SR - RES-10828 - DISCLOSURE PROCEDURES PUBLIC DEBT ISSUANCES & RELATED CONTINUING DISCLOSURE OBLIGATIONSAGENDA ITEM
November 25, 2014
ReviewedNe ' led By:
City Manager
TO: Honorable Mayor and Finance Dire or
Members of the City Council To Be Present Will Kolbow
THRU• John W. Sibley X Cons Calendar _ City Mgr Rpts
• City Manager Council Reports _ Legal Affairs
Boards /Cmtes _ Public Hrgs
FROM: William M. Kolbow(/y Admin Reports PlanXnviron
Finance Director
1. SUBJECT
Resolution No. 10828 — A Resolution of the City Council of the City of Orange Approving
Disclosure Procedures for Public Debt Issuances and Related Continuing Disclosure Obligations.
2. SUMMARY
The Securities and Exchange Commission (the "SEC ") requires issuers of bonds to annually
disclose certain information such as financial reports and operating data related to the issuer, as
well as information on significant events that have occurred. The attached resolution would
adopt procedures and policies (the "Procedures ") with respect to compliance with continuing
disclosure obligations relating to the City's outstanding bonds. The Procedures, which govern
the City and its related entities (including the Successor Agency of the Orange Redevelopment
Agency (the "Successor Agency "), the Orange Housing Authority and other entities created by
the City Council or for which the members of the City Council serve as the governing board of
the legislative body, including joint powers agencies and special districts), provide guidance to
assist the City in complying with applicable federal and state securities laws, and also promote
best practices regarding continuing disclosure.
13. RECOMMENDED ACTIONS
Adopt Resolution No. 10828.
14. FISCAL IMPACT I
No Fiscal Impact.
5. STRATEGIC PLAN GOAL(S
2. Be a fiscally health community.
d. Effectively manage and develop City assets.
ITEM -� 31 1 11/25/2014
6. GENERAL PLAN IMPLEMENTATION
Not applicable.
7. DISCUSSION and BACKGROUND
Rule 15c2 -12 (the "Rule ") of the Securities Exchange Act of 1934 regulates the quality and
timeliness of disclosure in the municipal securities market. The Rule essentially requires the
issuer of bonds (including the City and its related entities) to enter into a written contract, usually
referred to as a continuing disclosure agreement or undertaking, to provide notices of certain
significant events and annual financial information and operating data relating to the issuer. This
information would be important for market participants, including investors and regulators, to
understand the health and risk profile of the outstanding bonds.
The SEC has recently increased enforcement activity with respect to the municipal securities
market. The City currently has bonds outstanding, and may incur additional debt or refinance
existing debt in the future. At the time of the debt issuance, the City entered into required
continuing disclosure agreements with respect to its debt in order to ensure compliance with the
Rule. In connection with the Series 2014A Tax Allocation Refunding Bonds, approved by
Council on October 14, 2014, the Successor Agency covenanted to adopt certain Continuing
Disclosure Procedures. The Procedures will assist the City in complying with the Rule and other
applicable federal and state securities laws, and would promote best practices moving forward.
Furthermore, in recent enforcement actions brought by the SEC against other jurisdictions for
failure to comply with the Rule, the SEC regularly looks at whether an issuer of municipal bonds
has adopted policies and procedures in determining overall culpability. As such, adopting
Procedures would not only assist in the City in complying with the Rule and other applicable
laws, but further, assuming the City complies with the Procedures, the Procedures may insulate
the City from exposure moving forward.
The Procedures contain certain reminders and a check list to assist the City in monitoring
compliance. As part of the procedures, a "Disclosure Practices Working Group" would be set up
by the City Manager and appointments to the working group would include the Finance Director,
City Attorney, the City's Disclosure Consultant, and any other individuals that the City Manager
and /or Finance Director deem appropriate.
8. ATTACHMENTS
Resolution No. 10828
ITEM 2 11/25/2014
RESOLUTION NO. 10828
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF ORANGE APPROVING DISCLOSURE
PROCEDURES FOR PUBLIC DEBT ISSUANCES
AND RELATED CONTINUING DISCLOSURE
OBLIGATIONS
WHEREAS, from time to time the City of Orange (the "City "), the Successor Agency to
the Orange Redevelopment Agency, the Orange Housing Authority and other entities created by
the City Council or for which the members of the City Council serve as the governing board or
the legislative body, including joint powers agencies and special districts (the City, the Successor
Agency, the Housing Authority and any such other entities being collectively referred to below
as the "Public Agencies "), incur indebtedness (including but not limited to bonds, notes and
certificates of participation) and, in connection therewith, prepare disclosure documents (a)
describing the indebtedness for use in the offering and sale of the indebtedness or interests
therein generally known as "official statements" or "placement memoranda" (referred to in this
Resolution as "Initial Disclosure Documents "); and (b) as required by continuing disclosure
obligations entered into by the Public Agencies in connection with such indebtedness (referred to
in this Resolution as "Continuing Disclosure Documents ") which typically are required to be
filed with the Municipal Securities Rule Making Board's Electronic Municipal Market Access
System (generally known as "EMMA "), and
WHEREAS, to (a) ensure that Initial Disclosure Documents do not contain any material
misstatements or omit to state information material to prospective investors in connection with
their decision to purchase obligations of the Public Agencies, (b) ensure that Continuing
Disclosure Documents filed with EMMA by the Public Agencies are timely filed, are accurate
and are otherwise in accordance with continuing disclosure obligations of the respective Public
Agencies, (c) ensure that material event notices and any other filings with EMMA in connection
with debt obligations of the Public Agencies are accurate and comply with all applicable federal
and state securities laws, and (d) promote best practices regarding the preparation of Initial
Disclosure Documents and Continuing Disclosure Documents, it is appropriate for the City
Council to adopt disclosure procedures for public debt issuances.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ORANGE
HEREBY FINDS, DETERMINES, RESOLVES AND ORDERS AS FOLLOWS:
Section 1. Disclosure Procedures To (a) ensure that Initial Disclosure Documents do not
contain any material misstatements or omit to state information material to prospective investors
in connection with their decision to purchase obligations of the Public Agencies, (b) ensure that
Continuing Disclosure Documents filed with EMMA by the Public Agencies are timely filed, are
accurate and are otherwise in accordance with continuing disclosure obligations of the Public
Agencies, (c) ensure that material event notices and any other filings with EMMA in connection
with debt obligations of the Public Agencies are accurate and comply with all applicable federal
and state securities laws, and (d) promote best practices regarding the preparation of Initial