DATE: October 30, 2014
TO: Board of Mayor and Aldermen
FROM: Eric Stuckey, City Administrator
Russ Truell, Assistant City Administrator
SUBJECT:
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Report on SEC Continuing Disclosure Cooperation Initiative
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Purpose
To discuss the City's responsibility as a municipal bond issuer for continuing financial disclosure
Background
According to Rule 15c2-12, underwriters of municipal securities are to ensure that the governments issuing the bonds enter into an agreement to provide financial condition disclosures on an ongoing basis. Primarily, this disclosure consists of the City's audited annual financial report. Other notices would need to be provided for certain delinquencies, defaults, financial difficulties, etc.
On March 10, 2014, the SEC (Securities and Exchange Commission) introduced the Municipalities Continuing Disclosure Cooperation (MCDC) Initiative. Its intent is to allow underwriters and issuers the opportunity to self-report material misstatements in regards to this continuing disclosure requirement. The deadline for underwriters was September 10, 2014. For issuers, such as the City, the deadline is December 1, 2014.
Although the SEC has not defined what it considers material, the National Association of Bond Lawyers released a report on August 5, 2014 to help provide some guidance to underwriters and issuers. The City has received letters from Raymond James and Baird, both of whom acted as underwriters of recent bond issues, stating that they found no material misstatements in the City's continuing financial disclosures.
Financial Impact
There is no financial impact to the City that staff can identify.
Recommendation
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Staff believes that the City has materially met its ongoing reporting requirements. When the City issued bonds in December 2013, the official statement noted the annual report for fiscal year 2010 was not posted to the reporting website within six months of fiscal year ...
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