Broward County, Florida

Transcription

1 Broward County, Florida Arbitrage Rebate Services June 6, 2018 PFM Asset Management LLC 213 Market Street Harrisburg, PA Phone: Fax: PFM 1

2 Advice for People Transforming Their World PFM PFM Asset Management LLC PFM Financial Advisors LLC Public Financial Management, Inc. Investment Management Fixed Income Portfolio Management Multi-Asset Class Management Cash Management Pools Investment Consulting Fixed-Income Consulting Treasury Management Consulting Multi-Asset Class Consulting Financial Advisory Debt Management and Bond Pricing Optimization Capital Structure Consulting Risk Management Advisory Rating Agency/Credit Enhancement Advisory Public-Private Partnerships (P3s) PFM Group Consulting LLC PFM Financial Services LLC Specialized Services Management & Budget Consulting Payment Solutions Structured Investments Bond Proceeds Arbitrage Rebate Compliance Emerging & Minority Managers PFM Swap Advisors LLC PFM Solutions LLC Swap Advisory Services Whitebirch Software SwapViewer PFM 2

3 David Reeser Katia M. Frock Managing Director Engagement Manager 22 years of industry experience Director Project Manager 15 years of industry experience Michael Steinbrook Amy Rothdeutsch Director Senior Managing Consultant Project Manager 14 years of industry experience Project Support 10 years of industry experience PFM 3

4 Project Team Dedicated to Broward County Broward County PFM Asset Management LLC Engagement Team David Reeser, EA, CTP, Managing Director Katia M. Frock, Director Michael Steinbrook, Director Arbitrage & Tax Compliance Group David Walters, CFA, Senior Managing Consultant Amy Rothdeutsch, Senior Managing Consultant Vishal Sadhasivan, Senior Analyst Sarah Latch, Analyst Zachary Despreaux, Analyst Rina Patel, Analyst Kathy Whitman, Senior Associate PFM 4

5 PFM s Arbitrage & Tax Compliance Group PFM maintains a group that specializes in arbitrage rebate calculations Providing arbitrage rebate services since 1989 Preparing over 3,000 calculations annually for more than 350 taxadvantaged issuers Proactively seeking to minimize rebate liabilities and streamline issuer compliance procedures Including experience with IRS audits, late payments and refund requests Data as of December 31, Expenditure allocation strategies Yield restriction compliance strategies Pre-issuance election review Transferred proceeds analysis and allocations Arbitrage yield calculations Single vs. separate issue analysis Training Arbitrage rebate calculations Yield restriction compliance calculations Exception compliance analysis Transferred proceeds calculations Universal cap analysis Swap termination payment allocations 8038-T preparation Review and advise on policies and procedures to insure Post-Issuance Compliance Investment valuation & allocation analysis Expenditure allocation strategies & analysis Variable rate bond yield optimization Computation period optimization Evaluation of applying exceptions to rebate Parity debt service reserve fund allocation analysis IRS Refund Requests PFM 5

6 PFM s Approach to Broward Regular communication and interaction allows for compliance advice in real time PHASE I: INSIGHT Project planning, information review, and data collection Discuss current practices and procedures Propose a schedule of regular interactions PHASE II: EXPERTISE Completion of arbitrage rebate calculations Multi-manager review process Discuss results with County staff, financial advisors, and bond counsel EXPERTISE + INSIGHT = INGENUITY PFM 6

7 Phase I: Initial Steps - Transition Kick-off Meeting Review scope of the project Identify immediate action items Identify points of contact Request bond documents Collect most recent rebate analyses and liability summary completed by the previous consultant Discuss Current Procedures Go over current policies and procedures related to bond proceeds Offer recommendations for areas of improvement Collaborate with the County to develop an annual checklist to: Document adherence to policies and procedures Detect and identify failures promptly Establish Data Transmittal Process Determine method to transmit investment and expenditure records If bank statements are available, discuss setting up PFM viewing access Goal is to reduce burden on County staff PFM 7

8 Phase II: Ongoing Process Arbitrage Rebate Reporting Mid Fiscal Year Days Prior to FY End September October/November Collect updated data for County s new fiscal year Update data collected and stage files for fiscal year reporting Collect final fiscal year data Deliver completed fiscal year reports Discuss the impact of new issues/refundings Review reports with interested parties Provide non-fy compliance reporting (if necessary) Provide training to County staff PFM 8

9 Calculation Methodology Goal: Largest Possible Rebate Savings INITIAL APPROACH Employ the most conservative methods to achieve compliance with the federal tax law requirements. Compliance & Rebate Minimization Our rebate analysts are versatile in applying a vast number of minimization techniques to add value for our clients. FOLLOW-UP APPROACH Evaluate alternative methodologies to determine whether there are opportunities to reduce liabilities. How We Differ Internally developed sophisticated calculation models Typical rebate analysts use off-the-shelf or preprogrammed software packages Analyze every possibility to reach the most ideal after-tax result Maintain the level of customization needed to thoroughly evaluate an issue s compliance status PFM solely employs calculation methods that achieve compliance and liability minimization. PFM 9

10 Scope of Services Review Compiled and transmitted data from the County Applicable bond documents, including tax certificate, IRS Form 8038-G, official statement, verification report, swap confirmation, letter of credit agreement, etc. Sources and uses of funds to help ensure acknowledgement of amounts that need to be included in calculations Identify/Verify Any qualified guarantee fees, such as insurance premiums or payment for a letter of credit Any qualified hedges (e.g., interest rate swaps) with respect to the bonds Key dates, such as temporary period dates Any bonds that should be treated as a single issue or composite issue with other bonds Funds that are subject to the arbitrage rebate and yield restriction compliance requirements Any exceptions to arbitrage rebate that can be applied and would reduce liabilities Issue is subject to the Rebate Requirement Analyze The portfolio of investments and the funds and accounts in which the investments are held Debt service fund cash flows and balances to determine if debt service funds have been sufficiently depleted to qualify for the bona fide debt service fund exception Each type of fund to identify and implement the methodology that would result in the lowest overall liability with respect to the bonds PFM 10

11 Scope of Services Calculate Calculate the arbitrage yield Arbitrage rebate and yield restriction liability of each fund subject to these requirements Investment return for each fund and the aggregate return on all proceeds Provide Our multi-manager review process to help ensure that reports are accurate and all scenarios have been evaluated to minimize liabilities to the fullest extent An executive summary of the issue s compliance status, the rate of return on all proceeds included in our calculation, methodology and major assumptions A professional opinion that the calculation methodology is consistent with current federal tax laws An electronic copy of each report prepared and hard copies upon request A comprehensive liability summary report to the County upon request, including current liabilities and upcoming calculation dates for all outstanding bond issues Coordinate With the County s staff, financial advisors and bond counsel to discuss tax law compliance issues either during pre- or post-issuance timeframes With other third parties, pending the County s permission, to obtain financial data or distribute reports Submission of payment forms that we have prepared, including IRS Form 8038-T, filing instructions and preparers tax identification number ( PTIN ) of a PFM senior asset management professional PFM 11

12 Commitment to Client Training and Development PFM Training Debt & Investment seminars Week-long training sessions Webinars and conference calls Customized trainings for clients Recent Speech and Education Topics Debt Policy Development Short-Term Investments Maximizing Return in Low Rate Environment Investing Bond Proceeds Post-Issuance Compliance and Arbitrage Rebate Debt Management Banking and Cash Management PFM 12

13 PFM is Dedicated to Serve Broward County Expertise in complex tax-exempt structures and rebate minimization strategies Local presence devoted to serving Florida issuers Seamless transition plan with comprehensive analysis Dedication to compliance, accuracy and methodology considerations We have never been informed of the IRS proposing changes to our calculations Prioritized commitment to client education and training, both formal and informal, on site and electronically Integrated team approach with access to firm-wide resources Customized solutions for the County from our independent and national tax perspective PFM 13

14 Disclosures ABOUT PFM PFM is the marketing name for a group of affiliated companies providing a range of services. All services are provided through separate agreements with each company. This material is for general information purposes only and is not intended to provide specific advice or a specific recommendation. Financial advisory services are provided by PFM Financial Advisors LLC and Public Financial Management, Inc. Both are registered municipal advisors with the Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB) under the Dodd-Frank Act of Investment advisory services are provided by PFM Asset Management LLC which is registered with the SEC under the Investment Advisers Act of Swap advisory services are provided by PFM Swap Advisors LLC which is registered as a municipal advisor with both the MSRB and SEC under the Dodd-Frank Act of 2010, and as a commodity trading advisor with the Commodity Futures Trading Commission. Additional applicable regulatory information is available upon request. Consulting services are provided through PFM Group Consulting LLC. Institutional purchasing card services are provided through PFM Financial Services LLC. PFM s financial modelling platform for strategic forecasting is provided through PFM Solutions LLC. For more information regarding PFM s services or entities, please visit PFM 14

15 Thank You PFM 15