POST-ISSUANCE MATTERS Georgia Fiscal Managers Council September 2015 Conference 1

June 2015 Bond Sale $ 1,284,340,000 State of Georgia (Largest Sale for the State) $560,525,000 General Obligation Bonds 2015A $447,830,000 General Obligation Bonds 2015B (Federally Taxable) $275,985,000 General Obligation Refunding Bonds 2015C 2

Types of Projects Funded in June 3

Post- Issuance: Why do we care? 4

5

Not an option… 6

Post-Issuance: What is it? Proper expenditure of bond proceeds Timely spend down Proper use of tax-exempt financed property and equipment Record retention 7

Pop Quiz Time 8

QUESTION 1 WHAT 4 THINGS MAKE A PROJECT ELIGIBLE FOR TAX-EXEMPT BOND PROCEEDS? 9

What makes a project eligible for tax- exempt bond proceeds?  State ownership  Capital Expenditure  Useful life of asset should match life of bonds.  No private business use 10

Expenditures Ineligible for Reimbursement Personal services Lease payments Maintenance agreements for copiers or computers Depletable/disposable items Moving Costs Decorative items Office supplies Fuel oil Termite inspections Drug tests for employees Annual fire inspections 11

QUESTION 2 WHAT 3 ITEMS NEED TO BE DOCUMENTED FOR EACH PROJECT FUNDED BY BOND PROCEEDS? (HINT: WE CALL THIS ASSET TRACKING) 12

Asset Tracking Description/Location of Asset Actual placed in service date Expected economic life We are required to maintain documentation for the life of the bonds, plus five years. 13

QUESTION 3 – SPEND-DOWN WHAT IS THE FIRST SPEND-DOWN DEADLINE? 6 Months 14

QUESTION 4 – SPEND-DOWN HOW MUCH NEEDS TO BE SPENT OR CONTRACTUALLY OBLIGATED AT THAT TIME? 5% Spent or Contractually Obligated 15

QUESTION 5 – SPEND DOWN WHAT IS THE SECOND SPEND DOWN DEADLINE? 3 Years 16

QUESTION 6 – SPEND-DOWN HOW MUCH NEEDS TO BE SPENT AT THAT TIME? 85% Spent ***(Unlike 6 month spend down this spend down has to be amounts SPENT not Contractually Obligated) 17

QUESTION 7 – SPEND-DOWN WHAT IS THE FINAL SPEND DOWN DEADLINE? 5 Years 18

QUESTION 8 – SPEND-DOWN WHAT HAPPENS IF FUNDS ARE NOT SPENT BY THAT TIME? Proceeds are forfeited! 19

6 Months 5% Spent or Contractually Obligated 3 Years 85% Spent 5 Years 100% Spent ALL proceeds must be spent or forfeited PRIOR to reaching the 5 Year date. IRS Spend-Down Rules Recap 20

QUESTION 9 WHAT IS PRIVATE BUSINESS USE? 21

Private business use can involve the use of equipment or the use of space or facilities or a program by: A private for-profit business A natural person A private nonprofit organization (501(c)(3) or otherwise) An agency or instrumentality of the federal government Private business use exists when there is direct or indirect use by one or more private users in a manner or on a basis different than normal use of that space or facility or program by the general public. 22 Private Business Use Summary for Tax-Exempt Bond Funds

Private Business Use May Include  management or service contracts  leases  research contracts (including any with federal government)  parking contracts  use of space within a public use facility by a private citizen or company for the operation of a business enterprise, even if that enterprise serves the visiting public, agency clients or customers, or state employees  naming rights for buildings and athletic facilities  use by the federal government  Some examples: food services operated by a private vendor, prison facility operated by a private vendor, land leased to a private entity. (janitorial services ok) If in doubt – Ask. 23

Qualified Management Agreements Reasonable Not give the service provider the equivalent of an ownership interest in the financed facility Compensation not based in whole or in part on a share of the net profits of the operations of the facility 24

PBU Annual Survey Example 25

QUESTION 10 HOW CAN YOU KEEP OUR TAX-EXEMPT BONDS TAX-EXEMPT? 26

27