Introduction: Why Post-Issuance Compliance?
Over the past few years, the tax-exempt bond market has been under heightened scrutiny by various regulators, including the Internal Revenue Service (“IRS”), the United States Securities and Exchange Commission and the Municipal Securities Rulemaking Board. These regulators have called for increased regulation as well as transparency, with a large part of their focus on post-issuance compliance.
The purpose of this booklet is to introduce interested parties to the topic of post-issuance compliance. It is intended to assist:
• treasurers, finance directors, comptrollers and other responsible officials of state and local government issuers of tax-exempt bonds (“Issuers”) and
• private, non-governmental conduit borrowers (such as nonprofit institutions providing health care and higher education and for-profit developers of exempt facilities) which are allowed to borrow at tax-exempt rates from Issuers (“Borrowers”),
in developing policies, procedures and systems to ensure that (i) the interest on their bonds will remain tax-exempt, (ii) they are in compliance with their ongoing continuing disclosure obligations, and (iii) they are in compliance with their covenants under their bond documentation so that no event of default will occur on account of technical noncompliance.
Due to its complex nature, post-issuance tax compliance takes up the majority of this booklet — Chapters 2 through 7. Chapter 8 addresses compliance with continuing disclosure obligations. Lastly, Chapter 9 focuses on compliance with the underlying bond documentation in a financing. For further information about any of the topics discussed, please contact one of the people listed at the end of the booklet. We hope that you find this booklet to be useful and informative.
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