SR-203-001-06 (7)
ATTACHMENT 8
QUESTIONS FOR PUBLIC OFFICIALS TO ASK BEFORE APPROVING A BOND ISSUE
The following question list has been prepared by the National League of Cities; the
National Association of Counties; the National Association of State Auditors, Comptrollers,
and Treasurers; and the Government Finance Officers Association with input from the
Securities and Exchange Commission. They are designed to assist public officials who are
responsible for approving the issuance of tax exempt bonds.
Questions to Ask of Staff
1) How have staff allocated responsibilities for the preparation of the official statement?
Have they clearly defined the responsibilities of all participants in the transaction?
Answer: Preparation of the Preliminary and Final Official Statements is a
collaborative effort of the Finance and Resource Management Departments,
and the offices of the City Manager and City Attorney; the Redevelopment
Agencys Financial Advisor (Public Resources Advisory Group), Bond
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Counsel (Orrick, Herrington & Sutcliffe), Special Counsel (Kane, Ballmer and
Berkman) and Fiscal Consultant (HdL Coren and Cone). Each participant is
responsible for ensuring the information presented in their area of expertise
is correct. Orrick, Herrington & Sutcliffe is serving as Disclosure Counsel for
the preparation of the Preliminary Official Statement and has primary
responsibility to ensure that any investment risk associated with the bonds
has been adequately disclosed. All participants review the entire document
for consistency.
2) What process or procedures have been established to select qualified outside
professionals? How are we relying on them, and is our reliance appropriate? How are
they being compensated?
Answer: The Agencys Financial Advisor, Bond Counsel and Fiscal Consultant have
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been selected by a competitive selection process wherein qualifications and
price were considered. They will be compensated from the bond proceeds.
Agency Counsel has been retained on an on-going basis by the Agency, and
will be compensated through an existing contract. As a result of these
selection processes, staff believes it is appropriate to rely on their expert
advice.
3) What has been done to establish the accuracy of financial and operating information
and its disclosure in the official statement? Has anything happened since the date of
the financial statements that needs to be disclosed?
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Answer: All financial and operating information about the Agency has been subjected
to multiple internal reviews by appropriate staff. Audited financial
information has been presented, for fiscal years ending before June 30,
1999. FY 1998-99 financial information is currently unaudited but will be
audited this Fall by the Citys auditors, KPMG Peat Marwick. Nothing has
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occurred since the date of the Agencys financial statements that needs to
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be disclosed, other than the Citys issuance of $13.2 million of Lease
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Revenue Bonds on 10/13/99 for construction of the Public Safety Facility.
4) What policies and procedures have been developed to determine whether material
conflicts of interest exist that need to be disclosed?
Answer: The Financial Advisor, Bond Counsel, Special Counsel and Fiscal
Consultant have been questioned to determine if any material conflicts of
interest exist that need to be disclosed. No conflicts of interest have been
determined. A similar procedure has been followed for staff.
5) What procedures have been established to accurately describe the project, the bond
terms, the sources of repayment, and the risks associated with the project? What
procedures have been established for the investment and disbursement of the bond
proceeds?
Answer: The project, bond terms, sources of repayment, and risks are described in
the Preliminary Official Statement. Bond proceeds will be controlled by the
Trustee. Use of the proceeds will be accounted for by the Citys Finance
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Department in accordance with generally accepted accounting standards.
6) Do procedures permit the underwriters to carry out their due diligence and other
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responsibilities?
Answer: Potential underwriters (including their attorneys) who will bid on, purchase,
and resell the bonds, will be provided access to all bond documents. City
staff, the Agencys Financial Advisor, Bond Counsel, Special Counsel and
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Fiscal Consultant will respond to all questions in a timely manner.
7) Have staff fully considered any questions asked by the rating agencies?
Answer: Staff will brief and update the rating agencies concerning this bond issue
and the financial status of the Redevelopment Agency shortly following
Agency authorization to proceed. Staff has tried to anticipate and include in
the bond documents appropriate data and disclosures applicable to material
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rating agency questions. Any additional data and/or disclosures will be
promptly provided to the rating agencies upon request.
8) What continuing disclosure responsibilities have staff assumed and what procedures
have been established to meet them? Who will determine and file the annual financial
and material event disclosure information? Has staff designated an individual to speak
to the market on behalf of the Agency?
Answer: All Federal continuing disclosure requirements will be the responsibility of
the Finance Department. An appropriate annual disclosure statement will be
released and filed with the necessary agencies every year by March 1 and/or
as material events occur. The Citys Director of Finance and Financial
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Advisor will represent the Agency to the market.
9) Have staff procedures produced an official statement that accurately presents the
Agencys financial condition and discloses the information a reasonable investor
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needs to know? Have all the right people reviewed it?
Answer: Staff and the Agencys Financial Advisor, Bond Counsel, Special Counsel
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and Fiscal Consultant believe the official statement accurately presents the
financial condition of the Agency and discloses information a reasonable
investor needs to know. Concerning review of the official statement, please
see response to question #1 above.
Questions to Ask Outside Professionals
1) What is the nature of scope of the written opinion or certification, if any, that you are
giving in this transaction and relating to the disclosure document? Have staff given
you access to the information you need?
Answer: With respect to the disclosure documents for this transaction, Bond Counsel,
acting in its capacity as disclosure counsel, will provide an opinion which
confirms the following: Its attorneys have reviewed certain portions of the
Preliminary Official Statement, Official Statement, Certificates of the Agency,
the Final Opinion of Bond Counsel, and opinions of the City Attorney,
Trustee Counsel, and such other records, opinions and documents and
investigations of law as deemed appropriate as a basis for concluding that,
during the course of its engagement on this matter, no information came to
the attention of its attorneys rendering legal services which caused them to
believe that the Official Statement, as of its date (except for any financial or
statistical data, forecasts, numbers charts estimates or projections as to
which no opinion is expressed) contained any untrue statement of a material
fact or omitted to state any material fact necessary to make the statements
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therein, in the light of the circumstances under which they were made, not
misleading. Yes, staff has given bond counsel access to the information
they need.
2) Have you explained to staff all aspects of the structure or nature of this transaction so
that you are confident they fully understand all critical aspects? Does the Agencys
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official statement adequately address any concerns you have about this transaction
that a reasonable investor would consider important?
Answer: The Financial Advisor, Bond Counsel and Special Counsel have explained
all aspects of this bond issuance to staff and believe staff fully understands
all critical aspects. They also believe the official statement adequately
addresses matters that a reasonable investor would consider important.
3) Are there any matters regarding your participation in this transaction about which you
should make staff or the Redevelopment Agency aware, including potential conflicts of
interest?
Answer: There are no matters regarding their participation in this bond transaction or
potential conflicts of interest that the Financial Advisor, Bond Counsel,
Special Counsel and Fiscal Consultant believe should be disclosed to the
Redevelopment Agency and/or City staff.
4) Has your review of the relevant financial documents and other materials, including the
official statement, raised any concerns regarding this borrowing? Do these concerns
need to be disclosed?
Answer: The Financial Advisor, Bond Counsel, Special Counsel and Fiscal
Consultant have reviewed all bond documents and do not have any
concerns which need to be disclosed.
5) Are you aware of any circumstances in which the Redevelopment Agency, staff, or
others have not complied with City or Agency procedures to ensure the Agencys
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official statement adequately and accurately describes this transaction?
Answer: The Financial Advisor, Bond Counsel, Special Counsel and Fiscal
Consultant are not aware of any such circumstances.
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