Debt Management Program

Transcription

1 Debt Management Prgram Cntents General Prvisins... 2 Debt Administratin by the Chief Financial Officer... 3 Debt Affrdability Crdinatin... 4 Debt Affrdability and Capacity Measures... 5 Financing Alternatives... 5 Shrt-Term Debt and Interim Financing - Maturity f ne (1) year r less... 5 Lines and Letters f Credit... 5 Lng Term Debt (Bnds) Maturity ver ne (1) year... 6 Issuance f Debt Obligatins... 6 Cnditins f Sale... 6 Methds f Sale...7 Cmpetitive Sale...7 Negtiated Sale... 8 Allcatin and Designatin f Bnds... 9 Private Placement...10 Pricing Prcedures...10 Pst-Sale Evaluatin...10 Selectin f Debt Structures...10 Variable Rate Bnds...10 Liquidity and Credit Enhancement Facilities Prir Redemptins Optinal Redemptins Reserve Requirements & Bnd Insurance Refundings Current Refundings Advanced Refundings Investment f Bnd Prceeds Appintment f Prfessinals Term f Appintments A. Selectin Prcess Blackut Perids Impsed Selectin Criteria Cnflicts f Interest Regulatry Actin Investr and Rating Agency Cmmunicatin Disclsure Official Statement Filing - Primary Disclsure Cmprehensive Annual Financial Reprt Cntinuing Disclsure Undertaking Requirements Secndary Disclsure Securities Disclsure Plicies and Practices f the District Disclsure Prcedure Disclsure Actin Published Disclsure Statements Rating Agency, Investr and Media Cmmunicatins

2 General Prvisins This prcedural directive utlines the parameters fr issuing debt and managing the utstanding debt prtfli f the Albuquerque Public Schls. Pursuant t Bard f Educatin plicy, this prcedural directive als prvides guidance t decisin makers regarding the purpses fr which debt may be issued, types and amunts f permissible debt, timing and methd f sale that may be used, and structural features that may be incrprated. Adherence t this debt management prgram helps t ensure that the Albuquerque Public Schls maintains a sund debt psitin and that credit quality is prtected. The District s general debt plicy management guidelines prvides fr the fllwing: Full and timely payment f principal and interest n all utstanding debt; Debt shall be incurred nly fr thse purpses as prvided in the New Mexic State Cnstitutin and state statute and regulatin; Capital imprvements shuld be develped, apprved and financed in accrdance with Bard and vter apprved reslutins and the Capital Master Plan; The superintendent, r his/her designee, shall evaluate the impact f debt amunts and debt service requirements f any new prpsed debt within the verall cntext f utstanding debt; Principal and interest retirement schedules shall be structured t: (1) meet available cash flw available t service debt, (2) achieve a lw brrwing cst fr the district, (3) accmmdate the debt service payments f existing debt and (4) respnd t perceptins f market demand. Level debt service and shrter maturities shall always be encuraged t demnstrate t rating agencies that debt is being managed prudently and retired at a sufficiently rapid pace; Debt incurred shall generally be limited t bligatins with serial and term maturities but may be sld in ther structures if circumstances warrant; The average life f the debt incurred shuld be n greater than the prjected average life f the assets being financed; The payment f debt fr General Obligatin Bnds shall be secured by the full faith, credit and taxing pwer f the Albuquerque Public Schls. The district shall nt pledge any district revenues t guarantee indebtedness f thers; Albuquerque Public Schls may incur debt t purchase prperty leased t lcally-authrized charter schls. Such debt shall be subject t these guidelines. The superintendent, r his/her designee, shall select a methd f sale that achieves the financial gals f the district. Such sales can be cmpetitive, negtiated r private placement, depending upn the prject and market cnditins. The recmmendatin by the district s financial advisr will be cnsidered in the decisin as t the mst apprpriate sale methd. The recmmended methd f sale fr each financing as apprved by the chief financial fficer shall be subject t superintendent and Bard f Educatin apprval. The district shall make every attempt t earn and maintain the highest investment grade rating achievable; 2

3 The superintendent, r his/her designee(s), shall maintain gd cmmunicatins with bnd rating agencies t ensure cmplete and clear understanding f the credit wrthiness f the district; Finance team members and underwriters shuld be selected in accrdance with the Purchasing prcedural directive and the Debt Management Prgram prcedural directive develped under the directin f the chief financial fficer. The selectin shuld maximize the quality f services received while minimizing the cst t the district. Any additins t the finance team members shall be subject t bard apprval. Selected underwriters and financial advisrs shall adhere t the Municipal Securities Rulemaking Bard ( MSRB ) and the Securities and Exchange Cmmissin ( SEC ) rules and regulatins; Every financial reprt, bnd fficial statement and Cmprehensive Financial Annual Reprt ( CAFR ) shall fllw a plicy f full, cmplete and accurate disclsure f financial cnditins and perating results. All reprts shall cnfrm t guidelines issued by the Gvernment Finance Officers Assciatin ( GFOA ), Securities and Exchange Cmmissin ( SEC ) and the Internal Revenue Service (IRS) t meet the disclsure needs f rating agencies, underwriters, investrs and taxpayers. Federal incme tax laws generally restrict the ability t earn arbitrage in cnnectin with tax-exempt bnds. Every attempt shall be made t eliminate r minimize negative arbitrage. Debt Administratin by the Chief Financial Officer The chief financial fficer shall be the superintendent s designee t manage district debt. The chief financial fficer shall develp and maintain a debt management prgram that shall be subject t the apprval f the superintendent and reviewed by the Bard f Educatin; and t review and recmmend t the superintendent bth the finance teams and structuring plans fr all capital financings prir t the intrductin f such discussin with the Bard f Educatin. The chief financial fficer may emply the assistance f the district s retained financial advisr and legal cunsel in the develpment and nging administratin f its debt management respnsibilities. Debt management administratin respnsibilities include, but are nt limited t: Develp and maintain cmprehensive debt management guidelines in accrdance with this prcedural directive. Annually assess the district s ability t issue and repay utilizing financial benchmarks specified within this prcedural directive. Review and evaluate results f debt financing peratins including, but nt limited t: Issuance f lng-term and shrt-term debt bligatins, Selectin f bnd type, structure, methds f sale and marketing f bnds, and Investr and rating agency cmmunicatins. Review expenditures f bnd prceeds and the status f varius prjects being financed, including the Capital Master Plan fr timeliness f spent bnd 3

4 prceeds. Review and evaluate services prvided by bnd cunsel, disclsure cunsel, tax cunsel, financial advisr, underwriters and ther service prviders in bnd transactin fr effectiveness and quality f service. Review and revise annually, as apprved by the superintendent, the Debt Management Prgram prcedural directive based upn the superintendent s review f peratins; Develp and maintain Pst Issuance Cmpliance Guidelines that frmalize pst issuance cmpliance cntrls and prcedures related t the district s financial bligatins. Review and revise annually; as apprved by the superintendent, the Pst Issuance Cmpliance Guidelines based upn the chief financial fficer s review f peratins and legal requirements; Prepare an annual reprt t Bard f Educatin n the fllwing: Results f previus year s financings; Rating agency reprts and rating status; Bnd capacity f the district and relevant cmparable financial ratis; All bnd financings in prgress r anticipated fr the subsequent fiscal year, and Any changes t the Debt Management Prgram Prcedural Directive. Develp and maintain the selectin criteria fr underwriters, prepare and distribute underwriting Request fr Prpsals ( RFP ) and recmmend t the superintendent and Bard f Educatin the underwriting team fr all district credits, Develp and maintain the selectin criteria fr financial advisr and ther finance team members, act as the Ad-Hc Cmmittee n all RFPs and recmmend t the superintendent and Bard f Educatin the cnsultant-based finance team fr all district credits, pursuant t the district s purchasing apprval prcess. Debt Affrdability Crdinatin As an imprtant step within the annual develpment f the budget, the CFO shall annually assess the district s ability t issue and repay its debt. At a minimum, the chief financial fficer shall review and evaluate: Prpsed financing plans in cnjunctin with the lng range financial plan; The Capital Master Plan; Current financial psitin and financial plicy t assess the district s ability t issue and repay its debt. The chief financial fficer shall recmmend hw much new debt the district may authrize 4

5 Debt Affrdability and Capacity Measures The New Mexic Cnstitutin limits the pwers f a district t incur general bligatin debt extending beynd the fiscal year. The district can incur such debt fr the purpse f erecting, remdeling, making additins t and furnishing schl buildings r purchasing r imprving schl grunds r any cmbinatin f these purpses but nly after the prpsitin t create any such debt has been submitted t a vte f the qualified electrs f the district, and a majrity f thse vting n the questin vte in favr f creating the debt. The ttal indebtedness f the district may nt exceed six percent (6%) f the assessed valuatin f the taxable prperty within the district as shwn by the last preceding general assessment. The district als may create a debt by entering int a lease-purchase arrangement t acquire educatin technlgy equipment withut submitting the prpsitin t a vte f the qualified electrs f the district, but any such debt is subject t the six percent (6%) debt limitatin. The issuance f refunding bnds des nt have t be submitted t a vte f the qualified electrs f the district. Financing Alternatives The district shall assess all financial alternatives fr funding capital imprvements prir t issuing debt. Pay-as-yu-g financing shall be cnsidered befre issuing any debt. Pay-as-yu g financing may include: vter apprved mill levies; intergvernmental grants frm federal, state and ther surces; current revenues and fund balances; private sectr cntributins; public/private partnerships; r leasing. Once the district has determined that pay-as-yu-g and intergvernmental r private sectr grants are nt a feasible financing ptin, the district may use shrt-term r lngterm debt t finance capital prjects. Shrt-Term Debt and Interim Financing - Maturity f ne (1) year r less Shrt-term bligatins may be issued t finance prjects r prtins f prjects fr which the district ultimately intends t issue lng term debt (r where cash is available in a debt service fund and can be spnged t retire bnds immediately thereafter); i.e., it shall be used t prvide interim financing which shall eventually be refunded with the prceeds f lng term bligatins. Shrt-term bligatins may be backed with a legally available tax pledge. Lines and Letters f Credit Where their use is judged by the chief financial fficer and superintendent t be prudent and advantageus t the district, the district has the pwer t enter int agreements with cmmercial banks r ther financial entities fr purpses f acquiring lines r letters f 5

6 credit that shall prvide the district with access t credit under terms and cnditins as specified in such agreements. Any agreements with financial institutins fr the acquisitin f lines r letters f credit shall be apprved by the Bard f Educatin. Lines and letters f credit entered int by the district shall be in supprt f prjects cntained in the apprved Capital Master Plan r similar plans implemented by the district. Lng Term Debt (Bnds) Maturity ver ne (1) year Lng-term general bligatin bnds shall be issued t finance significant capital imprvements fr purpses set frth by vters in bnd electins and the Capital Master Plan r similar plans implemented by the district. Lng-term debt may be incurred fr nly thse purpses as prvided by state statute and regulatin. Issuance f Debt Obligatins All district bnds shall be issued in accrdance with the fllwing prcedures, which have been recmmended by the chief financial fficer and apprved by the superintendent: Cnditins f Sale Unless therwise justified, the issuance and sale f all district bnds, ntes, lans and ther evidences f indebtedness shall be subject t the fllwing cnditins: Principal and interest n all utstanding debt shall be paid in a full and timely manner; Debt shall be incurred nly fr thse purpses as prvided by the New Mexic State Cnstitutin and state statute and regulatin; Capital imprvements shuld be develped, apprved and financed in accrdance with bard and vter apprved reslutins and the Capital Master Plan; The payment f debt fr General Obligatin Bnds shall be secured by the full faith, credit and taxing pwer f the Albuquerque Public Schls. The district shall nt pledge any district revenues t guarantee indebtedness f thers. Furthermre, the district has n mral bligatin t repay bndhlders f cnduit financings issues under its authrity; Principal and interest retirement schedules shall be structured t: (1) meet available cash flw available t service debt, (2) achieve a lw brrwing cst fr the district, (3) accmmdate the debt service payments f existing debt and (4) achieve level tax rate. Level debt and shrter maturities shall always be encuraged t demnstrate t rating agencies that debt is being managed prudently and retired at a sufficiently rapid pace; Debt incurred shall generally be limited t bligatins with serial and term maturities but may be sld in the frm f ther structures if circumstances warrant; The average life f the debt incurred shuld be n greater than the prjected average life f the assets being financed. 6

7 Methds f Sale Debt bligatins f the district may be sld by cmpetitive, negtiated sale r private placement methds unless therwise limited by state law. The selected methd f sale shall be the ptin which is expected t result in the lwest cst and mst favrable terms given the financial structure used, market cnditins, and prir experience. Cmpetitive Sale New mney issuances by the district shall be sld thrugh a cmpetitive bid prcess r as therwise permitted under state law as recmmended by the chief financial fficer and apprved by the superintendent. Bid Verificatin Interest cst evaluatins amng prpsers shall be cmputed based n True Interest Cst (TIC). TIC is defined as the rate at which, as f the date f the bnds, discunts semi-annually all future payments f principal and interest n the bnds t the price bid, nt including interest accrued t the date f delivery f the bnds. Award f Cmpetitive Bids District bnds priced by cmpetitive bid shall be sld t the bidder prpsing the lwest true interest cst - TIC - t the district, prvided the bid cnfrms t the fficial ntice f sale. Methd f Accepting Bids The district shall accept bids in persn r by electrnic means with a preference fr electrnic bids. The district shall nt accept bids by telephne. The district reserves the right t reject bids that are late r include calculatin errrs. Gd Faith depsits All cmpetitive bids shall prvide fr a gd faith depsit f nt less than tw percent f the principal amunt f the bnds in the frm f a wire transfer in cash, financial surety bnd, cashier's check, treasurer's check r certified check drawn n, a slvent cmmercial bank r trust cmpany in the United States. Such gd faith depsit must be received by the district prir t Bard f Educatin actin t apprve the sale t the best bidder in accrdance with state law. Permissible Discunts and Premiums Term Bnds Minimum aggregate bid may nt be less than the par value f the bnds being sld. The district may permit discunt bids and premium bids. The fficial Ntice f Sale shall be designed t maximize the flexibility f the prspective purchasers and may include term bnds with mandatry 7

8 sinking fund installments, and ther features that may enhance the attractiveness f the ffering cnsistent with the receipt f the lwest true interest cst pssible. Bidders Financial advisrs shall nt be permitted t bid as a syndicate manager n cmpetitive sales fr bnds fr which they serve as financial advisrs. Negtiated Sale Cnditins f Sale When certain cnditins favrable fr a cmpetitive sale d nt exist and when a negtiated sale r private placement will prvide significant benefits t the district that wuld nt be achieved thrugh a cmpetitive sale, the district may elect t sell its debt bligatins thrugh a negtiated sale r private placement basis, upn apprval by the Bard f Educatin. Such determinatin may be made n an issue-by-issue basis, fr a series f issues, r fr part r all f specific financing prgram. The Bard f Educatin may prvide fr the sale f district bnds by negtiatin r private placement, the terms and cnditins f the sale, including prices, interest rates, credit facilities, underwriting r remarketing fees, and cmmissins. Examples f such sales include, but are nt limited t the fllwing: Variable rate demand bligatins; A debt issue s small r large that the number f ptential bidders wuld be t limited t prvide the district with truly cmpetitive bids; A debt issue requiring the ability t react quickly t sudden changes in interest rates (e.g., refunding bnds in vlatile r favrable market cnditins); A debt issue requiring intensive marketing effrts t establish investr acceptance (e.g., stry bnds r the use f prprietary r innvative financial prducts); and, An issue f debt with specialized distributin requirements (e.g., bnds sld nly t New Mexic residents r private placements). Negtiatin f Terms and Cnditins The negtiatin f terms and cnditins shall include, but nt be limited t discunts r takedwns and interest rates by maturity, management, structuring, remarketing, liquidity and bnd insurance fees. Guidelines shall be based n prevailing terms and cnditins in the marketplace fr cmparable issuers n the date f issuance, including yields frm secndary market trading f cmparable issuers and previusly issued district bnds. Selling Grups Permitted The bk-running senir manager shall discuss with the district and 8

9 financial advisr the advantages and /r disadvantages f using a selling grup. If utilizatin f a selling grup is apprpriate t assure the lcal retail distributin f a negtiated sale f the district s bnds, the selling grup shall include and be limited t nly thse firms perating retail brkerage peratins within the State f New Mexic. Allcatin and Designatin f Bnds The bk-running senir manager shall be respnsible fr ensuring that the verall allcatin f bnds meets the district s gals f: (a) btaining the best price fr the issue and (b) prviding firms with allcatins that are cmmensurate with wrk prefrmed. The district reserves the right t mnitr the rder-taking prcess and t review bnd allcatins prir t their release. Fllwing the executin f a bnd purchase cntract, the bk-running senir manager shall: Prvide fr fair allcatin f district bnds t underwriters and selling grup members, cnsistent with district s gals; Cmply with all Municipal Securities Rulemaking Bard n regulatins gverning rders, pririties and allcatins. Submit t the district, fr apprval, a cmplete and timely accunt f all rders, allcatins, and underwriting activities related t the sale f district bnds under its management Pririty fr assigning rders and allcatin f bnds Member Orders: When practical, retail rders, especially thse frm the State f New Mexic, are t be assigned the highest pririty by the bk-running senir manager. Net designated institutinal rders shall be given secnd pririty. Allcatins shall be assigned nly t thse firms that place rders, which place their firm s capital at risk. Grup net and stck rders shall receive the lwest pririty. Member rders received after ver subscriptin shall nt be filled unless earlier rders are canceled r bnds therwise remain unsld. Designated Orders: Whenever practical the district shall permit the use f designatin methds in its negtiated bnd sales which prvide institutinal investrs sme ability t direct the credit fr their rders; Fr syndicates with at least three firms in the management grup, designatins shall be distributed between a minimum f three firms with n manager receiving mre than fifty percent (50%) f the credit. Selling Grup Orders Selling grup members may place rders fr bnds and receive credit n the basis f the pririties established abve; Selling grup members are ineligible t receive management and structuring fees and shall be cmpensated nly n the basis f the takedwn paid n their cntingent sales. 9

10 Stck Orders Orders placed during the pricing perid fr which there is n identifiable retail r institutinal custmer shall nly be filled frm under-subscribed maturities. Grup Net Orders The sale f an entire issue n a grup net basis is t be avided in rder t encurage cmpetitive pricing dynamics during the rder perid. Private Placement The district may chse t privately place debt with a sphisticated investr r with a state r federal agency, New Mexic Finance Authrity r New Mexic State Treasurer, if the cst t the district is less than selling bnds in the pen market. Pricing Prcedures At least ne business day prir t the day f pricing, the bk-running senir manager shall initiate a pre-pricing cnference call with the chief financial fficer and the underwriting team t discuss the prpsed pricing terms, rder perid, underwriting spreads cmpnents, market cnditins, pririty f rders and allcatins and ther necessary pricing infrmatin. Pst-Sale Evaluatin The bk-running senir manager shall prvide the district with a final pricing bk. The final pricing bk shall include, but nt necessarily be limited t, the fllwing infrmatin; plan f finance, financing schedule; the distributin list; a discussin f market cnditins leading up t and during the pricing; the final pricing; cmparable issues in the market; any media cverage; rating agency reprts; a full set f final cmputer debt service runs; a list f selling grup members; a table r chart identifying rders and allcatins; a table r chart identifying management fee and liability; a table r chart identifying takedwn and designatin by dllars; and a table r chart identifying designatins n net designated rders. The final pricing bk shall be prvided t the district by the day f clsing. Selectin f Debt Structures In rder t minimize interest rate risk the preference f the district is t issue fixed rate debt hwever if an alternative structure is determined t be preferential the district may adpt the fllwing bnd structures subject t the defined cnstraints described herein: Variable Rate Bnds In the case f tax-supprted variable rate bnds, the level f variable rate shall nt exceed fifteen percent (15%) f the then utstanding tax supprted bnds. In cnsidering the amunt f unhedged variable rate bnds t be issued, cnsideratin shall be given t the amunt f cash balances available t be therwise invested as reserves and available as a natural interest rate hedge. Peridically, the chief financial fficer with assistance frm the financial advisr shall analyze each utstanding variable rate issue t determine if the issue shuld be cnverted t a fixed rate r therwise hedged. 10

11 Liquidity and Credit Enhancement Facilities The district may seek t use liquidity r credit enhancement when such enhancement prves t be cst effective r t imprve r establish a credit rating. When their use is judged prudent and advantageus t the district, the chief financial fficer shall have the authrity t enter int agreements with cmmercial banks r ther financial entities fr the purpses f acquiring lines r letters f credit, bnd insurance r surety plicies, etc. Selectin f enhancement prviders is subject t a cmpetitive bid prcess develped by the financial advisr and apprved by the chief financial fficer. Prerequisite t use: The present value f the estimated debt service savings frm the use f credit enhancement shuld be at least equal t r greater than the premium paid by the district t btain such credit supprt; and Criteria t be used in the appintment f credit prvider include: An bjective evaluatin f respnses t a request fr qualificatins; The shrt-term and lng-term credit ratings f the institutin and the relative trading level f debt supprt by such credit prvider; Institutin's experience with prviding liquidity facilities t municipal bnd issuers; Cmpetitiveness f fees submitted, interest charged n liquidity draws, maximum legal and administrative fees; Ability t agree t district and state legal requirements; and Number and amunt f liquidity facilities currently utstanding in the market. Prir Redemptins The district shuld cnsider prepaying r defeasing utstanding bnds when resurces are identified and available t reduce its utstanding debt. Bnds will be structured with shrtest ptinal redemptin date which des nt increase cst. Optinal Redemptins The district s bnds may be subject t ptinal redemptins and early calls, cnsistent with the bjective f paying the lwest pssible interest cst. Early calls may permit the district t act upn decreases in interest rates by refinancing bnds fr the purpse f realizing debt service savings. The district and its financial advisr will evaluate ptinal redemptin prvisins fr each issue s the district des nt service its debts at unacceptably higher interest raters. Reserve Requirements & Bnd Insurance In the issuance f bnds the district may find it necessary t fund a reserve fund r acquire bnd insurance in rder t achieve the lwest pssible interest cst. In each instance the district and its financial advisr will determine the apprpriate reserve and r insurance ptin that allws fr the lwest achievable interest cst while maintaining the marketability f the district s bnds. 11

12 Refundings The district shall cnsider refunding utstanding bnds in rder t: Generate interest rate savings Restructure principal and/r Eliminate burdensme bnd cvenants A present value analysis shall be prepared that identifies the ecnmic effects f any refunding prpsed. Prminent amng these are: Time t call date Time remaining t call date Negative arbitrage per maturity Shape f debt service savings Current Refundings Requires that the refunding escrw may nt exceed ninety (90) days; and unless therwise justified and apprved by the chief financial fficer and superintendent, a current refunding transactin shall require a present value savings f at least three (3) percent f the principal amunt f the refunding debt being issued and shall incrprate all csts f issuance expenses. A maturity by maturity analysis shall be cnducted t determine if the three percent (3%) r greater n a maturity by maturity basis threshld is met. Advanced Refundings Requires the refunding escrw duratin t exceed ninety (90) days. Gvernmental bnds issued after 1985 may nt be advance refunded with tax-exempt bnds mre than nce. Cnsequently, the district shuld carefully weigh the benefits and pprtunity csts f such an actin; and unless therwise justified and apprved by the chief financial fficer an advance refunding transactin shall require an verall ttal net present value savings f at least the lesser f tw percent (2%) f the part amunt f refunded bnds r three times the refunding s ttal csts f issuance, including underwriter s discunt and credit enhancement, if applicable. A maturity by maturity analysis shall be cnducted t include a determinatin f the negative arbitrage incurred in cnnectin with the escrw established fr a particular maturity. T be cnsidered, the negative arbitrage fr a particular candidate shall nt be greater than the net present value savings generated by that candidate. The chart belw illustrates the savings matrix fr a fixed rate refunding f existing fixed rate bnds s that each individual bnd maturity generates a net present value savings f at least the fllwing: 12

13 Years frm Call Date t Maturity Date Minimum NPV Savings Decisin Matrix Years t Call Date % 1.00% 2.00% Investment f Bnd Prceeds % 2.50% 4.00% % 4.00% 5.00% % 5.00% 5.50% Bnd prceeds will be invested pursuant t the Albuquerque Public Schls Investment plicy and prcedural directive. If the investment f bnd prceeds is nt addressed within the District s Investment Plicy r in the absence f a plicy the prceeds will be invested in US Treasury r as permitted by state statute and regulatin. Investment maturities will cincide with scheduled cnstructin draw dwns. Appintment f Prfessinals T prvide systematic technical advice and supprt t the district and fr the efficient cmpetitive, negtiated r private placement sale f district bnds, the Bard f Educatin shall apprve the selectin f qualified prfessinals including financial advisr(s), and underwriters. Such selectin f qualified prfessinals shall be based n an evaluatin f cmpetitive prpsals fr a cmbinatin f advisry and underwriting services, as recmmended t the bard by the superintendent r his/her designee. In n case may the financial advisr n any district credit serve as an underwriter in cmpliance with MSRB rules and regulatins. Term f Appintments Appintments shall be effective fr a term f fur (4) years frm the date f adptin f the superintendent s recmmendatin f award by the district bard, unless therwise amended by the district bard at the recmmendatin f r with the cncurrence f the Superintendent. Selectin Prcess The chief financial fficer shall peridically publish a RFP that invites cncurrent prpsals frm individual fferrs t prvide services in supprt f each f the district's anticipated prjects. Technical advisry subcmmittees are authrized. Ancillary subcmmittees may be established t prvide the chief financial fficer with technical supprt fr his/her assessment f prpsals. Overlapping subcmmittee memberships are permitted nly if a sufficient number f suitable candidates fr such subcmmittee assignments cannt be timely recruited. 13

14 The superintendent shall apprve all advisry cmmittee appintments. All actual r ptential cnflicts f interest f each prpsed subcmmittee member must be disclsed by such member fr the recrd, prir t submittal f said member's nminatin t the chief financial fficer s he/she may judge each individual's suitability t participate. The results f each subcmmittee's review, if such is empanelled, shall be reprted t the chief financial fficer wh shall, after cnsidering the subcmmittee s input, frward t the superintendent his/her recmmendatin fr the designated financial advisr and senir bk running manager fr each available assignment tgether with a rank rdered listing f the next three finalists. The superintendent may replace the firm ranked first with either the secnd r third ranked firm n the chief financial fficer s list when frmulating his/her recmmendatin t the Bard f Educatin. Blackut Perids Impsed Cmmunicatin abut a RFP r the selectin prcess with members f a financial advisr r underwriting prpsal review cmmittee, district emplyees, r elected fficials f the district by any emplyee r representative f an underwriting team under cnsideratin fr selectin is explicitly prhibited frm the date f publicatin f such RFP until recmmendatin f award by the superintendent. Failure t cmply with this requirement shall result in the applicant s disqualificatin. Selectin Criteria In rder f pririty, criteria t be used in the appintment f qualified financial advisr r underwriters shall include, but are nt limited t: Demnstrated ability f the firm t structure an issue f debt utilizing the cntemplated credit structure(s) efficiently and effectively; Experience f assigned persnnel; Apprach t prpsed scpe f wrk, including quality and applicability f prpsed financing ideas; Demnstrated capability t sell bnds t institutinal and retail investrs, especially t investrs lcated in New Mexic (underwriters nly); Demnstrated cmmitment and capacity f the underwriting firm r firms t put its firm's capital at risk, especially as evidenced by having successfully bid n prir cmpetitive sales f district bnds r by having underwritten the district's debt in adverse markets (underwriting firms nly); Demnstrated secndary market supprt fr debt which the underwriting firm r firms are retained, especially fr the specific credit which is t be pledged (underwriting firms nly); Fees and expenses; Weights fr the abve criteria may vary and shall reflect the unique requirements f the prpsed engagement; Preference fr lcal and state businesses shall be granted as may be prvided under et seq NMSA 1978; 14

15 Other factrs. Other factrs are defined as thse factrs that have nt been included as technical selectin criteria, but are factrs that in sme instances must be cnsidered in making the final selectin. Their nature will nt permit a meaningful numerical predeterminatin f relative significance f impact n the selectin decisin, and therefre, they are nt numerically scred. Failure t prvide cmplete disclsure fr each f the fferr firms t the fllwing questins r misrepresentatin shall result in disqualificatin. The prvider must certify that, t the best f its knwledge, the infrmatin submitted in respnse t this sectin is accurate, cmplete and nt misleading. Other factrs include: Cnflicts f Interest Each fferr shall list all ptential cnflicts f interest f which the firms have knwledge f which may arise with respect t the representatin f the district n this prpsal, including, withut limitatin, any circumstances which wuld create the appearance f a cnflict f interest. Disclsure f ptential cnflicts f interest shall be made pursuant t the New Mexic Gvernmental Cnduct Act. Each fferr shall disclse any plitical cntributin, gift r fund-raising, either direct r indirect, valued in excess f $ (singularly r in the aggregate) made by the firms r individuals at the firms t any elected fficial r persn seeking ffice in the state f New Mexic in the last five (5) years; any current, prpsed r past financial r business relatinship r arrangement between a firm r any individual at the firm and any District bard member, fficer r emplyee f the district; and any ther actual r ptential cnflict which may give rise t a claim f cnflict f interest. Each fferr shall prvide acknwledgement that it has cmplied with all MSRB rule G- 37 filings, and shall dcument specific breaches f the Rule fr which sanctins were impsed. The fferr shall nly be required t prvide any supplementary infrmatin requested by the district. Regulatry Actin Each fferr shall disclse any judicial r administrative prceedings f public recrd that have been filed against the firm during the five (5) years preceding the date f the prpsal that cncerned the fferr participatin in a securities transactin. Each fferr shall list and describe the current dispsitin r status f any litigatin r frmal r infrmal actin taken by any state r federal securities cmmissin, the MSRB, r any ther regulatry bdy against the firm (r taken against any individuals nw at the firm wh will wrk under this cntract) within the last five (5) years. Each fferr shall disclse emplyment practices and describe the current dispsitin r status f any litigatin r frmal r infrmal actin taken by the Equal Emplyment Opprtunity Cmmissin r any ther regulatry bdy against the firm within the last five (5) years with respect t its emplyment practices. 15

16 Investr and Rating Agency Cmmunicatin Disclsure It is the district s requirement t prvide primary and secndary disclsure t all its bnd investrs n a peridic basis as required by the SEC Disclsure Rule 15c2-12 and SEC Antifraud Prvisin Rule 10b-5 and MSRB Rule G-36 as stated belw: SEC Disclsure Rule 15c2-12 requires that issuers f municipal securities undertake in a written agreement r cntract fr the benefit f hlders f such securities t prvide certain annual financial infrmatin t varius infrmatin repsitries. SEC Antifraud Prvisins Rule 10b-5 requires that disclsure made by issuers f municipal securities be bth accurate and cmplete in all material respects at the time the disclsure is prvided. MSRB Rule G-17 requires, in the cnduct f municipal securities r municipal advisry activities, each brker, dealer, municipal securities dealer, and municipal advisr shall deal fairly with all persns and shall nt engage in any deceptive, dishnest r unfair practice. MSRB Rule G-23 establishes ethical standards and disclsure requirements fr brkers, dealers, municipal securities dealers wh act as financial advisrs t issuers with respect t the issuance f municipal securities. Firms are prhibited frm engaging in Underwriting and Remarketing activities with issuers f municipal securities with whm they maintain a financial advisry relatinship, as defined by MSRB Rule G-23. MSRB Rule G-36 requires filing by the brker dealer f the Official Statement within 10 days f the Bnd Purchase Agreement executin. The district acknwledges the respnsibilities f the underwriting cmmunity and shall assist underwriters in their effrts t cmply with SEC Disclsure Rule 15c2-12, SEC Antifraud Rule 10b-5 and MSRB Rule G-36. Official Statement Filing - Primary Disclsure The district shall file its fficial statements with the MSRB s Electrnic Municipal Market Access ( EMMA ) system. Cmprehensive Annual Financial Reprt The district shall file its Cmprehensive Annual Financial Reprt and ther infrmatin that it deems pertinent t the market in a timely manner n EMMA. Cntinuing Disclsure Undertaking Requirements Secndary Disclsure The district shall publish its annual Cntinuing Disclsure Undertaking requirements n later than December 31 f each year fllwing the end f its fiscal year n EMMA r as therwise prvided in the District s Pst Issuance Cmpliance Guidelines. 16

17 Securities Disclsure Plicies and Practices f the District In cnnectin with the issuance f certain bnds, ntes, and ther municipal securities, the district is required t prepare and disseminate certain disclsure infrmatin in rder t cmply with Rule 15c2-12 prmulgated by the Securities and Exchange Cmmissin under the Securities Exchange Act f 1934, including a requirement fr cntinuing disclsure f annual financial infrmatin and ntices f certain material events. This plicy shall centralize the infrmatin disseminatin prcess, establish apprpriate cntrls n disclsure statements made by the district and enable the district and its enterprises t cmply with Rule 15c2-12, in rder t assure the district's access t the capital markets as a surce f funds fr necessary and useful public undertakings f the district. This prcedure is nt intended in any way t limit any persn's access t public recrds r infrmatin, nr t infringe upn the nrmal plitical prcess, in particular the right f any elected fficial f the district t review, discuss, release, cmment upn r criticize any infrmatin. Disclsure Prcedure The chief financial fficer shall be respnsible fr reviewing and recmmending, prir t release t the public, all fficial statements and disclsure statements relating t municipal securities which the district is the issuer r an bligated persn fr purpses f Rule 15c2-12. N fficial statement relating t any municipal securities which the district is the issuer r an bligated persn fr purpses f Rule 15c2-12 shall be issued r released t the public until and unless apprved in writing by the chief financial fficer r superintendent. N disclsure statement cncerning municipal securities which the district is the issuer r an bligated persn fr purpses f Rule 15c2-12 shall be made, issued r released t the public by any emplyee, agent r fficial f the district until and unless such disclsure statement and the release theref shall be apprved in writing by the chief financial fficer r superintendent. N disclsure statement, fficial statement r undertaking with respect t any municipal securities which the district is the issuer fr purpses f Rule 15c2-12 that is issued r released t the public by any emplyee, agent r fficial f the district withut the express written apprval f the chief financial fficer r superintendent as required by this plicy shall be deemed t be a statement r undertaking by r n behalf f the district. Disclsure Actin Unless therwise required by law, prir t releasing t the public any fficial statement r disclsure statement intended t be made public, all nn-elected emplyees, agents and fficials f the district shall reprt t and file with the chief financial fficer any such prpsed disclsure statement, tgether with such additinal infrmatin requested by the chief financial fficer, including certificates as t the accuracy f such disclsure statement, and each such emplyee, agent and fficial f the district shall cnsult with the chief financial fficer cncerning such prpsed fficial statement r disclsure statement. 17

18 Published Disclsure Statements All infrmatin and dcumentatin requested by the chief financial fficer that may be required t supprt the preparatin f a disclsure statement, fficial statement r undertaking shall be prvided by the apprpriate district departments, as identified by the chief financial fficer, n a timely, cmplete, and accurate basis. All disclsure statements, fficial statements and undertakings shall be cmpiled by disclsure cunsel whm, tgether with the chief financial fficer and ther cunsel wh are parties t the dcumentatin. They shall be affrded, by the riginating department, such unbstructed access t dcumentatin and infrmatin, as they may deem apprpriate. Rating Agency, Investr and Media Cmmunicatins All cmmunicatins with rating agency persnnel, including respnses t their peridic questins, shall be managed thrugh and apprved by the chief financial fficer r superintendent. In rder t ensure unifrm market access t infrmatin that may be relevant t the valuatin f the district's securities, the release f any infrmatin, whether in respnse t an ad hc questin r self-initiated, that may be ptentially relied upn by the market t impute the credit wrthiness f the district's debt, whether intended fr that purpse r nt, shall be reviewed by the chief financial fficer and disclsure cunsel t determine whether r nt: The infrmatin is already in the public dmain; The infrmatin is a disclsure event as defined by the SEC, requiring prmpt ntificatin t the MSRB fr EMMA filing; The infrmatin is full, accurate, cmplete and nt misleading; and The infrmatin cmplies with the securities disclsure plicies and practices with respect t the Bard f Educatin. Administrative Psitin: Department Directr: References: Legal Crss Ref.: Bard Plicy Crss Ref.: Prcedural Directive Crss Ref.: NSBA/NEPN Classificatin: Chief Financial Officer Executive Directr f Accunting DE Bnds, Mill Levys and Educatin Technlgy Ntes DE Reviewed: June 11,