. C. Debt Affordability Measures. The committee shall examine specific statistical measures to determine debt capacity and relative debt position and compare these ratios to other counties, rating agency standards and Contra Costa County’s historical ratios to determine debt affordability. From Moody’s Investors Service, the committee will evaluate the County against the following three debt ratios from the most recent available national medians for counties in the “Aa” rating tier contained in Moody’s “Municipal Financial Ratio Analysis – U.S. Counties (Population > 1 million)” and for the County’s cohort group in Moody’s “California County Medians”: 1. Direct net debt as a percentage of Assessed Valuation; 2. Overall net debt as a percentage of Assessed Valuation; and 3. Assessed Valuation per-capita. From Standard and Poor’s, the committee will evaluate the County against the following three debt ratios from the most recent available national medians for counties in the “AAA” rating tier : 1. Percentage of total fund equity; 2. Percentage of unreserved fund equity; and 3. Direct debt per-capita. 2 | P a g e III. COMPREHENSIVE CAPITAL PLANNING A. Planning. The County Administrator’s Office shall prepare a multi-year capital program for consideration and adoption by the Board of Supervisors as part of the County’s budget process. Annually, the capital budget shall identify revenue sources and expenditures for the coming current year and the next succeeding three fiscal years. The plan shall be updated annually. B. Funding of the Capital Improvement Program. Whenever possible, the County will first attempt to fund capital projects with grants or state/federal funding, as part of its broader capital improvement plan. When such funds are insufficient, the County will use dedicated revenues to fund projects. If these are not available, the County will use excess surplus from the reserve and debt financing, general revenues. The County shall be guided by three principles in selecting a funding source for capital improvements: equity, effectiveness and efficiency. 1. Equity: Whenever appropriate, the beneficiaries of a project or service will pay for it. For example, if a project is a general function of government that benefits the entire community, such as an Office of Emergency Services, the project will be paid for with general purpose revenues or financed with debt. If, however, the project benefits specific users, such as a building permit facility, the revenues will be derived through user fees or charges, and assessments. 2. Effectiveness: In selecting a source or sources for financing projects, the County will select one or more that effectively funds the total cost of the project. For example, funding a capital project, or the debt service on a project, with a user fee that does not provide sufficient funds to pay for the project is not an effective means of funding the project. 3. Efficiency: If grants or current revenues are not available to fund a project, the County will generally select a financing technique that provides for the lowest total cost consistent with acceptable risk factors and principals of equity and effectiveness. These methods currently consist of County issued debt, special funding programs funded by state or federal agencies, or special pool financing. Examples include funding pools like the Association of Bay Area Governments Participation Certificates. C. Maintenance, Replacement and Renewal/FLIP. The County intends to set aside sufficient current revenues to finance ongoing maintenance needs and to provide periodic replacement and renewal consistent with its philosophy of keeping its capital facilities and infrastructure systems in good repair and to maximize a capital asset’s useful life. D. Debt Authorization. No County debt issued for the purpose of funding capital projects may be authorized by the Board of Supervisors unless an appropriation has been included in the capital budget (Some forms of debt such as Private Activity Bonds for housing, Mello-Roos for infrastructure, and redevelopment bonds for infrastructure/facilities may not be appropriate for inclusion in the County capital improvement program. The policies for such forms of debt are included as Appendixes 4, 5, and 6). IV. PLANNING AND STRUCTURE OF COUNTY INDEBTEDNESS A. Overview. The County shall plan long- and short-term debt issuance to finance its capital program based on its cash flow needs, sources of revenue, capital construction periods, available financing instruments and market conditions. The County Finance Director shall oversee and coordinate the timing, issuance process and marketing of the County’s borrowing and capital funding activities required in support of the capital improvement plan. The County shall finance its capital needs on a regular basis dictated by its capital spending pattern. Over the long-term this policy should result in a consistently low average interest rate. When market conditions in any one year result in higher than average interest rates, the County shall seek refinancing opportunities in subsequent years to bring such interest rates closer to the average. The Debt Affordability Advisory Committee shall use the Government Financial Officers Association checklist set forth in Appendix 1 hereto in planning and structuring any debt issuances. 3 | P a g e B. Financing Team. The County employs outside financial specialists to assist it in developing a debt issuance strategy, preparing bond documents and marketing bonds to investors. The key team members in the County’s financing transactions include its financial advisor and outside bond and disclosure counsel, the underwriter and County representatives (the County Auditor-Controller, Treasurer-Tax Collector, and the County Finance Director, among others). Other outside firms, such as those providing paying agent/registrar, trustee, credit enhancement, verification, escrow, auditing, or printing services, are retained as required. The County will issue Requests for Qualifications (RFQs) for financial advisor, bond counsel, disclosure counsel and tax counsel every three years The financing team shall meet at least semi-annually to review the overall financing strategy of the County and make recommendations to the County Administrator. C. Term of Debt Repayment. Borrowings by the County shall mature over a term that does not exceed the economic life of the improvements that they finance and usually no longer than 20 years, unless special structuring elements require a specific maximum term to maturity, as is the case with pension obligation bonds. The County shall finance improvements with a probable useful life less than five years using pay-go funding for such needs. Bonds sold for the purchase of equipment with a probable useful life exceeding five years are repaid over a term that does not exceed such useful life. D. Legal Borrowing Limitations/Bonds and other indebtedness. California Government Code Section 29909 limits General Obligation Bond indebtedness to five percent of the total assessed valuation of all taxable real and personal property within the County, excluding Public Financing Authority lease revenue bonds, Public Facility Corporation certificates of participation, Private Activity Bond, Mello-Roos special tax, and Assessment District Debt for which no legal limitations are currently in effect. E. Debt Features. 1. Original issue discount or premium. The County’s bonds may be sold at a discount or premium, in order to achieve effective marketing, achieve interest cost savings or meet other financing objectives. The maximum permitted discount is stated in the Notice of Sale accompanying the County’s preliminary official statement on the Bond Purchase Agreement, as applicable. 2. Debt service structure/Level Debt Service. The County shall primarily finance its long-lived municipal improvements over a 20-year term or less, on a level debt service basis. This policy minimizes long-run impact on a funding department’s budget. The County will seek to continue this practice, unless general fund revenues are projected to be insufficient to provide adequately for this debt service structure. 3. Call provisions. The County shall seek to minimize the protection from optional redemption given to bondholders, consistent with its desire to obtain the lowest possible interest rates on its bonds. The County’s tax-exempt bonds are generally subject to optional redemption. The County seeks early calls at low or no premiums because such features will allow it to refinance debt more easily for debt service savings when interest rates drop. The County and its financial advisor shall evaluate optional redemption provisions for each issue to assure that the County does not pay unacceptably higher interest rates to obtain such advantageous calls. The County shall not sell derivative call options. 4. Interest rates. The County shall first consider the use of fixed-rate debt to finance it capital needs, except for short-term needs (such as short-lived assets) that will be repaid or refinanced in the near term; and may consider variable rate debt under favorable conditions. F. Other Obligations Classified as Debt/Other Post Employment Benefits (OPEB)/Vested Vacation Benefits. OPEBs and vacation benefits are earned by County employees based on time in service. The County records these vacation benefits as earned in accordance with generally accepted accounting principles as established by the Governmental Accounting Board (GASB). The liability for the benefit is recorded on the Fund level financial statements. The expense is recorded during the conversion to the Government Wide financial statements in accordance with GASB standards. For Enterprise funds the expense and liability are accrued in the respective funds. In this initial policy, the amount of OPEB and vacation benefits will not be in measures used to evaluate the County’s debt affordability. However, the County’s net OPEB obligation is posted to the County’s balance sheet. 4 | P a g e V. METHOD OF SALE. The County will select a method of sale that is the most appropriate in light of financial, market, transaction-specific and County-related conditions, and explain the rationale for its decision. A. Competitive Sales. Debt obligations are generally issued through a competitive sale. The County and its financial advisor will set the terms of the sale to encourage as many bidders as possible. By maximizing bidding, the County seeks to obtain the lowest possible interest rates on its bonds. Some of the conditions that generally favor a competitive sale include: 1. the market is familiar with the County; 2. the County is a stable and regular borrower in the public market; 3. there is an active secondary market with a broad investor base for the County’s bonds; 4. the issue has a non-enhanced credit rating of A or above or can obtain credit enhancement prior to the competitive sale; 5. the debt structure is backed by the County’s full faith and credit or a strong, known or historically performing revenue stream; 6. the issue is neither too large to be easily absorbed by the market nor too small to attract investors without a concerted sale effort; 7. the issue does not include complex or innovative features or require explanation as to the bonds’ security; 8. the issue can be sold and closed on a schedule that does not need to be accelerated or shortened for market or policy reasons; and 9. interest rates are stable, market demand is strong, and the market is able to absorb a reasonable amount of buying or selling at reasonable price changes. B. Negotiated Sales. When certain conditions favorable for a competitive sale do not exist and when a negotiated sale will provide significant benefits to the County that would not be achieved through a competitive sale, the County may elect to sell its debt obligations through a private placement or negotiated sale, upon approval by the County Board of Supervisors. Such determination shall be made on an issue-by- issue basis, for a series of issues, or for part or all of a specific financing program. The following practices are recommended to be observed in the event of a negotiated sale: 1. ensure fairness by using a competitive underwriter selection process through a request for proposals where multiple proposals are considered; 2. remain actively involved in each step of the negotiation and sale processes to uphold the public trust; 3. ensure that either an employee of the County, or an outside professional other than the issue underwriter, who is familiar with and abreast of the condition of the municipal market, is available to assist in structuring the issue, pricing, and monitoring sales activities; 4. require that the financial advisor used for a particular bond issue not act as underwriter of the same bond issue; 5. require that financial professionals disclose the name or names of any person or firm, including attorneys, lobbyists and public relations professionals compensated in connection with a specific bond issue; 6. request all financial professionals submitting joint proposals or intending to enter into joint accounts or any fee-splitting arrangements in connection with a bond issue to fully disclose to the County any plan or arrangements to share tasks, responsibilities and fees earned, and disclose the financial professionals with whom the sharing is proposed, the method used to calculate the fees to be earned, and any changes thereto; and 7. review the “Agreement among Underwriters” and insure that it is filed with the County and that it governs all transactions during the underwriting period. 5 | P a g e VI. REFINANCING OF OUTSTANDING DEBT. The County may undertake refinancings of outstanding debt under the following circumstances: A. Debt Service Savings. The County may refinance outstanding long-term debt when such refinancing allows the County to realize significant debt service savings (2% minimum by maturity on its own and a minimum 4% savings overall on its own or if combined with more than one refinancing) without lengthening the term of refinanced debt and without increasing debt service in any subsequent fiscal year. The County may also consider debt refinancing when a primary objective would be the elimination of restrictive covenants that limit County operations. B. Defeasance. The County may refinance outstanding debt, either by advance refunding to the first call or by defeasance to maturity, when the public policy benefits of replacing such debt outweigh the costs associated with new issuance as well as any increase in annual debt service. VII.CREDIT RATINGS A. Rating Agency Relationships. The Senior Deputy County Administrator/Finance Manager is responsible for maintaining relationships with the rating agencies that assign ratings to the County’s various debt obligations. This effort includes providing periodic updates on the County’s general financial condition along with coordinating meetings and presentations in conjunction with a new debt issuance. B. Quality of Ratings. The County shall request ratings prior to the sale of securities from each of two major rating agencies for municipal bond public issues. Currently these agencies are Moody’s Investors Service and Standard & Poor’s Corporation. The County shall provide a written and/or oral presentation to the rating agencies to help each credit analyst make an informed evaluation. The County shall make every reasonable effort to maintain its Aa implied general obligation bond credit ratings. VIII. MANAGEMENT PRACTICES. The County has instituted sound management practices and will continue to follow practices that will reflect positively on it in the rating process. Among these are the County development of and adherence to long-term financial and capital improvement plans, management of expense growth in line with revenues and maintenance of an adequate level of operating reserves. A. Formal Fiscal Policies. The County shall continue to establish, refine, and follow formal fiscal policies such as: Investment Policy, General Fund Reserve Policy, Budget Policy, and this Debt Management Policy. B. Rebate Reporting and Covenant Compliance The Senior Deputy County Administrator/Finance Manager is responsible for maintaining a system of record keeping and reporting to meet the arbitrage rebate compliance requirements of the federal tax code and/or contracting for such service. This effort includes tracking investment earnings on debt proceeds, calculating rebate payments in compliance with tax law, and remitting any rebatable earnings to the federal government in a timely manner in order to preserve the tax- exempt status of the County’s outstanding debt issues. Additionally, general financial reporting and certification requirements embodied in bond covenants are monitored to ensure that all covenants are complied with. C. Reporting Practices. The County will comply with the standards of the Government Finance Officers Association for financial reporting and budget presentation and the disclosure requirements of the Securities and Exchange Commission. D. Post-Issuance Compliance Procedures. To assure it manages its debt obligations in accordance with all federal tax requirements, the County will comply with the Post-Issuance Compliance Procedures set forth in Appendix 2 hereto. APPENDIX 1 GOVERNMENT FINANCE OFFICERS ASSOCIATION Checklist of Debt Policy Considerations 1. How long is the capital planning period? 2. Have all non-debt sources of funds been considered? 3. How are borrowing plans reviewed internally? 4. What level of debt is manageable in order to maintain or improve the government’s credit quality? 5. How much “pay-as-you-go” financing should be included in the capital plan? 6. How much short-term borrowing will be undertaken, including both operating and capital borrowings? 7. How much debt will be issued in the form of variable-rate securities? 8. How does the redemption schedule for each proposed issue affect the overall debt service requirements of the government? 9. What types of affordability guidelines will be established to help monitor and preserve credit quality? 10. What provisions have been made to periodically review the capital plan and borrowing practices? 11. What is the overlapping debt burden on the taxpayer? 12. How will the formal debt policies be integrated into the capital planning and funding process? Appendix 2    Page 1 of 3    County of Contra Costa Post-Issuance Tax Compliance Procedures For Tax-Exempt and Build America Bonds The purpose of these Post-Issuance Tax Compliance Procedures is to establish policies and procedures in connection with tax-exempt bonds and “Build America bonds” (“Bonds”) issued by the County of Contra Costa and the County of Contra Costa Financing Authority (together, the “County”) so as to ensure that the County complies with all applicable post-issuance requirements of federal income tax law needed to preserve the tax-exempt or Build America bond status of the Bonds. General Ultimate responsibility for all matters relating to County financings and refundings, other than Tax and Revenue Anticipation Notes (“TRANs”), rests with the County Administrator (the “Administrator”). The County Treasurer and County Auditor-Controller are responsible for tax compliance with respect to TRANs. Post-Issuance Compliance Requirements Timely Reporting of Final Sale The Administrator and other appropriate County personnel shall file timely any report required by state and federal regulatory agencies notifying those agencies of final sale of bonds, or receipt bank loan/private placement proceeds, as required by law. As of this writing, this section applies to the following: 1. California Debt and Investment Advisory Commission (CDIAC)  Report of Final Sale: This Reports details information about the issuer and the bond issuance. The report requires attachment of the Official Statement related to the transaction or other bond documents in the case of a bank loan/private placement. The report is required to be filed within 21 days of closing, pursuant to Government Code § 8855(j). o Special Requirement for Refunding Bonds sold via Negotiated Sale or Private Placement: In addition to the Report of Final Sale above, if refunding bonds are sold through a negotiated sale or private placement, CDIAC requires submission of a written statement explaining the reasons for not selling those bonds at a public sale within 14 days of closing, pursuant to Government Code § 53583(c)(2)(B). 2. Internal Revenue Service (IRS)  IRS Form 8038-G “Information Return for Tax-Exempt Governmental Obligations”: This filing details information about the issuer and tax-exempt governmental obligations over $100,000. The report is required to be filed no later than the 15th day of the second calendar month after the close of the calendar quarter in which the bond was issued, pursuant to Internal Revenue Code § 149(e). External Advisors / Documentation The Administrator and other appropriate County personnel shall consult with bond counsel and other legal counsel and advisors, as needed, throughout the Bond issuance process to identify requirements and to establish procedures necessary or appropriate so that the Bonds will continue to qualify for the appropriate tax status. Those requirements and procedures shall be documented in a County resolution(s), Tax Certificate(s) and / or other documents finalized at or before issuance of the Bonds. Appendix 2    Page 2 of 3    Those requirements and procedures shall including future compliance with applicable arbitrage rebate requirements and all other applicable post-issuance requirements of federal tax law throughout (and in some cases beyond) the term of the Bonds. The Administrator and other appropriate County personnel also shall consult with bond counsel and other legal counsel and advisors, as needed, following issuance of the Bonds to ensure that all applicable post- issuance requirements in fact are met. This shall include, without limitation, consultation in connection with future contracts with respect to the use of Bond-financed assets and future contracts with respect to the use of output or throughput of Bond-financed assets. Whenever necessary or appropriate, the County shall engage expert advisors (each a “Rebate Service Provider”) to assist in the calculation of arbitrage rebate payable in respect of the investment of Bond proceeds. Role of the County as Bond Issuer Unless otherwise provided by County resolutions, unexpended Bond proceeds shall be held by the County, and the investment of Bond proceeds shall be managed by the [Administrator]. The Administrator shall maintain records and shall prepare regular, periodic statements to the County regarding the investments and transactions involving Bond proceeds. If a County resolution provides for Bond proceeds to be administered by a trustee, the trustee shall provide regular, periodic (monthly) statements regarding the investments and transactions involving Bond proceeds. Arbitrage Rebate and Yield Unless a Tax Certificate documents that bond counsel has advised that arbitrage rebate will not be applicable to an issue of Bonds:  the County shall engage the services of a Rebate Service Provider, and the County or the Bond trustee shall deliver periodic statements concerning the investment of Bond proceeds to the Rebate Service Provider on a prompt basis;  upon request, the Administrator and other appropriate County personnel shall provide to the Rebate Service Provider additional documents and information reasonably requested by the Rebate Service Provider;  the Administrator and other appropriate County personnel shall monitor efforts of the Rebate Service Provider and assure payment of required rebate amounts, if any, no later than 60 days after each 5- year anniversary of the issue date of the Bonds, and no later than 60 days after the last Bond of each issue is redeemed; and  during the construction period of each capital project financed in whole or in part by Bonds, the Administrator and other appropriate County personnel shall monitor the investment and expenditure of Bond proceeds and shall consult with the Rebate Service Provider to determine compliance with any applicable exceptions from the arbitrage rebate requirements during each 6-month spending period up to 6 months, 18 months or 24 months, as applicable, following the issue date of the Bonds. The County shall retain copies of all arbitrage reports and trustee statements as described below under “Record Keeping Requirements”. Appendix 2    Page 3 of 3    Use of Bond Proceeds The Administrator and other appropriate County personnel shall:  monitor the use of Bond proceeds, the use of Bond-financed assets (e.g., facilities, furnishings or equipment) and the use of output or throughput of Bond-financed assets throughout the term of the Bonds (and in some cases beyond the term of the Bonds) to ensure compliance with covenants and restrictions set forth in applicable County resolutions and Tax Certificates;  maintain records identifying the assets or portion of assets that are financed or refinanced with proceeds of each issue of Bonds;  consult with Bond Counsel and other professional expert advisers in the review of any contracts or arrangements involving use of Bond-financed facilities to ensure compliance with all covenants and restrictions set forth in applicable County resolutions and Tax Certificates;  maintain records for any contracts or arrangements involving the use of Bond-financed facilities as might be necessary or appropriate to document compliance with all covenants and restrictions set forth in applicable County resolutions and Tax Certificates;  meet at least annually with personnel responsible for Bond-financed assets to identify and discuss any existing or planned use of Bond-financed, assets or output or throughput of Bond-financed assets, to ensure that those uses are consistent with all covenants and restrictions set forth in applicable County resolutions and Tax Certificates. All relevant records and contracts shall be maintained as described below. Record Keeping Requirements Unless otherwise specified in applicable County resolutions or Tax Certificates, the County shall maintain the following documents for the term of each issue of Bonds (including refunding Bonds, if any) plus at least three years:  a copy of the Bond closing transcript(s) and other relevant documentation delivered to the County at or in connection with closing of the issue of Bonds;  a copy of all material documents relating to capital expenditures financed or refinanced by Bond proceeds, including (without limitation) construction contracts, purchase orders, invoices, trustee requisitions and payment records, as well as documents relating to costs reimbursed with Bond proceeds and records identifying the assets or portion of assets that are financed or refinanced with Bond proceeds;  a copy of all contracts and arrangements involving private use of Bond-financed assets or for the private use of output or throughput of Bond-financed assets; and  copies of all records of investments, investment agreements, arbitrage reports and underlying documents, including trustee statements. County of Contra Costa Annual Report Filing Requirements by Outstanding Bond Issue, Listed by Most Recent to Oldest - 1 - Issue Description Due Date Filing Requirements County of Contra Costa Public Financing Authority Lease Revenue Bonds $58,055,000 consisting of: $6,790,000 2010 Series A-1 (Capital Project I – Tax Exempt Bonds); $13,130,000 2010 Series A-2 (Capital Project I – Taxable Build America bonds); $20,700,000 2010 Series A-3 (Capital Project I – Taxable Recovery Zone Bonds); and $17,435,000 2010 Series B (Refunding) Dated: October 28, 2010 Nine months after FYE 6/30 (3/31) (a) The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following captions: 1. The status of the construction and installation of the improvement constituting Capital Project I and Capital Project II until such time as each Capital Project has been completed; 2. Report of changes in “DEBT SERVICE SCHEDULE;” 3. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Recent County General Fund Budgets” (update Table B-1 “COUNTY OF CONTRA COSTA GENERAL FUND BUDGET”); 4. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Ad Valorem Property Taxes” (update Table B-2 “COUNTY OF CONTRA COSTA SUMMARY OF SECURED ASSESSED VALUATIONS AND AD VALOREM PROPERTY TAXATION”); 5. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Accounting Policies, Reports and Audits” (update Table B-6 “COUNTY OF CONTRA COSTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES”); 6. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Pension Plan” (update Table B-9 “CONTRA COSTA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION SCHEDULE OF FUNDED STATUS”); 7. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Other Post-Employment Healthcare Benefits” (update Table B-16 “CONTRA COSTA COUNTY OTHER POST-EMPLOYMENT HEALTHCARE BENEFIT PLAN SUMMARY OF PARTICIPATING EMPLOYEES AND CONTRIBUTIONS”); 8. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Long Term Obligations” (update Table B-22–“CONTRA COSTA COUNTY OUTSTANDING LEASE OBLIGATIONS AND PENSION OBLIGATION BONDS”). APPENDIX 3 Page 1 of 6 County of Contra Costa Annual Report Filing Requirements by Outstanding Bond Issue, Listed by Most Recent to Oldest - 2 - Issue Description Due Date Filing Requirements County of Contra Costa Public Financing Authority Lease Revenue Bonds $232,330,000 consisting of: (Refunding and Various Capital Projects) 2007 Series A, $122,065,000 and (Medical Center Refunding) 2007 Series B, $110,265,000 Dated: March 14, 2007 Nine months after FYE 6/30 (3/31) (a) The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following captions: 1. Report of changes in “DEBT SERVICE SCHEDULE;” 2. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Recent County General Fund Budgets” (update Table B-1 “COUNTY OF CONTRA COSTA GENERAL FUND BUDGET”); 3. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Ad Valorem Property Taxes” (update Table B-2 “COUNTY OF CONTRA COSTA SUMMARY OF SECURED ASSESSED VALUATIONS AND AD VALOREM PROPERTY TAXATION”); 4. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Accounting Policies, Reports and Audits” (update Table B-5 “COUNTY OF CONTRA COSTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES”); 5. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Pension Plan” (update Table B-12 “CONTRA COSTA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION SCHEDULE OF FUNDED STATUS”); 6. APPENDIX B–“COUNTY FINANCIAL INFORMATION–Long Term Obligations” (update Table B-23–“CONTRA COSTA COUNTY OUTSTANDING LEASE OBLIGATIONS AND PENSION OBLIGATION BONDS”). County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2003 Series A, $18,500,000 Dated: August 14, 2003 Nine months after FYE 6/30 (3/31) 1. The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available 2. Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following captions: (a) “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” (report changes in “-Debt Service Schedule”); (b) “APPENDIX A – COUNTY ECONOMIC, DEMOGRAGHIC AND FINANCIAL INFORMATION – Recent County General Fund Budgets” (update table entitled “COUNTY OF CONTRA COSTA GENERAL FUND BUDGET”); (c) “APPENDIX A – COUNTY ECONOMIC, DEMOGRAGHIC AND FINANCIAL INFORMATION – Ad Valorem Property taxes” (updated table entitled “COUNTY OF CONTRA COSTA SUMMARY OF ASSESSED VALUATIONS AND AD VALOREM PROPERTY TAXATION”); (d) “APPENDIX A – COUNTY ECONOMIC, DEMOGRAGHIC AND FINANCIAL INFORMATION – Accounting Policies, Reports and Audits” (update table entitled “COUNTY OF CONTRA COSTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES”); (e) “APPENDIX A – COUNTY ECONOMIC, DEMOGRAGHIC AND FINANCIAL INFORMATION – Long Term Obligations – General Obligation Debt” and “- Lease Obligations” (update table entitled “COUNTY OF CONTRA COSTA OUTSTANDING MARKETABLE LEASE AND PENSION BOND OBLIGATIONS”) APPENDIX 3 Page 2 of 6 County of Contra Costa Annual Report Filing Requirements by Outstanding Bond Issue, Listed by Most Recent to Oldest - 3 - Issue Description Due Date Filing Requirements County of Contra Costa California Taxable Pension Obligation Bonds, Series 2003A, $322,710,000 Dated: May 1, 2003 Nine months after FYE 6/30 (3/31) 1. The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available 2. Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following captions: (a) “APPENDIX A – COUNTY ECONOMIC, DEMOGRAGHIC AND FINANCIAL INFORMATION – Recent County General Fund Budgets” (update table entitled “COUNTY OF CONTRA COSTA GENERAL FUND BUDGET”); (b) “APPENDIX A – COUNTY ECONOMIC, DEMOGRAGHIC AND FINANCIAL INFORMATION – Ad Valorem Property taxes” (updated table entitled “COUNTY OF CONTRA COSTA SUMMARY OF ASSESSED VALUATIONS AND AD VALOREM PROPERTY TAXATION”); (c) “APPENDIX A – COUNTY ECONOMIC, DEMOGRAGHIC AND FINANCIAL INFORMATION – Accounting Policies, Reports and Audits” (update table entitled “COUNTY OF CONTRA COSTA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES”); (d) “APPENDIX A – COUNTY ECONOMIC, DEMOGRAGHIC AND FINANCIAL INFORMATION – Long Term Obligations – General Obligation Debt” and “- Lease Obligations” (update table entitled “COUNTY OF CONTRA COSTA OUTSTANDING MARKETABLE LEASE AND PENSION BOND OBLIGATIONS”) County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 2002 Series B $25,440,000 Dated: September 5, 2002 Nine months after FYE 6/30 (3/31) 1. The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available 2. Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following captions: (a) “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” (report changes in DEBT SERVICE SCHEDULE); (b) “APPENDIX B – COUNTY FINANCIAL INFORMATION – County General Fund Budgets” (update table entitled GENERAL FUND BUDGETS); (c) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Ad Valorem Property Taxes” (update table entitled SUMMARY OF ASSESSED VALUATIONS AND AD VALOREM PROPERTY TAXATION); (d) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Accounting Policies, Reports and Audits” (update table entitled SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES); (e) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Long Term Obligations – General Obligation Debt” and “- Lease Obligations” (update financial information) APPENDIX 3 Page 3 of 6 County of Contra Costa Annual Report Filing Requirements by Outstanding Bond Issue, Listed by Most Recent to Oldest - 4 - Issue Description Due Date Filing Requirements County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2002 Series A $12,650,000 Dated: June 1, 2002 Nine months after FYE 6/30 (3/31) 1. The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available 2. Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following captions: (a) “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Base Rental Payments” (report changes in DEBT SERVICE SCHEDULE); (b) “APPENDIX B – COUNTY FINANCIAL INFORMATION – County General Fund Budgets” (update table entitled GENERAL FUND BUDGETS); (c) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Ad Valorem Property Taxes” (update table entitled SUMMARY OF ASSESSED VALUATIONS AND AD VALOREM PROPERTY TAXATION); (d) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Accounting Policies, Reports and Audits” (update table entitled SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES); (e) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Long Term Obligations – General Obligation Debt” and “- Lease Obligations” (update financial information) County of Contra Costa Public Financing Authority, 2001 Revenue Bonds (Reassessment District of 2001), $6,575,000 Dated: June 7, 2001 Nine months after FYE 6/30 (3/31) (a) Items relating to the Authority (i) Outstanding principal amount of the Bonds as of the end of the most recent fiscal year; and (ii) Balance of the Reserve Fund as of the end of the most recent fiscal year. (b) Items relating to the Reassessment District. Unless otherwise provided in the audited financial statements filed on or prior to the annual filing deadline for the Annual Reports provided for in Section 3 above, financial information and operating data with respect to the Reassessment District for the preceding fiscal year, substantially similar to that provided in the corresponding tables and charts in the Official Statement for the Bonds, as follows: (i) Principal amount outstanding of the Reassessment Bonds. (ii) Balance in the Redemption Funds created pursuant to the Paying Agent Agreement relating to the Reassessment Bonds. (iii) Total aggregate assessed value (per the County records) of all parcels currently subject to the Reassessments within the Reassessment District showing the total aggregate assessed valuation for all land and the total aggregate assessed valuation for all improvements within the Reassessment District. (iv) With respect to the Reassessment District, but only in the event the sum of uncured Reassessment delinquencies for such Reassessment District for the preceding Fiscal Year exceeds 5 percent of the Reassessment installments posted to the tax roll for such Fiscal Year (3% if any portion of the Reassessment District does not participate in the County’s Teeter Plan), delinquency information for each parcel then delinquent in the payment of Reassessments, including the amount of such delinquency, length of delinquency and status of any foreclosure (including results of foreclosure sales). (v) A land ownership summary listing property owners (and the assessed values of their property) responsible for more than five percent (5%) of the annual Reassessments within the Reassessment District, as shown on the Contra Costa County Assessor’s last equalized tax roll prior to the September next preceding the Annual Report Date. (vi) A copy of any information given by the Authority to the California Debt and Investment Advisory Commission pursuant to Government Code Section 6599.1. APPENDIX 3 Page 4 of 6 County of Contra Costa Annual Report Filing Requirements by Outstanding Bond Issue, Listed by Most Recent to Oldest - 5 - Issue Description Due Date Filing Requirements County of Contra Costa California Taxable Pension Obligation Bonds, Refunding Series 2001, $107,005,000 Dated: March, 20, 2001 Nine months after FYE 6/30 (3/31) 1. The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available (a) “APPENDIX B – COUNTY FINANCIAL INFORMATION – County General Fund Budgets” (update table entitled GENERAL FUND BUDGETS); (b) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Ad Valorem Property Taxes” (update table entitled SUMMARY OF ASSESSED VALUATIONS AND AD VALOREM PROPERTY TAXATION); (c) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Accounting Policies, Reports and Audits” (update table entitled SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES); (d) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Long Term Obligations – General Obligation Debt” and “- Lease Obligations” (update financial information) County of Contra Costa Public Financing Authority Lease Revenue Bonds (Various Capital Projects), 2001 Series A, $18,030,000 Dated: January 1, 2001 Nine months after FYE 6/30 (3/31) 1. The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available 2. Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following captions: (a) “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Base Rental Payments” (report changes in DEBT SERVICE SCHEDULE); (b) “APPENDIX B – COUNTY FINANCIAL INFORMATION – County General Fund Budgets” (update table entitled GENERAL FUND BUDGETS); (c) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Ad Valorem Property Taxes” (update table entitled SUMMARY OF ASSESSED VALUATIONS AND AD VALOREM PROPERTY TAXATION); (d) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Accounting Policies, Reports and Audits” (update table entitled SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES); (e) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Long Term Obligations – General Obligation Debt” and “- Lease Obligations” (update financial information) APPENDIX 3 Page 5 of 6 County of Contra Costa Annual Report Filing Requirements by Outstanding Bond Issue, Listed by Most Recent to Oldest - 6 - Issue Description Due Date Filing Requirements County of Contra Costa Public Financing Authority Lease Revenue Bonds (Refunding and Various Capital Projects), 1999 Series A, $74,685,000 Dated: February 1, 1999 Nine months after FYE 6/30 (3/31) 1. The audited financial statements of the County for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the County's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available 2. Numerical and tabular information for the immediately preceding Fiscal Year of the type contained in the Official Statement under the following captions: (a) “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Base Rental Payments” (report changes in DEBT SERVICE SCHEDULE); (b) “APPENDIX B – COUNTY FINANCIAL INFORMATION – County General Fund Budgets” (update table entitled GENERAL FUND BUDGETS); (c) “APPENDIX B – COUNTY FINANCIAL INFORMATION – The Contra Costa County Investment pool” (update various tables); (d) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Ad Valorem Property Taxes” (update table entitled SUMMARY OF ASSESSED VALUATIONS AND AD VALOREM PROPERTY TAXATION); (e) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Accounting Policies, Reports and Audits” (update table entitled GENERAL FUND BALANCE SHEET); (f) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Accounting Policies, Reports and Audits” (update table entitled SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES); (g) “APPENDIX B – COUNTY FINANCIAL INFORMATION – Long Term Obligations – General Obligation Debt” and “- Lease Obligations” (update financial information) Additional tasks to be completed around the time of the Annual Report: 1. RZEDB Self Certification Form for CDLAC (due by March 1 each year bonds are outstanding) 2. CDIAC Marks-Roos Report for Reassessment District of 2001 (due by October 1 each year bonds are outstanding) APPENDIX 3 Page 6 of 6 1 G:\CDBG-REDEV\MF MRB\MF MRB Policies\MFMRB Policy.2011.doc APPENDIX 5 County of Contra Costa Multifamily Mortgage Revenue Bond Program Policy 2 G:\CDBG-REDEV\MF MRB\MF MRB Policies\MFMRB Policy.2011.doc Summary Federal, state and local legislation authorize issuance of mortgage revenue bonds by local governments to finance the development, acquisition and rehabilitation of multifamily rental housing projects pursuant to Section 52075 of the California Health and Safety Code, and applicable provisions of the Internal Revenue Code. The allocation of private activity bond authority is secured through the California Debt Limit Allocation Committee (CDLAC). The interest on the bonds can be exempt from federal and state taxation. As a result, bonds provide below market financing for qualified rental projects located within Contra Costa County (the “County”)*. In additional the bonds issued under the program can qualify projects for allocations of federal low-income housing tax credits, which can provide a significant portion of the funding necessary to develop affordable housing. The program is administered by the County’s Department of Conservation and Development (DCD). There is no direct legal liability to the County in connection with the repayment of bonds; there is no pledge of the County’s faith, credit or taxing power and the bonds do not constitute general obligations of the issuer because the security for repayment of bonds is limited to project revenue and other sources specified under each financing. Project loans are, in most cases, secured by a first deed of trust on the bond-financed property. The program is completely self-supporting; developers must secure funding to pay for costs of issuance of the bonds and all other costs under each financing. The bonds may be used for construction, rehabilitation and permanent financing. The effective mortgage rate is the aggregate of the applicable bond rate and the add-on fees charged under the program such as lender, trustee, issuer’s fee, etc. The bond rate, for fixed rate bonds, is determined at the time of a bond sale, and the resulting mortgage rate is approximately 1.5-2% below conventional mortgage rates. The project loans generally have a 30-year amortization schedule. The goals of the program include: • Increase and preserve the supply of affordable rental housing; • Encourage economic diversity within residential communities; • Maintain a quality living environment for residents of assisted projects and surrounding properties; and • In the event of provision of public funds towards the project, optimize the effectiveness of those funds by maximizing the leveraging of private sector funds. Eligibility The project must be located within Contra Costa County and consist of complete rental units, including full kitchens and bathrooms, and cannot be used for transient or student housing. * The County has authority to issue on behalf of Cities within the County pursuant to Contra Costa County 1982 Home Mortgage Revenue Bonds Cooperation Agreements. The County works closely with local communities to meet their housing objectives. There is no limit on the maximum or minimum project size or number of units. However, smaller size projects (fewer than 40 units or less than $2 million loan) may not find tax exempt financing economically efficient due to the costs of issuance, services of the 3 G:\CDBG-REDEV\MF MRB\MF MRB Policies\MFMRB Policy.2011.doc financial team, rating fees, etc. Proposed combined or pooled projects will be considered on a case by case basis. For projects requiring bond financing greater than $35 million, it will be necessary to obtain a waiver from the CDLAC in order to receive an allocation. Loan funds may be used for costs of property acquisition (no more than 25% of bond proceeds can be used for the acquisition of land), construction, rehabilitation, improvements, architectural and engineering services, construction interest, loan fees and other capital costs of the project incurred after the Bond Inducement date (specified in Financing Process section). Pursuant to federal requirements, if bonds are used for acquisition and rehabilitation, at least 15% of the portion of the acquisition cost of the building and related equipment financed with the proceeds of the bonds must be used for rehabilitation of the project. No more than 2% of any tax-exempt bond loan can be used to finance costs of issuance, such as the services of the financing team members, rating and printing of bonds, bond allocation, etc. County Compensation The County’s fees are comprised of (1) a non-refundable application fee due prior to drafting a Reimbursement Inducement Resolution, (2) an issuance fee due upon bond closing, and (3) an annual fee due in advance to cover costs of monitoring compliance with State and federal law requirements as contained in a Regulatory Agreement. The annual fees may be negotiated, however the standard fee is 1/8 of 1% (or .125%) of the principal amount of bonds outstanding. Annual fees are charged for the full term of the Regulatory Agreement, generally 55 years. At the County’s discretion, annual fees above a $5,000 minimum may be subordinated to payment of debt service. The County fees are summarized in the table below: Issuer Fee Schedule Application (1) Issuance Fee Annual Fee (2) Rate (3) .125% Rate (3) .125% $2,500 Minimum $5,000 Minimum $5,000 Maximum $75,000 Maximum $25,000 (1) Payable upon request of Reimbursement Inducement Resolution. Amount applied to Issuance Fee at closing. DCD may waive this requirement in its sole discretion. (2) Amounts above the minimum may be subordinated to bond debt service, at the County’s option. (3) Percentage applied to the initial bond issuance amount. Types of Bonds 4 G:\CDBG-REDEV\MF MRB\MF MRB Policies\MFMRB Policy.2011.doc The County may issue either tax-exempt or taxable bonds. Taxable bonds would generally be issued in combination with tax-exempt bonds. Tax-Exempt Private Activity Bonds (non- refunding) require an allocation of bond authority from CDLAC. To obtain the allocation the County must submit an application to CDLAC on behalf of the developer. Submittal of the application is at the discretion of the County, not the developer. The developer must pay all required CDLAC fees when due. The interest on taxable bonds is not exempt from federal taxation. These bonds are not subject to federal volume “cap” limitations and therefore do not require allocation authority from CDLAC. Taxable bonds can be used in combination with low-income housing tax credits awarded by the Tax Credit Allocation Committee. Taxable bond issues must meet all applicable requirements of this Policy (including rating requirements) and any additional regulations that may be promulgated, from time to time, by the County The County may issue 501(c)(3) bonds on behalf of qualified nonprofit organizations. 501 (c)(3) bonds are tax-exempt and do not require an allocation from CDLAC, but cannot be used with the Low Income Housing Tax Credit Program. Refunding Bonds will be allowed if the issuance meets the following conditions: 1. The Project Sponsor agrees to cover all costs of the issuer. 2. Projects originally financed by tax-exempt bonds prior to the 1986 Tax Act will have to make a minimum 10% of the units affordable to persons earning 50% of the median area income with the rents affordable at the same level. 3. The affordability restrictions of the existing bond regulatory agreement are subject to extension and/or additional restrictions. All specifics of refunding proposals must be approved by the County. 4. Default refunding applications require a default refunding analysis (to determine the eligibility for a default refunding). The County shall choose the firm to conduct the analysis. The project applicant will deposit the cost for the study with the County before the study begins. Affordability Requirements Term The project must remain as rental housing and continuously meet the affordability requirements for at least 55 years from the date of 50% occupancy of the project. At the conclusion of the Regulatory period, rent of “in-place” tenants will continue to be governed by the applicable affordability restriction, so long as those tenants continue to live in the development. Income Restrictions To be eligible for tax-exempt bond financing, federal and State law require that the project meet one of the following conditions: (a) A minimum of 20% of the units in the project must be set aside for occupancy by households whose income does not exceed 50% of area median income, as adjusted for family size; or (b) A minimum of 10% of the units in the project must be set aside for occupancy by households whose incomes do not exceed 50% of area median income, as adjusted for family size AND an additional 40% of the units in the project must 5 G:\CDBG-REDEV\MF MRB\MF MRB Policies\MFMRB Policy.2011.doc be set aside for occupancy by households whose incomes do not exceed 60% of area median income, as adjusted for family size. Project owners must certify their tenant’s eligibility annually. If at the annual certification it is found that a tenant’s income exceeds 140% of the current income limit, the owner must rent the next available unit of comparable size to a new income eligible tenant. The owner may raise the current tenant’s rent to market rent only upon renting the next available unit to a new low-income or very low-income household, as applicable. A unit occupied only by full time students does not count towards the set-aside requirement. Rent Restrictions The maximum rents for all the affordable units are equal to 30% of the applicable monthly maximum income level, assuming one person in a studio, two persons in a one-bedroom, three persons in a two-bedroom and four persons in a three-bedroom unit. These assumptions differ for projects using Low Income Housing Tax Credits. In the event that both are used, the more restrictive rents apply. The maximum rents are further reduced by the amount of the utility allowance applicable to those units, based on unit size. Utility allowances are set by the Housing Authority of the County of Contra Costa and are based solely upon the utilities paid by the tenant. The set-aside units must proportionately reflect the mix of all units in the project, be distributed throughout the project, and have the same floor area, amenities, and access to project facilities as market-rate units. Regulatory Agreement The rental and affordability unit requirements will be contained in a Regulatory Agreement that is recorded with the property and must be complied with by subsequent buyers for the minimum rental period. The requirements are terminated at the later of the end of the minimum rental period and repayment in full of the bonds or in the event of total casualty loss or foreclosure. Financing Team Bond Counsel and Financial Advisor, if applicable, specifically represent the interests and concerns of the County in ensuring the integrity of the bond transaction. The project sponsor may, at its own expense, add additional members to the finance team to represent its interests. Financial Advisor If deemed necessary, the Financial Advisor will be designated by DCD. They will prepare a feasibility study of whether it is economically advisable to proceed with the financing, including: evaluations of the financial strength of the project; assumptions regarding income and expenses; sources of security for bonds in addition to the project; developers financial situation and experience in operating and managing rental projects; marketability of the bonds; rights and resources of parties to the transaction in the event of default; and provide financial advise on all relevant issues to best protect the interests of the County. The compensation for financial advisory services to determine whether it is advisable to proceed with a financing will not be contingent on the sale of the bonds. Bond Counsel 6 G:\CDBG-REDEV\MF MRB\MF MRB Policies\MFMRB Policy.2011.doc Bond Counsel will be designated for each financing by the County Board of Supervisors. Bond counsel will prepare the necessary legal documentation, including provisions regarding compliance with any applicable continuing disclosure requirements, provide an opinion regarding the validity of the bonds and their tax exemption, and provide legal advice on all relevant issues to best protect the interests of the County. Additional Parties The Bond Underwriter, Remarketing Agent, Private Placement Purchaser, and Bond Trustee, if required, will be selected by the County in consultation with the project sponsor. The fees for such services will be paid solely out of bond proceeds or otherwise by the project sponsor. The Financing Process 1. Request for Financing (New or Refunding) – A letter of request must be sent to the DCD stating the desire to use the County’s Multifamily Mortgage Revenue Bond Program. The letter should include: a. Name of Development Project; b. Location by street address and assessor’s parcel number (if known); c. Estimated number units; d. Estimated development costs including land (bonds to be issued cannot exceed this amount); e. Exact legal name of the ownership entity at the time of bond closing (e.g. name of individual, partnership, corporation, etc. and f. If different, name of the operating entity at the time of bond closing. g. Non-refundable application fee of $2,500 to cover the administrative costs of reviewing the project feasibility, Inducement and TEFRA Hearing processes. 2. Board of Supervisor Approval of Reimbursement [Inducement] Resolution – The Reimbursement Resolution is a conditional statement of intent on the part of the County to provide tax-exempt financing for the project. The Resolution is non- binding, however it authorizes the submittal of the application to CDLAC by the County and it sets the date (which is 60-days earlier than the Inducement Date) from which costs related to the project are eligible for financing. 3. Public Hearing/Section 147(f) Resolution – Tax law requires that a public hearing be held to take comment on the nature of and location of the facility proposed to be financed with private activity bonds (Multifamily Mortgage Revenue Bonds included). The hearing must be noticed in a local newspaper of general circulation at least 14 days prior to the hearing. The legislative body then adopts a resolution approving the issuance of bonds pursuant to Section 147(f) of the Tax Code after the hearing is held. This is not the final approval of the bond issuance. The DCD holds the hearing administratively and the Board of Supervisors approves the Section 147(f) Resolution at a subsequent Board meeting. DCD may opt to schedule the required public hearing with the Board of Supervisors. 4. Securement of CDLAC Allocation – The CDLAC allocation of private activity bond authority is subject to an application process. The application must be submitted to the County for review and comment at least 10 days prior to the CDLAC deadline. The final application must include the current application fee for CDLAC and a 7 G:\CDBG-REDEV\MF MRB\MF MRB Policies\MFMRB Policy.2011.doc performance deposit in the amount of .5% of the requested allocation amount to be held by the County. The deposit is returned according to CDLAC procedures, but is subject to reversion to CDLAC if the financing does not close according to their procedures. The CDLAC process includes approximately 60 days for review of applications prior to allocation. 5. Bond Sale Resolution – When an allocation is received the County and financing parties have 90 days in which to complete the financing and sell and close on the issuance of the bonds. All real estate, lender and bond documents are completed. The Board of Supervisors must approve a Bond Sale Resolution, typically 30 days in advance of the proposed bond closing. Bond Sale Modes/Issuing Criteria Under its tax exempt financing program the County provides loans secured by a first deed of trust. A fundamental requirement for financings is that the project have loan underwriting and credit enhancement from a third party institution that bears the ultimate risk and responsibility of the loan. The County may consider unrated bonds on a case by case basis. Subordinate financing from other federal, state, or local agencies may be integrated into a plan of finance for the project. Early consultation with County staff is encouraged. Any bonds issued under the program that are sold to the public should generally be rated “A”, or its equivalent, or better from a nationally recognized rating agency. The same rating requirement applies in the case of a substitution of existing credit facility for bonds that are outstanding. A preferred way of obtaining the required rating on the bonds is through the provision of additional, outside credit support for the bond issue provided by rated, financially strong private institutions, such as bond insurance companies; domestic and foreign banks and insurance companies; FHA mortgage insurance or co-insurance, etc. The rating on the bonds is based on the credit worthiness of the participating credit enhancement provider. The applicant is required to identify and obtain credit enhancement for each bond issuance. As the primary source of security for the repayment of bonds, the credit enhancement provider reviews and approves the borrower and the project and its feasibility, including the size of the loan and the terms of repayment using their own underwriting criteria. Fixed rate bonds, or their portion, can be issued without credit enhancement if the proposed financing structure results in the required minimum rating on the bonds by a nationally recognized rating agency. Bonds issued without credit enhancement will be sold to institutional investors in minimum $100,000 denominations. Private Placement Bonds Private Placement Bonds are allowed under the following conditions: 1. The bonds are privately placed with “qualified institutional buyers” under Rule 144A of the Securities Act of 1933, or “accredited investors,” as generally defined under Regulation D of the Securities Act of 1933. 2. The bonds must be sold in minimum $100,000 denominations. 3. All initial and subsequent purchasers must be willing to sign a sophisticated investor letter in a form approved by the County. While the bonds remain unrated, their 8 G:\CDBG-REDEV\MF MRB\MF MRB Policies\MFMRB Policy.2011.doc transferability will be restricted to qualified institutional buyers or accredited invested who sign an Investor Letter. 4. The County may limit the number of investors. 5. The owner must indemnify the County against any costs incurred by the County, including any lawsuit initiated by the bondholder or any other party, regardless of whether the developer is negligent, and if requested by the County, post a surety bond guaranteeing the same. Change of Ownership The County reserves the right to approve any voluntary change in ownership (i) that results in a transfer of 50% or more of the total equity interests in a developer or (ii) that results in a transfer of any general partner or managing member interest in the developer. Such approval to transfer ownership shall be at the discretion of the County. Transfers made by a limited partner tax credit investor to its affiliates may, at the County’s discretion, be exempted from this requirement. The County shall review proposed owner management practices on current and previously owned properties, inspections, financial statements and credit histories. Other Issuers Projects financed with subordinate financing from the County (CDBG, HOME, etc.) will be financed by bonds issued by the County. The County may consent to the use of statewide issuers for private activity bonds (including 501c3 bonds) to finance projects located within the unincorporated County when such projects are part of a common plan of finance with one or more projects located within the County. DCD may waive the limitations on the use of statewide issuers. APPENDIX 6 Contra Costa County Debt Management Policies For Successor Agency to the former Contra Costa County Redevelopment Agency I. Purpose The purpose of this Successor Agency (“Agency”) Debt Management Policy is to organize and formalize the Agency’s debt-related policies and practices and establish a framework for administering and potentially refinancing the Agency's debt. The primary objectives of the policy are to: • Promote sound financial management • Assist the Agency in evaluating debt refinancing options • Ensure full and timely repayment of debt • Maintain full and complete financial disclosure and good investor relations • Ensure compliance with applicable state and federal laws II. Responsibility/Approval Process The Director of the Department of Conservation and Development, Deputy Director-Redevelopment, or designee shall be responsible for managing and coordinating all activities related to the administration and potential refinancing of the Agency’s debt, including investment of bond proceeds, compliance with bond covenants, continuing disclosure, and arbitrage compliance. III. Debt Issuance Refinancing The Agency may refinance all or a portion of an outstanding debt issue when such refinancing enables the Agency to realize significant debt service savings or other policy goals. In general, refinancing that produces a net present value savings of at least three percent (3%) of the refinanced debt, without extending the term of the refinanced debt, will be considered economically viable. Refinancing that produce a net present value savings of less than three percent (3%) will be considered on a case-by-case basis if there is a compelling public policy objective that is accomplished by retiring the debt. For example, the Agency may pursue a non-economic refinancing to eliminate undesirable legal covenants in outstanding bond documents, to restructure the debt service profile, or to change the tax status of the debt. IV. Debt Structure Project Area Debt The Agency may refinance debt for a single project area or may combine financings for multiple project areas to achieve economies of scale or credit benefits. Each project area debt component must conform to the requirements and limitations of its respective project area redevelopment plan. Debt Service Reserve Fund The Agency may finance a debt service reserve fund from bond proceeds or other funds, consistent with federal tax law, to enhance the marketability of the bonds and/or to satisfy requirements of outstanding debt covenants. The Agency may purchase a reserve fund equivalent (such as a reserve fund surety) when such purchase is considered to be advantageous to the economics of the debt issuance. Bond Insurance The Agency may purchase bond insurance (or secure a letter of credit) for any proposed financing if the economic benefit of the insurance realized through lower interest costs exceeds the cost of the insurance. The Director of the Department of Conservation and Development, Deputy Director – Redevelopment or designee will soli cit quotes from providers, and shall have the authority to select a provider whose bid is most cost effective, and whose terms and conditions are satisfactory to the County. Call Provisions In general the bonds will include a call feature that is no longer than 10 years from the date of delivery of the bonds. The Agency will seek to avoid the sale of non-callable bonds absent careful evaluation by the Agency of the value of the call option. Original Issue Discount An original issue discount will be permitted only if the Agency determines that such discount results in a lower true interest cost on the bonds and that the use will not adversely affect the projects to be financed. Interest Rate Mode The Agency shall use only fixed-rate debt to refinance its bonds. VI. Financing Team The Agency employs outside financial specialists to assist in developing a debt strategy, preparing bond documents, marketing bonds to investors and generally implementing its financing plan. The Director of the Department of Conservation and Development, Deputy Director – Redevelopment, or designee shall have the authority to periodically select service providers as necessary to meet legal requirements and minimize net Agency debt costs. Such services, depending on the type of financing, may include bond counsel, disclosure counsel, financial advisory, underwriting, trustee, verification agent, escrow agent, arbitrage consulting, and fiscal consulting. The goal in selecting service providers is to achieve an appropriate balance between service and cost. VII. Method of Sale The Agency may select a method of sale that is most appropriate for a particular financing or debt program in light of the financial, market, transaction-specific, and Agency-related conditions. The Director of the Department of Conservation and Development, Deputy Director – Redevelopment and/or Community Development Bond Program Manager shall be responsible for determining the appropriate manner in which to offer any securities to investors, and may consider negotiated sale, competitive bid or private placement, as appropriate. The Agency’s bonds have traditionally been sold via negotiated sale. This has been reflective of a complex structure which has required significant up-front work by the bond underwriter, and a strong pre-marketing effort at sale. The Agency may elect to privately place its debt if it is demonstrated to result in a cost savings to the Agency relative to other methods of debt issuance. VIII. Debt Administration Investment of bond proceeds Investments of bond proceeds shall be consistent with federal tax requirements, the County’s adopted Investment Policy as modified from time to time, and with requirements contained in the governing bond documents. Continuing Disclosure The Agency is committed to full and complete primary and secondary market financial disclosure in accordance with disclosure requirements established by the Securities and Exchange Commission and Municipal Securities Rulemaking Board, as may be amended from time to time. The Agency is also committed to cooperating fully with rating agencies, institutional and individual investors, other levels of government, and the general public to share clear, timely, and accurate financial information. Arbitrage Compliance The Agency shall maintain a system of record keeping and reporting to meet the arbitrage compliance requirements of federal tax law or procure an outside contractor for such service. Appendix 2    Page 1 of 3    County of Contra Costa Post-Issuance Tax Compliance Procedures For Tax-Exempt and Build America Bonds The purpose of these Post-Issuance Tax Compliance Procedures is to establish policies and procedures in connection with tax-exempt bonds and “Build America bonds” (“Bonds”) issued by the County of Contra Costa and the County of Contra Costa Financing Authority (together, the “County”) so as to ensure that the County complies with all applicable post-issuance requirements of federal income tax law needed to preserve the tax-exempt or Build America bond status of the Bonds. General Ultimate responsibility for all matters relating to County financings and refundings, other than Tax and Revenue Anticipation Notes (“TRANs”), rests with the County Administrator (the “Administrator”). The County Treasurer and County Auditor-Controller are responsible for tax compliance with respect to TRANs. Post-Issuance Compliance Requirements Timely Reporting of Final Sale The Administrator and other appropriate County personnel shall file timely any report required by state and federal regulatory agencies notifying those agencies of final sale of bonds, or receipt bank loan/private placement proceeds, as required by law. As of this writing, this section applies to the following: 1. California Debt and Investment Advisory Commission (CDIAC)  Report of Final Sale: This Reports details information about the issuer and the bond issuance. The report requires attachment of the Official Statement related to the transaction or other bond documents in the case of a bank loan/private placement. The report is required to be filed within 21 days of closing, pursuant to Government Code § 8855(j). o Special Requirement for Refunding Bonds sold via Negotiated Sale or Private Placement: In addition to the Report of Final Sale above, if refunding bonds are sold through a negotiated sale or private placement, CDIAC requires submission of a written statement explaining the reasons for not selling those bonds at a public sale within 14 days of closing, pursuant to Government Code § 53583(c)(2)(B). 2. Internal Revenue Service (IRS)  IRS Form 8038-G “Information Return for Tax-Exempt Governmental Obligations”: This filing details information about the issuer and tax-exempt governmental obligations over $100,000. The report is required to be filed no later than the 15th day of the second calendar month after the close of the calendar quarter in which the bond was issued, pursuant to Internal Revenue Code § 149(e). External Advisors / Documentation The Administrator and other appropriate County personnel shall consult with bond counsel and other legal counsel and advisors, as needed, throughout the Bond issuance process to identify requirements and to establish procedures necessary or appropriate so that the Bonds will continue to qualify for the appropriate tax status. Those requirements and procedures shall be documented in a County resolution(s), Tax Certificate(s) and / or other documents finalized at or before issuance of the Bonds. Appendix 2    Page 2 of 3    Those requirements and procedures shall including future compliance with applicable arbitrage rebate requirements and all other applicable post-issuance requirements of federal tax law throughout (and in some cases beyond) the term of the Bonds. The Administrator and other appropriate County personnel also shall consult with bond counsel and other legal counsel and advisors, as needed, following issuance of the Bonds to ensure that all applicable post- issuance requirements in fact are met. This shall include, without limitation, consultation in connection with future contracts with respect to the use of Bond-financed assets and future contracts with respect to the use of output or throughput of Bond-financed assets. Whenever necessary or appropriate, the County shall engage expert advisors (each a “Rebate Service Provider”) to assist in the calculation of arbitrage rebate payable in respect of the investment of Bond proceeds. Role of the County as Bond Issuer Unless otherwise provided by County resolutions, unexpended Bond proceeds shall be held by the County, and the investment of Bond proceeds shall be managed by the [Administrator]. The Administrator shall maintain records and shall prepare regular, periodic statements to the County regarding the investments and transactions involving Bond proceeds. If a County resolution provides for Bond proceeds to be administered by a trustee, the trustee shall provide regular, periodic (monthly) statements regarding the investments and transactions involving Bond proceeds. Arbitrage Rebate and Yield Unless a Tax Certificate documents that bond counsel has advised that arbitrage rebate will not be applicable to an issue of Bonds:  the County shall engage the services of a Rebate Service Provider, and the County or the Bond trustee shall deliver periodic statements concerning the investment of Bond proceeds to the Rebate Service Provider on a prompt basis;  upon request, the Administrator and other appropriate County personnel shall provide to the Rebate Service Provider additional documents and information reasonably requested by the Rebate Service Provider;  the Administrator and other appropriate County personnel shall monitor efforts of the Rebate Service Provider and assure payment of required rebate amounts, if any, no later than 60 days after each 5- year anniversary of the issue date of the Bonds, and no later than 60 days after the last Bond of each issue is redeemed; and  during the construction period of each capital project financed in whole or in part by Bonds, the Administrator and other appropriate County personnel shall monitor the investment and expenditure of Bond proceeds and shall consult with the Rebate Service Provider to determine compliance with any applicable exceptions from the arbitrage rebate requirements during each 6-month spending period up to 6 months, 18 months or 24 months, as applicable, following the issue date of the Bonds. The County shall retain copies of all arbitrage reports and trustee statements as described below under “Record Keeping Requirements”. Appendix 2    Page 3 of 3    Use of Bond Proceeds The Administrator and other appropriate County personnel shall:  monitor the use of Bond proceeds, the use of Bond-financed assets (e.g., facilities, furnishings or equipment) and the use of output or throughput of Bond-financed assets throughout the term of the Bonds (and in some cases beyond the term of the Bonds) to ensure compliance with covenants and restrictions set forth in applicable County resolutions and Tax Certificates;  maintain records identifying the assets or portion of assets that are financed or refinanced with proceeds of each issue of Bonds;  consult with Bond Counsel and other professional expert advisers in the review of any contracts or arrangements involving use of Bond-financed facilities to ensure compliance with all covenants and restrictions set forth in applicable County resolutions and Tax Certificates;  maintain records for any contracts or arrangements involving the use of Bond-financed facilities as might be necessary or appropriate to document compliance with all covenants and restrictions set forth in applicable County resolutions and Tax Certificates;  meet at least annually with personnel responsible for Bond-financed assets to identify and discuss any existing or planned use of Bond-financed, assets or output or throughput of Bond-financed assets, to ensure that those uses are consistent with all covenants and restrictions set forth in applicable County resolutions and Tax Certificates. All relevant records and contracts shall be maintained as described below. Record Keeping Requirements Unless otherwise specified in applicable County resolutions or Tax Certificates, the County shall maintain the following documents for the term of each issue of Bonds (including refunding Bonds, if any) plus at least three years:  a copy of the Bond closing transcript(s) and other relevant documentation delivered to the County at or in connection with closing of the issue of Bonds;  a copy of all material documents relating to capital expenditures financed or refinanced by Bond proceeds, including (without limitation) construction contracts, purchase orders, invoices, trustee requisitions and payment records, as well as documents relating to costs reimbursed with Bond proceeds and records identifying the assets or portion of assets that are financed or refinanced with Bond proceeds;  a copy of all contracts and arrangements involving private use of Bond-financed assets or for the private use of output or throughput of Bond-financed assets; and  copies of all records of investments, investment agreements, arbitrage reports and underlying documents, including trustee statements.