8/28/2014 1:10 PM
In July the Local Finance Board issued Local Finance Notice 2014-9 "Secondary Bond Market - Continuing Disclosure Commitments". LFN 2014-9 reminds us that there are post issuance requirements with most fire district bond issues. Typically, Official Statements have included a requirement that the issuer must file certain financial documents annually. Failure to do the required filings can be detrimental to future bond issues.
Boards must file the required documents annually with the Municipal Securities Rulemaking Board (MSRB) utilizing the Electronic Municipal Market Access(EMMA) system. Go to www.emma.msrb.org to learn more about how to use EMMA. If you are not sure where your Official Statement is you can print it out from this site. In the statement it will detail what the required annual disclosures are for your bond issue. Typically it will require the annual audit, the current budget, and a financial fact sheet.
The Securities Exchange Commission (SEC) became alarmed by the amount of noncompliance in the secondary bond market. SEC developed a program of self-reporting of noncompliance and to assure future compliance. The program runs through December 1, 2014. LFN 2014-9 details the process of self-reporting and provides the SEC web site that contains the self-reporting format.
Local Finance Board Commissioners are drafting another LFN that will provide consequences to fire district for noncompliance. The Board of Fire Commissioners will probably be required to certify compliance with post issuance disclosure requirements through a signed certification as part of the budget package. Auditors will be required to disclose as a comment in the annual audit if a Board is in violation of the Official Statement.
There's not much time left. If you have bonds contact your auditor today to discuss the requirements of your Official Statement. Your auditor should be familiar with LFN 2014-9. If not, refer them to this blog.