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Policy Statement

This Post‐Issuance Compliance Policy is designed to ensure the University complies with applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code") and the regulations promulgated thereunder (the "Treasury Regulations") applicable to both taxable and tax‐exempt bonds (the "Bonds") issued to finance New �鶹��ý City University (University) facilities.

The University also provides management and oversight to both the New �鶹��ý City University Foundation, Inc. (Foundation) and the West Campus Housing, LLC (WCH). Therefore, the post bond compliance requirements for both the Foundation and WCH will be monitored under the University and are included in the scope of this policy.

It is the University’s policy to fulfill all requirements that must be satisfied subsequent to the issuance of Bonds in order to meet the provisions of the bond issued requirements and the IRS compliance requirements.

Reason For The Policy

The University has adopted this Bond Post‐Issuance Compliance Policy for tax‐exempt and tax‐credit bonds in order to meet all tax requirements under the Internal Revenue Code of 1986, as amended, and to meet all continuing disclosure requirements.

This policy ensures appropriate monitoring of compliance throughout the entire period the debt remains outstanding and improves the issuer’s ability to identify noncompliance and prevent violations from occurring, to timely correct identified violations (when prevention is not possible) and to ensure the continued tax‐advantaged status of the issued Bonds that are required to have annual tax filings.

Stakeholders Affected By The Policy

This Policy shall be communicated to all University administrators and staff with responsibility or control over any aspect of the Bond issuance, the investment or expenditure of Bond proceeds and the use of Bond‐financed assets, including but not limited to those who manage, direct or influence the following:

1. The pre‐issuance process and decision‐making, including identification of eligible projects;
2. The expenditure of Bond proceeds and other University funds for project costs;
3. The investment of Bond proceeds and other University funds;
4. The use of all facilities and other assets financed or refinanced by Bonds, including use by the University or by third parties pursuant to leases, management agreements, service agreements, sponsored research agreements, fee‐for‐use or other arrangements;
5. The sale or other disposition of any facilities or other assets financed or refinanced by Bonds;
6. The creation and retention of documentation relating to expenditure of Bond proceeds, the use and disposition of Bond‐financed assets, Arbitrage and tax return filings; and
7. The recording and reporting of financial transactions related to Bonds.

Definitions

Applicable Federal Law – Includes the Code and the Treasury Regulations, including Sections 145 through 150 of the Code and the related Treasury Regulations (Note: IRS Publication 4077: Tax‐Exempt Bonds for 501(c)(3) Charitable Organizations Compliance Guide provides guidance and explanation for most areas of tax‐exempt financing relevant to the University and the New �鶹��ý City University Foundation, LLC (Foundation).

Arbitrage – Earnings from investment of Bond proceeds in excess of the amount that would have been earned had the funds been invested at the Bond yield, adjusted for certain expenses (i.e., investment yield higher than the Bond yield).

Private Business Use – Examples of Private Business Use include (1) the University's use of Bond‐ financed property in an unrelated trade or business, and (2) the use of Bond‐financed assets by parties other than the University or certain other charitable organizations, including use by third parties pursuant to leases, management or service contracts that do not meet Internal Revenue Service (“IRS”) requirements, certain sponsored research arrangements, and any other arrangements that provide third parties with special legal entitlements to use or occupy (or otherwise benefit from) Bond‐financed property. Generally, no more than five percent (5%) of Bond proceeds may be used for Private Business Use. The use of Bond proceeds is generally determined based on the use of the Bond‐financed property. The use of Bond proceeds to pay Bond issuance costs (typically, up to two percent (2%) of Bond proceeds) is considered Private Business Use, so other allowable Private Business Use may be as low as three percent (3%) of Bond proceeds.

In addition, the following categories of activities might be PBU if they result in private business users using University property that has been acquired or improved with Tax Exempt Bond proceeds:

1. Sale of University property
2. Lease of University property
3. Use of University property
4. Management contracts
5. Utility output contracts
6. Sponsored research agreements, material transfer agreements, and corporate researchers working at the University
7. Technology transfer and licensing agreements
8. Clinical trial agreements
9. Unrelated trade or business activities by the University
10. Naming rights
11. Joint ventures, partnerships and limited liability companies’ agreements
12. Other actual or beneficial use of, or economic benefit from, University property

Tax Certificate – The agreement signed by the University at the closing of a Bond issuance in which the University makes certain representations, warranties and covenants relating to its tax exempt status as a state institution or the Foundation’s 501(c)(3) status.

Policy Text

The University's Chief Financial Officer (“CFO”) shall have primary responsibility for monitoring the University’s compliance with post‐issuance federal tax requirements for Bonds, and for implementing/overseeing procedures necessary to ensure such compliance.

Procedures

In adhering to the Bond Post‐Issuance Compliance Policy, the University shall implement the following procedures:

Expenditures of Bond Proceeds

• Bond proceeds, including investment earnings thereon, shall be disbursed only for project costs, capitalized interest (i.e., interest payments during project construction), Bond issuance costs and other purposes expressly allowed under the Bond documents. All Bond‐financed property must be owned by the University and/or Foundation.
• If the University intends to reimburse itself from Bond proceeds for project costs paid prior to issuance of the Bonds, the University shall adopt a declaration of official intent to reimburse project costs. The University shall consult with nationally recognized bond counsel to ensure the declaration of intent meets the requirements of Applicable Federal Law.

Final Allocation of Bond Proceeds
Promptly after the final expenditure of Bond proceeds, the CFO shall prepare a written report documenting the allocation of Bond proceeds (including interest earnings thereon) and other University funds to project expenditures (the “Final Allocation”). It is recommended that the University consult with nationally recognized bond counsel in connection with the Final Allocation of Bond proceeds.

Change of Use
Any significant change in the use of Bond‐financed property must be reported to the CFO prior to implementation. The CFO shall determine whether the proposed new use may constitute Private Business Use. If the use may be Private Business Use, the CFO shall consult with counsel for tax advice on whether that use or arrangement, if put into effect, will be consistent with the restrictions on Private Business Use and, if not, whether any "remedial action" permitted under the Code may be taken by the University and/or Foundation as a means of enabling that use.

Sale or Disposition
Any sale or other disposition of Bond‐financed property must be reported to the CFO prior execution of any agreement of sale or other agreement of disposition. The CFO shall determine whether the Bond‐ financed property has any remaining useful life in accordance with the Tax Certificate and Applicable Federal Law, and if so, consult with nationally recognized bond counsel as to the requirements of Applicable Federal Law applicable to the sale or other disposition and the appropriate “remedial action” permitted by the Code that must be undertaken by the University and/or Foundation as a result of the potential sale or other disposition of the Bond‐financed property.

Investment of Bond Proceeds; Arbitrage and Rebate

• The University and/or the Foundation will utilize a service provider for management of the investment of bond proceeds, arbitrage and rebate issuances as per the finalized bond documents. The University and/or Foundation will work with the professional experienced third parties to fulfill and file the necessary arbitrage rebate requirements for the bond issue in addition to the statutory requirements.

Record Retention
Unless otherwise permitted by future Treasury Regulations or IRS guidance, written records (which may be in electronic form) will be maintained with respect to each Bond issue for as long as those Bonds (and any Bonds issued to refinance those Bonds) remain outstanding, plus three to six years depending on the Tax Regulatory Agreement of the series. For refundings, the record retention period includes the original issuance. The records to be maintained shall include:

• basic records relating to the Bond issuance including the official transcript of proceedings;
• documentation evidencing expenditure of Bond proceeds including, but not limited to, purchase contracts, construction contracts, progress payment requests, invoices, cancelled checks, payment of Bond issuance costs, and records of "allocations" of Bond proceeds to reimburse the University for project expenditures made before the Bonds were actually issued;
• records showing the specific assets financed with Bond proceeds (including assets to which Bond proceeds are allocated pursuant to the Final Allocation described above);
• information, records and calculations showing that, with respect to each Bond issue, the University was eligible for one of the Arbitrage rebate spending exceptions or, if not, that the Arbitrage rebate amount, if any, was calculated and timely paid to the IRS;
• documentation evidencing use of Bond‐financed property by public and private entities (including copies of leases, management contracts and research agreements);
• records showing that special use arrangements, if any, affecting Bond‐financed property made by the University with third parties, if any, are consistent with applicable restrictions on Private Business Use of property financed with proceeds of tax‐exempt Bonds;
• records of any sale or disposition of Bond‐financed property, including terms of sale, and documentation of any “remedial action” undertaken as a result of the sale or other disposition; and

The purpose of the foregoing record retention procedures are to enable the University and/or Foundation to readily demonstrate to the IRS, upon an audit of any Bond issue, that the University has fully complied with all Applicable Federal Law requirements that must be satisfied after the issue date of the Bonds so that interest on those Bonds continues to be tax‐exempt under the Code.

Corrective Actions
Upon discovering any violation of Applicable Federal Law including, but not limited to, excess Private Business Use, violation of Arbitrage restrictions or sale of Bond‐financed assets, the CFO shall promptly consult with legal counsel to determine appropriate remedial action to correct such violation.

Continuing Disclosure
Under the provisions of SEC Rule 15c2‐12 (the "Rule"), Participating Underwriters (as defined in the Rule) are required to determine that issuers and obligated persons (such as the University and/or Foundation) have entered into written Continuing Disclosure Agreements to make ongoing disclosure in connection with Offerings subject to the Rule. Unless the University and/or Foundation is exempt from compliance with the Rule or the continuing disclosure provisions of the Rule as a result of certain permitted exemptions, the bond transcript for each issue of bonds will include a Continuing Disclosure Agreement executed by the University and/or Foundation.

In order to monitor compliance by the University with its Continuing Disclosure Agreements, the CFO and Treasurer will, if and as required by such Continuing Disclosure Agreements:

• Assist in the preparation or review of annual reports ("Annual Reports") in the form required by the related Continuing Disclosure Agreements.
• Maintain a calendar, with appropriate reminder notifications, listing the filing due dates relating to dissemination of Annual Reports, which annual due date is generally expressed for the University as December 15 following the end of the University’s fiscal year (the "Annual Report Due Date"), as provided in the related Continuing Disclosure Agreements.
  • In reference to the bonds appropriated under the New �鶹��ý City University Foundation, Inc. that pertain to the WCH, LLC, the University notes electronic reminders are sent to notify the filing due dates for the following:
    • Quarter Filings
    • Annual Report & Certification
    • Debt Service Ratio
    • Housing Report
    • Residency Policy