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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