topleft CSBA.org >  Services >  Governance Technology > 

Kings Canyon SD |  BP  7214  Facilities

Continuing Disclosure And Post Issuance Compliance Responsibilities For Debt Issues Policies   

arrow Previous bar Next arrow

In response to SEC Rule 15c2-12, Kings Canyon Unified has elected to adopt Board Policy 7214 (a) "Continuing Disclosure and Post Issuance Compliance Responsibilities for Debt Issues." These policies follow and provide procedures for annual disclosure and other reportable events prescribed by the SEC Rule, as well as procedures for compliance with tax rules and the opportunity for timely remediation when needed.

I. Policies

A. It is the policy of Kings Canyon to provide full and fair disclosure and comply with all post-issuance regulatory obligations in connection with the initial sale and distribution of its publicly marketed debt instruments and to provide appropriate ongoing secondary market information in compliance with the requirements of applicable federal and state securities laws, rules and regulations, including United States Securities and Exchange Commission ("SEC") Rule 15c 2-12 (the "Rule").

B. It is also the policy of the District to fully comply with all requirements of the Internal Revenue Code and accompanying regulations necessary to maintain the tax-exempt status of the interest paid on the District's tax-exempt debt.

C. This policy shall be implemented through the adoption set forth below which provide for assignment of responsibility for information compilation, communication, analysis, response and dissemination.

D. The Director of Fiscal Services is hereby charged with general authority and responsibility for developing, implementing and overseeing compliance with this policy and the administrative procedures, which will include coordination with the District's financial advisors, underwriters, and bond and disclosure counsels as appropriate.

II. Procedures for Continuing Disclosure

A. Provision of Annual Reports.

(1) For each debt issue subject to the Rule, the Board shall determine whether the District will act as its own "Dissemination Agent" for continuing disclosure purposes or will retain a third party to act in such capacity. At the time this policy was adopted, the District had retained its financial advisory firm to act as the District's Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the District shall be the Dissemination Agent.

(2) The District shall cause the Dissemination Agent to provide to the Municipal Securities Rulemaking Board ("MSRB"),or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule, an Annual Report which is consistent with the requirements of the applicable Disclosure Certificates or Agreements, not later than the date in each year that is nine months after the end of the District's prior fiscal year, which date, as of the date of this Policy, is March 31 (the "Annual Report Date"). The Annual Report may include by reference other information as provided in Section B hereof; provided, however, that the audited financial statements of the District may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the District's fiscal year changes, it shall, or it shall instruct the Dissemination Agent to, give notice of such change in a filing with the MSRB.

(3) If the District is unable to file, or cause the Dissemination Agent to file, an Annual Report with the MSRB by the date required in subsection (2) above, the District shall, in a timely manner, file or cause the Dissemination Agent to file with the MSRB through the Electronic Municipal Market Access ("EMMA") System, a "Notice of Failure to File Annual Report."

(4) The Dissemination Agent shall determine each year prior to the Annual Report Date the electronic filing requirements of the MSRB for the Annual Reports. If the Dissemination Agent is other than the District or an official of the District, then the Dissemination Agent shall file a report with the District certifying that the Annual Report has been filed with the MSRB pursuant to the District's applicable Disclosure Certificates or Agreements, stating the date it was so filed and confirming it was filed with the MSRB through the EMMA System.

B. Content of Annual Reports. Each Annual Report shall contain or include by reference the following:

(1) Audited financial statements of the District for the preceding fiscal year, prepared in conformity with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board and the American Institute of Certified Public Accountants and including all statements and information prescribed for inclusion therein by the Controller of the State of California. If the District's audited financial statements are not available by the time the Annual Report is required to be provided to the MSRB pursuant to Section A (2) hereof, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be provided to the MSRB in the same manner as the Annual Report when they become available.

(2) To the extent not included in the audited financial statements of the District, each Annual Report shall also include the additional information called for in the District's applicable Disclosure Certificates or Agreements.

(3) In addition to any of the information expressly required to be provided under paragraphs (1) and (2) of this Section above, the District shall provide such further information, if any, as may be necessary to make the specifically required statements, in light of the circumstances under which they are made, not misleading.

(4) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which have been submitted to the EMMA System or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available to the public on the MSRB website. The District shall clearly identify each such other document so included by reference.

C. Reporting of Listed Events.

(1) Pursuant to the provisions of this Section, the District shall give, or cause to be given by the Dissemination Agent, notice of the occurrence of any of the following events with respect to the applicable debt issue of the District not later than ten (10) business days after the occurrence of the event:

(a) Principal and interest payment delinquencies;

(b) Unscheduled draws on debt service reserves reflecting financial difficulties;

(c) Unscheduled draws on credit enhancements reflecting financial difficulties;

(d) Substitution of or failure to perform by any credit provider;

(e) Issuance by the Internal Revenue Service of an adverse tax opinion, a proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB);

(f) Tender offers;

(g) Defeasances;

(h) Rating changes; and

(i) Bankruptcy, insolvency, receivership or similar event of the District; or

(j) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the District, any of which reflect financial difficulties.

(2) For purposes of the events identified in subparagraph (i), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the District in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or other governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District.

(3) Pursuant to the provisions of this Section, the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the applicable debt issue, if material, not later than ten (10) business days after the occurrence of the event:

(a) Unless described in paragraph (e) of subsection (1) of this Section, other material notices or determinations by the Internal Revenue Service with respect to the tax status of the applicable debt or other material events affecting the tax status of the debt;

(b) Modifications to rights of Owners;

(c) Optional, unscheduled or contingent bond calls;

(d) Release, substitution or sale of property securing repayment of the debt issue;

(e) Non-payment related defaults;

(f) The consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms;

(g) Appointment of a successor or additional Paying Agent or the change of name of a Paying Agent; or

(h) Incurrence of a Financial Obligation of the District, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the District, any of which affect security holders.

(4) Whenever the District obtains knowledge of the occurrence of a Listed Event described in subsection (3) of this Section, the District shall determine if such event would be material under applicable Federal securities laws.

(5) Whenever the District obtains knowledge of the occurrence of a Listed Event described in subsection (1) of this Section, or determines that knowledge of a Listed Event described in subsection (3) of this Section would be material under applicable Federal securities laws, the District shall file, or shall cause the Dissemination Agent to file, within ten (10) business days of such occurrence, a notice of such occurrence with the MSRB. Notwithstanding the foregoing, notice of Listed Events described in paragraphs (g) of subsection (1) of this Section and (c) of subsection (3) of this Section need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to owners of affected debt issue pursuant to the District Resolution.

D. Termination of Reporting Obligations. The District's obligations under an applicable Disclosure Certificate terminate upon the legal defeasance, prior redemption or payment in full of all of the debt. If such termination occurs prior to the final maturity of the debt, the District shall give, or cause the Dissemination Agent to give, notice of such termination in a filing with the MSRB.

III. Procedure for Post Issuance Compliance

A. General. The District will take all appropriate action to assure that (i) no use of the proceeds of the any debt issue, and no other event or action, will cause the debt issue to violate federal income tax limitations with respect to the exclusion of interest on the debt issue from federal income taxation, and (ii) all uses of proceeds of the debt issue comply with State and local legal requirements regarding the valid incurrence of debt and permitted uses of proceeds of the debt issue.

Without limiting the generality of the foregoing, the District will take the following actions to account for and monitor (i) the expenditure and investment of debt issue proceeds, (ii) the use of the project financed with the proceeds of the debt issue, and (iii) any changes in the underlying structure of the debt issue financing.

B. Non-governmental Uses of the Debt Issue-Financed Facilities

(1) Monitor and document sales, leases or other use agreements with respect to the project with nongovernmental entities, not including uses by members of the general public within the meaning of 1.141-3(c) of the Federal Tax Regulations (the "Regulations"). Compute the percent of private business use or private payments or private security with respect to those nongovernmental uses.

(2) Monitor and document management contracts (see e.g., Rev. Proc. 97-13) with nongovernmental entities.

(3) Monitor and document other special legal entitlements with respect to the debt issue-financed property (e.g., licenses, use agreements, easements, etc.).

C. Allocation of Debt Issue Proceeds to Expenditures

(1) Allocate proceeds of debt issue to expenditures subject to 1.148-6(d) and 1.141-6(a) of the Federal Tax Regulations by 18 months after the later of the date the expenditure was made or the date the project was placed in service, but not later than the earlier of 5 years after the debt issue were issued or 60 days after the issue is retired. Document this allocation.

(2) Monitor and document reimbursement of expenditures paid from non-debt issue proceeds prior to the date of issue of the debt issue and verify compliance with 1.150-2 of the Regulations.

D. Arbitrage

(1) Hire a rebate calculation agent or perform rebate calculations internally.

(2) Rebate payments:

(a) The first installment is due 60 days after the end of 5th debt issue year.

(b) Succeeding installments are due 60 days after end of every 5th debt issue year thereafter.

(c) The final installment is due 60 days after retirement of the last debt issue of the issue.

(3) Monitor expenditures of debt issue proceeds for qualification for rebate expenditure exceptions: 6-month exception, 18-month exception or 24-month exception.

(4) Monitor expenditures of debt issue proceeds against date of issuance expectations regarding 3-year or 5-year temporary periods and 5-year hedge bond limitations.

E. Records Retention

(1) Retain records of all accounting and monitoring the District carries out with respect to the debt issue for at least 3 years after the debt issue mature or are redeemed (whichever is earlier); however, if the debt issue are redeemed and refunded, the District will retain its records of accounting and monitoring at least 3 years after the earlier of the maturity or redemption of the bonds which refunded the debt issue.

(2) Maintain special records required by the safe harbor for investment contracts or defeasance escrows under 1. 148-5 of the Regulations.

(3) Maintain a record of the identification on the District's books and records of any "qualified hedge" contract under 1.148-4(h)(2)(viii) and 1.148-11A(i)(3) of the Regulations.

(4) Maintain a record of any election not to take depreciation on property required to be owned by a governmental unit which is leased to a nongovernmental entity as required by 1.103(n)-21 Q/A7 of the Regulations.

(5) Maintain records of accounting for rebate for a period of at least 3 years after the earlier of the maturity or redemption of the debt issue.

F. Reissuance

A significant modification of the debt issue documents may result in the debt issue being deemed re-funded or "reissued". Such an event will require, among other things, the filing of new information returns with the federal government and the execution of a new arbitrage certificate. Qualified bond counsel shall be consulted in the event of modification of the debt issue documents.

POST-ISSUANCE TAX COMPLIANCE PROCEDURES FOR TAX-EXEMPT BONDS

I. In General

These post-issuance compliance procedures ("Procedures") of the Kings Canyon Joint Unified School District (the "District") are designed to provide for the effective management of the District's post bond issuance compliance program for tax-exempt and other tax-benefited bonds in a manner consistent with state and federal laws applicable to such obligations.

II. Post-Issuance Tax Compliance

The [Chief Financial Officer] of the District shall be the primary compliance officer ("Bond Compliance Officer") responsible for each issuance by the District of tax-exempt bonds, notes, financing leases, or other obligations (collectively referred to as "Bonds"). All information related to each bond issue and the assets financed by such issue shall be maintained by or on behalf of the Bond Compliance Officer. The actions taken under these Procedures shall be taken by or on behalf of the Bond Compliance Officer, or other officers or employees of the District, at the direction of the Bond Compliance Officer.

A. Tax Certificate; IRS Form 8038/8038-G/8038-GC; and Continuing Education

1. Tax Certificate. The Bond Compliance Officer shall review the Tax Certificate prepared by the District's bond counsel prior to closing each bond issuance and confirm that the factual statements regarding the District are accurate and complete and the expectations regarding the project and the use of proceeds are reasonable and in accord with the District's intent as of the closing date for the bond issuance. Immediately upon issuing any Bonds, the Bond Compliance Officer, in conjunction with the District's bond counsel, tax counsel, or other qualified counsel (collectively, the "District's counsel" or "counsel") shall prepare a post-issuance compliance plan ("Plan") specific to the Bonds, based on the requirements of the related Tax Certificate, these Procedures, and any additional notes taken by the Bond Compliance Officer in connection with its discussions with counsel (including any supplemental materials that bond counsel may give the District relating to ongoing compliance). The Plan will define the roles and responsibilities relating to the ongoing compliance activities for the Bonds and will identify specific compliance requirements.

2. IRS Form 8038/8038-G/8038-GC. The Bond Compliance Officer shall confirm that it has timely filed, or has caused bond counsel to timely file, the IRS Information Return (Form 8038, 8038-G or 8038-GC, as applicable) for each issue of Bonds. The IRS Informational Return Form 8038 is due to be filed for each issue of Bonds not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Bonds are issued.

3. Continuing Education - The Bond Compliance Officer (or designee) shall actively seek out advice from the District's counsel on any matters that appear to raise ongoing compliance concerns under a Plan. The Bond Compliance Officer (or designee) may attend or participate in seminars, webinars or teleconferences that address compliance issues and developments relating to issuance of, or post-issuance compliance for, Bonds.

B. Tax-Exempt Bonds Compliance Monitoring

1. Restrictions Against Private Use - The Bond Compliance Officer will monitor the expenditure of the proceeds of Bonds and the use of assets financed or refinanced with Bonds to ensure compliance with Section 141 of the Internal Revenue Code (the "Code"). This section generally establishes limitations on the use of Bond-financed assets by non-state or local governmental entities, such as individuals using Bond-financed assets on a basis other than as a member of the general public, corporations and the federal government and its agencies and instrumentalities.

a. Use of Bond Proceeds. The Bond Compliance Officer will monitor and maintain records with respect to expenditures to ensure that Bond proceeds are being used on capital expenditures for governmental purposes in accordance with the bond documents, and record the allocation of all Bond proceeds.

b. Use of the Bond-Financed Facility or Equipment

i. Equipment assets financed with Bonds will be listed in a schedule for each bond issue, which schedule may be included in the Tax Certificate. Equipment assets generally are not to be disposed of prior to the earlier of: (a) the date the Bonds and all subsequent refundings of such bonds are fully paid; or (b) the end of the useful life of such equipment. The Bond Compliance Officer will maintain the list of all Bond-financed equipment for each issue of Bonds, together with the equipment's expected useful life.

ii. In order to ensure that assets constructed or acquired using Bond proceeds are not leased, sold or disposed of prior to the end of the term of the bonds and of all subsequent refundings of such bonds, assets shall be flagged in the District's records to indicate that they are allocated a share of the proceeds of a Bond issue (with reference to the particular issue of Bonds and allocable amounts) and monitored by the Bond Compliance Officer.

iii. If there is any proposal to change the use of a bond-financed facilities from a governmental purpose to a use in which a private entity may have the use or benefit of said asset that is different from the rest of the general public - including a contract for use of bond-financed facilities, a lease, license, sale or other disposition/abandonment of the bond-financed facilities - the Bond Compliance Officer will consult with counsel prior to the occurrence of the proposed change in use.

2. Qualification for Initial Temporary Periods and Compliance with Investment Restrictions

a. Expectations as to Expenditure of "New Money" Bond Proceeds

i. In order to qualify under the arbitrage rules for an initial temporary period of 3 years for "new money" issues during which bond proceeds can be invested without regard to yield (but potentially subject to rebate), the District must reasonably expect to spend at least 85% of "spendable proceeds" by the end of the temporary period. In general under Code Section 149, in order to avoid classification of an issue of bonds as "hedge bonds," the District must both: (1) reasonably expect to spend 85% of the "spendable proceeds" of the bond issue within the 3 year period beginning on the date the bonds are issued (unless the project cannot be completed within 3 years, in which case the District's reasonable expectations may be extended to 5 years upon provision of supporting certifications of the qualified project architect or other qualified expert); and (2) invest not more than 50% of the proceeds of the issue in investments having a substantially guaranteed yield for 4 years or more. These expectations shall be documented for the District's outstanding Bonds in the related tax certificate executed in connection with each issue of Bonds.

ii. If, for any reason, the District's expectations concerning the period over which the Bond proceeds are to be expended change from what was documented in the applicable tax certificate, the Bond Compliance Officer will consult with bond counsel.

b. Bond Proceeds Expenditure Schedule Compliance Monitoring - While there are unspent proceeds of bonds, the Bond Compliance Officer will compare and analyze the bond proceeds expenditure schedule to the actual investment earnings and expenditures incurred on each project, on an annual or more frequent basis. The purpose of this analysis is to determine any variances from the expected expenditure schedule and to document the reasons for these variances.

3. Arbitrage Rebate Compliance

a. Bonds may lose their tax-favored status, retroactive to the date of issuance, if they do not comply with the arbitrage restrictions of Section 148 of the Code. Two general sets of requirements under the Code must be applied in order to determine whether governmental bonds are arbitrage bonds: (1) the yield restriction requirements of Section 148(a); and (2) the rebate requirements of Section 148(f).

b. Yield Restriction Requirements. The yield restriction requirements provide, in general terms, that gross proceeds of a bond issue may not be invested in investments earning a yield higher than the yield of the bond issue, i.e., the District cannot earn interest on unspent bond proceeds at rates higher than the rates of interest the District is paying on the bonds, except for investments: (i) during one of the temporary periods permitted under the regulations; (ii) in a reasonably required reserve or replacement fund; or (iii) in an amount not in excess of the lesser of 5% of the sale proceeds of the Bonds or $100,000 (the "minor portion"). Under limited circumstances, the yield on investments subject to yield restriction can be reduced through payments to the IRS known as "yield reduction payments." The tax certificate shall identify a particular issue of Bonds known, as of the date of issuance, to be subject to yield restriction.

c. Rebate Requirements

i. If, consistent with the yield restriction requirements, amounts treated as Bond proceeds are permitted to be invested at a yield in excess of the yield on the Bonds (pursuant to one of the exceptions to yield restriction referred to above), rebate payments may be required to be made to the U.S. Treasury. Under the applicable regulations, the aggregate rebate amount is the excess of the future value of all the receipts from bond funded investments over the future value of all the payments to acquire such investments. The future value is computed as of the computation date using the bond yield as the interest factor. At least 90% of the rebate amount calculated for the first computation period must be paid no later than 60 days after the end of the first computation period. The amount of rebate payments required for subsequent computation periods (other than the final period) is that amount which, when added to the future value of prior rebate payments, equals at least 90% of the rebate amount. For the final computation period, 100% of the calculated amount must be paid. Rebate exceptions and expectations are documented for each Bond issue in the tax certificate executed at the time of such bond issue.

ii. While there are unspent proceeds of bonds, the District will determine whether to engage an experienced independent rebate analyst to annually calculate any rebate that may result for that year and annually provide a rebate report to the Bond Compliance Officer. Bond counsel can assist with referrals to qualified rebate analysts.

d. Timing of Rebate Payments - The Bond Compliance Officer will work with the rebate analyst to ensure the proper calculation and payment of any rebate payment and/or yield-reduction payment at the required time:

i. First installment due no later than 60 days after the end of the fifth anniversary of each Bond issuance date;

ii. Succeeding installments at least every five years;

iii. Final installment no later than 60 days after retirement of last Bond in the issue.

4. Refunding Requirements

a. Refunded Projects - The Bond Compliance Officer will maintain records of all Bond financed assets for each bond issue, including assets originally financed with a refunded bond issue.

b. Yield Restriction - The Bond Compliance Officer will work with its financial advisor and bond counsel to maintain records of allocation of bond proceeds for current and advance refunding of prior Bond issues to ensure that such bond proceeds are expended as set forth in the applicable tax certificate executed at the time the refunding Bonds are issued. Any yield restricted escrows will be monitored for ongoing compliance.

C. Record Retention

1. Section 6001 of the Code provides the general rule for the proper retention of records for federal tax purposes. The IRS regularly advises taxpayers to maintain sufficient records to support their tax deductions, credits and exclusions. In the case of Bonds, the primary taxpayers are the bondholders. In order to ensure the continued exclusion of interest to such bondholders, it is important that the District retain sufficient records to support such exclusion.

2. In General

a. All records associated with any Bonds shall be stored electronically or in hard copy form at the District's offices or at another location conveniently accessible to the District.

b. The Bond Compliance Officer (or designee) will ensure that the District provides for appropriate storage of these records.

c. If storing documents electronically, the District shall conform with Rev. Proc. 97-22 (as the same may be amended, supplemented or superseded), which provides guidance on maintaining books and records by using an electronic storage system. The Bond Compliance Officer (or designee) shall request a copy of this Revenue Procedure from bond counsel if needed.

3. Bonds - The District shall maintain the records of the Bonds as defined in this section for the longer of the life of the Bonds plus 6 years or the life of Bonds which refunded the Bonds plus 6 years. The records shall include at least the following documents:

a. Pre-Issuance Documents:

i. SLGS/Open Market Securities. When applicable, the Bond Compliance Officer shall retain all documentation regarding the procurement of the State and Local Government Series (SLGS) subscription or other open market securities subscription for any advance refunding of Bonds.

ii. Project Draw/Expenditure Schedule. The Bond Compliance Officer shall retain all documentation and calculations relating to the draw schedule used to meet the "reasonable expectations" test and use of proceeds tests (including copies of contracts with general and sub-contractors or summaries thereof).

iii. Issue Sizing. The Bond Compliance Officer shall maintain a copy of all financial advisor's or underwriter's structuring information.

iv. Bond Insurance. The Bond Compliance Officer shall maintain a copy of insurance quotes and calculations supporting the cost benefit of bond insurance, if any.

v. Costs of Issuance documentation. The Bond Compliance Officer shall retain all invoices, payments and certificates related to costs of issuance of the Bonds.

b. Issuance Documents - The Bond Compliance Officer shall retain the bound Bond transcript delivered from bond counsel.

c. Post-Issuance Documents:

i. Records of Investments for the Bonds shall be retained by the Bond Compliance Officer.

ii. Investment Activity Statements shall be retained by the Bond Compliance Officer.

iii. The Bond Compliance Officer shall maintain or shall cause to be maintained all invoices and purchase orders relating to equipment purchases and constructed or acquired projects using Bond proceeds, either electronically or in hard copy.

iv. Records of Compliance:

(A) Qualification for Initial Temporary Periods and Compliance with Restrictions Documentation - The Bond Compliance Officer shall prepare the annual analysis described in Section II(B)(2) above and maintains these records.

(B) Arbitrage Rebate Reports may be prepared by the Bond Compliance Officer or a third party as described in section II (B)(3) of this document and retained by the Bond Compliance Officer.

(C) Returns and Payments to the IRS shall be prepared at the direction of the Bond Compliance Officer and filed as described in Section II(B)(3) of this document.

(D) A list of contracts under which any bond proceeds are spent (consulting engineering, acquisition, construction, etc.).

d. General

i. Audited Financial Statements. The Bond Compliance Officer will maintain copies of the District's annual audited Financial Statements.

ii. Reports of any prior IRS Examinations. The Bond Compliance Officer will maintain copies of any written materials pertaining to any IRS examination of any issue of Bonds.

III. Voluntarily Correcting Failures to Comply with Post-Issuance Compliance Activities

If, in the effort to exercise due diligence in complying with applicable federal tax laws, a potential compliance issue is discovered, the District may address the compliance issue through the applicable method listed below. The District shall work with its bond counsel (and consult with its financial advisor, and underwriter, as appropriate) to determine the appropriate way to proceed:

1. To take remedial actions as described in Section 141 of the Internal Revenue Code;

2. To utilize the Voluntary Closing Agreement Program (VCAP) - Section 7.2.3 of the Internal Revenue Manual establishes the voluntary closing agreement program for tax-exempt bonds (TEB VCAP), whereby issuers of tax-exempt bonds can resolve violations of the Internal Revenue Code through closing agreements with the Internal Revenue Service; and/or

3. To take such additional or different actions as may be required to comply with the Internal Revenue Code and other applicable law, regulations or IRS rulings.

IV. Post Issuance Tax Compliance Procedures Review

The Bond Compliance Officer shall review these procedures as needed, and implement revisions or updates as deemed appropriate, in consultation with bond counsel.

Policy KINGS CANYON UNIFIED SCHOOL DISTRICT

adopted: April 14, 2020 Reedley, California